Communication Services Boom: Which Telecom ETF Should Be on Your Radar?

The telecom sector just got a major makeover. Back when AT&T (NYSE: T) and Verizon (NYSE: VZ) ruled the roost, telecom ETFs were all about steady dividend plays. Not anymore. In 2018, MSCI and S&P rewrote the rulebook, merging the old telecom sector with pieces of consumer discretionary and tech to create the “communication services group.” The result? Today’s telecom ETF lineup is dominated by growth machines like Facebook (NASDAQ: FB) and Alphabet (NASDAQ: GOOG, GOOGL) rather than legacy telecom giants.

For investors hunting growth in this transformed sector, here’s your playbook on the best telecom ETF options available.

The Heavyweight Champion: Communication Services Select Sector SPDR (XLC)

XLC Expense Ratio: 0.13% annually

When the communication services sector officially launched, XLC hit the market first—and it’s been a runaway success. With roughly $3 billion in assets under management, this telecom ETF holds 26 stocks but plays it top-heavy. Facebook and Alphabet’s two share classes account for over 40% of the fund’s weight.

The story here is simple: you’re getting exposure to fast-growing media and entertainment companies alongside traditional telecom. The catch? Recent analyst sentiment has cooled, with long-term EPS growth forecasts sliding from 12.5% to 10.6%. Still, declining prices have created valuation opportunities in this telecom ETF.

The Broad-Based Play: Vanguard Communication Services ETF (VOX)

VOX Expense Ratio: 0.1%

Instead of launching something new, Vanguard pivoted its existing telecom ETF into the communication services era. VOX holds 110 stocks—significantly more diversified than XLC—but concentration risk remains real. The top 10 holdings make up nearly 70% of this telecom ETF’s weight, including Facebook, Alphabet, Verizon (NYSE: VZ), and Netflix (NASDAQ: NFLX).

The broader holding count makes VOX appealing if you want more breathing room beyond the mega-cap tech names. However, understand that you’re still essentially betting on the same core players.

The Budget Option: Fidelity MSCI Communication Services ETF (FCOM)

FCOM Expense Ratio: 0.084%

Looking for the cheapest telecom ETF on the block? Fidelity delivers. FCOM tracks the MSCI USA IMI Communication Services 25/50 Index and carries nearly $183 million in assets. Facebook, Alphabet, and Verizon combine for almost 46% of the portfolio—making this another top-heavy telecom ETF.

The real advantage: Fidelity clients can trade FCOM commission-free on Fidelity’s ETF platform, slashing costs even further. If you’re after low-cost exposure to communication services, this telecom ETF fits the bill.

The International Angle: Global X MSCI China Communication Services ETF (CHIC)

CHIC Expense Ratio: 0.65%

Want to diversify beyond U.S. communication services? CHIC offers something different—exposure to China’s telecom and tech scene. This telecom ETF blends slower-growth traditional telecom with fast-growth internet players.

Here’s the kicker: Chinese sectors historically show low correlation to U.S. equivalents. Geopolitical tensions, domestic consumption trends, and market drivers move differently. That means CHIC can act as a portfolio diversifier when your other telecom ETF holdings move in lockstep with U.S. markets.

The Traditional Heavy-Hitter: iShares U.S. Telecommunications ETF (IYZ)

IYZ Expense Ratio: 0.43%

This telecom ETF took the reconfiguration seriously but maintained more traditional telecom DNA than peers. Tracking the Dow Jones U.S. Select Telecommunications Index with 44 stocks, IYZ still gives Verizon and AT&T over 32% combined weight—significantly higher than VOX or FCOM.

One surprise holding: Cisco Systems (NASDAQ: CSCO) claims the third-largest position at 15%+, pulling this telecom ETF toward technology exposure. With a 13.1% three-year standard deviation and 2.7% dividend yield, IYZ offers steadier returns than pure-growth alternatives.

Infrastructure Play: Pacer Benchmark Data & Infrastructure Real Estate ETF (SRVR)

SRVR Expense Ratio: Not specified as traditional telecom ETF

Not technically a traditional telecom ETF, but SRVR captures the 5G rollout theme that’s reshaping telecom infrastructure. This fund screens REITs by property type and revenue streams, focusing on data centers and infrastructure properties—which represent over 61% of its portfolio.

As AT&T and competitors expand 5G networks nationwide, SRVR offers indirect telecom ETF exposure through real estate. Trading at 21.62x funds from operations with a 3.4% dividend yield, it’s worth considering as a telecom sector complement.

Making Your Pick

The communication services sector has fundamentally shifted from dividend plays to growth plays. Your choice depends on your risk tolerance and diversification goals. Want maximum growth concentration? XLC and FCOM deliver at rock-bottom fees. Seeking balance? VOX’s broader 110-stock basket provides breathing room. Need international diversification? CHIC opens China doors. Prefer traditional telecom with tech flavor? IYZ remains a solid middle ground.

Each telecom ETF tells a different story about where communication services is heading—pick the narrative that matches your portfolio strategy.