Telecom Services Sector

The Telecom Services sector ranks fifth out of the ten sectors as detailed in my Sector Rankings for ETFs and Mutual Funds report. It gets my Neutral rating, which is based on aggregation of ratings of 6 ETFs and 13 mutual funds in the Telecom Services sector as of July 16, 2014. Prior reports on the best & worst ETFs and mutual funds in every sector arehere.

Figure 1 ranks from best to worst all six Telecom Services ETFs and Figure 2 shows the five best and worst-rated Telecom Services mutual funds. Not all Telecom Services sector ETFs and mutual funds are created the same. The number of holdings varies widely (from 21 to 65). This variation creates drastically different investment implications and, therefore, 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 worstETFs and mutual funds within the Telecom Services sector, investors need a predictive ratingbased on (1) the stocks ratings of the holdings, (2) the all-in expenses of each ETF and mutual fund, and (3) the fund’s rank compared to all other ETFs and mutual funds. As a result, only the cheapest funds with the best holdings receive Attractive or better ratings. Investors need not rely on backward-looking ratings. My fund rating methodology is detailed here.

Investors should not buy any Telecom Services 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 historyof not paying off. Here’s the list of our top-rated Telecom Services stocks.

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

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