State Street’s Communication Services Select Sector SPDR Fund (XLC) is one of the newest additions to State Street’s popular legacy lineup of sector ETFs.
Investors looking for broad-based exposure to companies like Facebook, Twitter, Netflix and Google-parent Alphabet will find those stocks in XLC. The fund was created in 2018 in response to a worldwide change in index taxonomy that reclassified social media giants out of the technology sector and into a new “communications services” category.
As a result popular ETFs like State Street’s Technology Select Sector SPDR Fund (XLK) and the Vanguard Information Technology ETF (VGT) sold off the reclassified stocks, which were then bought up by new or reconstituted ETFs like XLC that target communications services stocks. (Apple kept its spot in the tech sector while Amazon was moved to consumer discretionary.)
XLC’s closest rival is the Vanguard Communication Services ETF (VOX), which is nearly identical, barring VOX’s lower fee and differences in the way Vanguard manages index rebalancing.
One other difference between State Street and Vanguard’s sector funds has typically been the audience. Vanguard funds are favorites of the buy-and-hold investors while the sector SPDRs are more popular with traders who prize their deep liquidity, massive options market and tight spreads.