Telecommunication Services: An Orphaned Sector

We've all heard of the term "orphan stock" where a company is largely ignored by analysts either because it is in a sector that is out of favor or the firm that took it public eventually drops coverage.  With so many companies out there and Wall Street research budgets getting slashed, its understandable that some companies get overlooked.

Sectors though, are another matter.  Standard and Poor's breaks the S&P 500 index into ten sectors.  For investors looking to gain exposure to an entire sector, S&P, along with SSgA Funds, created ETFs for each sector - except one - Telecommunication Services.  While we do not know the exact reason why they chose not to create an ETF for this sector, it comes across as though the both parties think the telecommunication service sector is too inconsequential to warrant its own ETF.  As recent experience has shown, buying opportunities often arise when there is nothing good to say about a sector or group.

Comments

[Joe Calhoun]

Barclay's has a Telcom Sector ETF: IYZ. It's about doubled the return of the S&P 500 over the last year and has outperformed over the last four year period.