An exchange-traded fund that invests in telecommunications companies with the objective of replicating the performance of an underlying telecom index. Communication industry ETFs include giant integrated providers of wireless and wire line services, as well as smaller companies that specialize in wireless services or manufacture communications equipment.
The defensive characteristics of telecom companies, such as their high dividend yields and relatively stable cash flows, are well known. As a result, an ETF based on telecoms will be less volatile than the broad market and will tend to outperform during turbulent economic times. On the downside, communication industry ETFs are likely to be laggards in a bullish market.
These ETFs generally fall under the umbrella of telecom ETFs.