![]() Transactions in these instruments are very risky, and you should trade only with the capital you can afford to lose. OTC Derivative products / CFDs are complex financial instruments that do not confer any claim or right to the underlying financial instrument. But if the US economy falls deeper into recession, your dullest holdings may be the one you appreciate most,” she added.ĭisclaimer: Trading in leveraged Over-The-Counter (OTC) Derivative products including Contracts for Difference (CFDs) and spot foreign exchange contracts involves a significant risk of loss which can exceed deposits and may not be suitable for all investors. “Sector ETFs in utilities and telecommunications may be the least interesting positions in your portfolio. “Companies like Verizon Communications keep people connected and that’s important during recessions, especially when said recession is prompted by a global pandemic,” Catherine Brock wrote in The Motley Fool, Zacks has a medium risk outlook on the Vanguard Communication Services ETF.īut, several of the stocks in the VOX could do well in any upcoming economic downturn. They believe Facebook and Alphabet are “major winners on this front.” “We now see a material reduction in the possibility of a meaningful overhaul to existing antitrust law,” said Evercore ISI analysts in a research note. However, potential gridlock in Washington could limit antitrust legislation. The tech sector has also been hit by reputational damage such as that suffered by Facebook from the Cambridge Analytica scandal and the threat of anti-trust legislation, including that from the US House Judiciary Committee to control their power and encourage more competition. When the global pandemic eases there may be a rush to consume outdoor or communal entertainment like cinemas again. There may be some dark clouds on the horizon, however, if businesses continue to suffer in the recession and squeeze advertising budgets on social media and television spots, and if consumers get bored of their online habits through overuse. This growth could continue if the work-from-home trend continues and more people stay at home for their entertainment, and as Businesses migrate more towards the cloud and adopt 5G digital services. The Vanguard Communication Services ETF has benefited from having diverse holdings in a sector that has flourished among accelerated consumer and business trends in the pandemic. Netflix, the go-to streaming service during the crisis, surged 72.2% from $298.84 on 16 March to $514.73 on 6 November. ![]() ![]() Verizon Communications shares have grown 17.2% from $49.94 on 25 March to $58.53 on 6 November, and with Comcast rose 37.4% from $32.42 on 1 April to $44.53. Its Q3 revenues rose 22%, although advertising revenues have seen slower growth as businesses hold fire on their budgets in the crisis. Meanwhile, Facebook’s shares are up 101% from $146 on 16 March to $293.4 on 6 November as many people kept in touch with friends and family during lockdown via the social media service. This is fuelling communications-focused ETFs as of late,” wrote Ben Hernandez in ETF Trends.Īlphabet’s shares rocketed 66.7% from $1,056 on 23 March to $1,761.7 on 6 November as businesses snapped up services like Google Cloud as they worked remotely, and consumers played games via Google Play and watched YouTube while stuck at home. “The communications sector is feeding off the latest innovation in facilitating interaction among humans despite the challenges of Covid-19. ![]() The recent performance of a number of these mega-caps has been good news for the ETF. NBCUniversal owner Comcast makes up 4.8% of the fund, while TV streaming service Netflix constitute 4.7% and The Walt Disney Company 4.4%. Google owner Alphabet Holdings has the biggest weighting with 21.6%, followed by social media giant Facebook with 17.2%, telecoms group Verizon Communications with 5.5%. The fund has 112 holdings including stocks of companies that provide telephone, data transmission, cellular, wireless communication services and offer related content and information through various media. The Vanguard Communication Services ETF, first launched in September 2004, tracks the MSCI US Investable Market Telecommunication Services 25/50 Index.
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