Best And Worst ETFs And Mutual Funds: Telecom Sector

Oct. 30, 2012 10:30 AM ETIYZ, LTL, ERIC, VOX, XTL, T
David Trainer profile picture
David Trainer

The Telecom sector ranks eighth out of the ten sectors as detailed in my Sector Rankings for ETFs and Mutual Funds. It gets my Dangerous rating, which is based on aggregation of ratings of 4 ETFs and 13 mutual funds in the Telecom sector as of October 11, 2012. Prior reports on the best and worst ETFs and mutual funds in every sector and style are here.

Figure 1 ranks from best to worst the four Telecom Services ETFs and Figure 2 ranks from best to worst the nine Telecom Services mutual funds that meet our liquidity standards. Not all Telecom sector ETFs and mutual funds are created the same. The number of holdings varies widely (from 23 to 54), which creates drastically different investment implications and ratings. The best ETFs and mutual funds allocate more value to Attractive-or-better-rated stocks than the worst ETFs and mutual funds, which allocate too much value to Neutral-or-worse-rated stocks.

To identify the best and avoid the worst ETFs and mutual funds within the Telecom sector, investors need a predictive rating based on (1) stocks ratings of the holdings and (2) the all-in expenses of each ETF and mutual fund. Investors need not rely on backward-looking ratings. My fund rating methodology is detailed here.

Investors should not buy any Telecom ETFs or mutual funds because none get an Attractive-or-better rating. If you must have exposure to this sector, you should buy a basket of Attractive-or-better rated stocks and avoid paying undeserved fund fees. Active management has a long history of not paying off.

Get my ratings on all ETFs and mutual funds in this sector on my free mutual fund and ETF screener.

Figure 1: ETFs with the Best & Worst Ratings - Top 2

* Best ETFs exclude ETFs with TNA's less than 100 million

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David Trainer profile picture
We aim to help investor make more intelligent capital allocation decisions. Our research is driven by proven-superior fundamental data, models and equity/credit ratings.

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