Global Telecom, a Compelling Combination of Dividends and International Growth
This sector-oriented ETF offers the best of both worlds for investors: income, low volatility, and exposure to fast-growing emerging markets.
Looking for exposure to rapid growth in the wireless telecommunications industry in emerging markets, while at the same time enjoying healthy levels of income and lower volatility? Consider iShares S&P Global Telecommunications (IXP). This narrowly focused exchange-traded fund is an appropriate way to tap into an attractive mix of stable, mature, U.S.-based telecom firms, which make up about one third of this fund's assets, and overseas wireless and land-line providers, many of which have access to faster-growing emerging markets where phone penetration levels have long runways ahead.
With a dividend yield approaching 5% and a three-year beta of just 0.66, IXP offers stability at a time when many investors are concerned about equity market volatility. And it provides unique exposure as the only ETF to straddle the divide between U.S. and foreign-based telecoms. The fund tilts heavily toward the largest global telecoms, holding just 37 companies and devoting close to 70% of its assets to its top 10 holdings. However, many of IXP's holdings have meaningful operations in rapidly growing emerging markets, such as Vodafone (VOD), America Movil (AMX), and China Mobile (CHL).
Robert Goldsborough does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.
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