SPDR Communication Services (XLC) is a sector ETF for broadband and electronic communication, media, and entertainment. XLC is about 8% of the S&P 500 and constitutes 25 companies such as Meta Platforms (META), Alphabet A (GOOGL) and C (GOOG), and Walt Disney (DIS).1 These companies serve broad markets to provide news, digital information transmission, cell phone service, movies and streaming services, and social media.
The sector is sensitive and fluctuates with the overall economy. It comprises interactive media and services (45%), entertainment (22%), media (15%), diversified telecom (12%), and wireless telecom (4%).2 A significant portion of the fund’s composition is made up of companies in the media and publishing industry.
XLC features the latest in communication technology in its competitive landscape, such as increasingly powerful smartphones, wearable tech, 5G connectivity, virtual reality, and artificial intelligence. However, some are concerned about consumer privacy and other issues related to these developing technologies. Demand is largely driven by platform versatility, brand loyalty, algorithms and advertising, technological development, social concern, and meeting consumers’ dynamic entertainment needs.
First State holds significant positions in large-cap XLC stocks Walt Disney (DIS), Verizon (VZ), and AT&T (T). Investors who want greater exposure to the telephone and software industries may incorporate the ETF into their portfolios. To schedule a free consultation with First State’s wealth advisors, contact us today at (918) 492-1361.
Sources
1Select Sector SPDRs (Accessed Mar 15, 2023)
2State Street Global Advisors XLC The Communication Services Select Sector SPDR® Fund (Accessed Mar 15, 2023)
This overview is for informational purposes only and is not a recommendation. It should not be the sole deciding factor in making an investment. Investing is a risk and, as with all risks, a positive return is not guaranteed. Past performance does not indicate future results.