Should You Invest In The IShares Global Comm Services ETF (IXP)?

Designed to provide broad exposure to the Technology - Telecom segment of the equity market, the iShares Global Comm Services ETF (IXP) is a passively managed exchange traded fund launched on 11/12/2001.

Passively managed ETFs are becoming increasingly popular with institutional as well as retail investors due to their low cost, transparency, flexibility and tax efficiency. They are excellent vehicles for long term investors.

Sector ETFs also provide investors access to a broad group of companies in particular sectors that offer low risk and diversified exposure. Technology - Telecom is one of the 16 broad Zacks sectors within the Zacks Industry classification. It is currently ranked 6, placing it in top 38%.

Index Details

The fund is sponsored by Blackrock (NYSE:BLK). It has amassed assets over $244.38 M, making it one of the average sized ETFs attempting to match the performance of the Technology - Telecom segment of the equity market. IXP seeks to match the performance of the S&P Global (NYSE:SPGI) 1200 Telecommunications Services Sector Index before fees and expenses.

The S&P Global 1200 Telecommunications Services Sector Index measures the performance of companies are part of the telecommunications sector of the economy and are important to global markets.

Costs

Since cheaper funds tend to produce better results than more expensive funds, assuming all other factors remain equal, it is important for investors to pay attention to an ETF's expense ratio.

Annual operating expenses for this ETF are 0.47%, making it one of the most expensive products in the space.

It has a 12-month trailing dividend yield of 4.34%.

Sector Exposure and Top Holdings

Even though ETFs offer diversified exposure which minimizes single stock risk, it is still important to look into a fund's holdings before investing. Luckily, most ETFs are very transparent products that disclose their holdings on a daily basis.

Looking at individual holdings, Facebook Class An Inc (NASDAQ:FB) accounts for about 10.33% of total assets, followed by Alphabet (NASDAQ:GOOGL) Inc Class C (GOOG) and Alphabet Inc Class A (GOOGL).

The top 10 holdings account for about 65.20% of total assets under management.

Performance and Risk

So far this year, IXP has lost about -9.13%, and is down about -3.45% in the last one year (as of 11/16/2018). During this past 52-week period, the fund has traded between $51.91 and $62.51.

The ETF has a beta of 0.65 and standard deviation of 12.93% for the trailing three-year period, making it a medium risk choice in the space. With about 80 holdings, it effectively diversifies company-specific risk.

Alternatives

IShares Global Comm Services ETF holds a Zacks ETF Rank of 2 (Buy), which is based on expected asset class return, expense ratio, and momentum, among other factors. Because of this, IXP is an excellent option for investors seeking exposure to the Telecommunication ETFs segment of the market. There are other additional ETFs in the space that investors could consider as well.

Vanguard Communication Services ETF (VOX) tracks MSCI US Investable Market Telecommunication Services 25/50 Index and the Communication Services Select Sector SPDR Fund (XLC) tracks COMMUNICATION SERVICES SELECT SECTOR IND. Vanguard Communication Services ETF has $1.27 B in assets, Communication Services Select Sector SPDR Fund has $3.22 B. VOX has an expense ratio of 0.10% and XLC charges 0.13%.

Bottom Line

To learn more about this product and other ETFs, screen for products that match your investment objectives and read articles on latest developments in the ETF investing universe, please visit Zacks ETF Center.