Roger Nusbaum submits: I received an email from a reader asking about the telecom sector. If I read his email correctly, he only wants emerging market exposure for telecom but if I am wrong about that, he is at least very clear about wanting no domestic exposure for the sector.
He mentions a few stocks and the Emerging Markets Telecom Fund (ticker: ETF). I have written about ETF (this fund is very old and the ticker is from before exchange traded funds existed) for RealMoney.com.
The reader thinks his choices boil down to ETF or one particular stock that is an interesting choice. He has sort of ruled out, per the email, four other choices. ETF is expensive as funds go and the one stock in question has a good chart but he is concerned about it being overextended. I think I am reading his conflict between long term investing and short term trading which is a very natural thing.
I think the reader could benefit from a lot more ideas before doing something. Somehow his starting point seems quite narrow. One idea I have would be to look at the components in things like iShares Global Telecom (NYSEARCA:IXP) and ETF. There are plenty of interesting companies held that are worth learning about.
Further I would add that alot of companies from developed markets have extensive footprints in emerging markets. It seems like every Nordic phone company I have ever looked at has emerging market lines of business. There are a couple of Russian companies that the reader does not mention. Remember Telebras from a few years ago? It split into a dozen companies, perhaps one of them is appropriate or maybe Telmex? There are a couple of Asian names with monster yields. I plan to add a relatively boring western European phone stock to client accounts that, like the Nordics, does a lot of business in emerging markets. The list is extensive.
My suggestion, assuming I can't talk him out of just emerging market only, would be to own several stocks from different parts of the world and make sure at least one of them has a big yield. I think the Asian companies have, in general, the highest yields but either way there is plenty of yield to be had. Hope that helps.