Communication Services ETFs: Media and Tech
The communication services sector was redrawn in 2018 to pull Meta, Alphabet and Netflix out of tech and away from old telecom. The result is a concentrated, growth-heavy hybrid that surprises many buyers.
Don't have time? Here's what you need to know:
- 1A 2018 GICS reshuffle moved Alphabet, Meta and Netflix into communication services, turning it from a telecom sector into a growth-heavy hybrid.
- 2XLC and VOX are dominated by Alphabet and Meta, which can together make up roughly 40% or more of the fund.
- 3The sector overlaps heavily with broad-market, S&P 500 and Nasdaq-100 holdings, so it often adds concentration rather than diversification.
- 4Treat it as a small, growth-oriented satellite — not the defensive, dividend-paying telecom sector its name implies.
A Sector Rebuilt in 2018
Communication services is not the old telephone sector despite the name. In 2018, the index providers behind the GICS framework redrew sector boundaries and created a far broader communication services sector. They pulled internet and media giants out of technology and consumer discretionary — Alphabet (Google), Meta (Facebook), Netflix and others — and combined them with the traditional telecom and media companies that previously made up the old, sleepy telecommunications sector.
The result is a hybrid that confuses many investors. Buyers expecting a defensive, dividend-paying utility-like sector of phone companies instead get a portfolio dominated by high-growth internet and media platforms. The 'communication' in the name now covers everything from cellular networks to social media to streaming, with very different economics underneath.
What You Actually Own
The two main funds are XLC, the Communication Services Select Sector SPDR, and VOX, Vanguard's communication services fund. Both are dominated at the top by Alphabet and Meta, which together can make up a very large share of the fund — often roughly 40% or more between the two names. That concentration is the single most important fact about these funds.
Below the two giants sit a mix of streaming and entertainment (Netflix, Disney), interactive media and gaming companies, and the traditional telecom carriers (Verizon, AT&T, T-Mobile) and cable operators that anchored the old sector. The funds are inexpensive — typically around 0.08-0.10% — but the heavy top-weighting means your outcome rides largely on a handful of mega-cap platform stocks rather than the sector's broad diversity.
| Group | Examples | Character |
|---|---|---|
| Internet platforms | Alphabet, Meta | Mega-cap growth; the bulk of the fund |
| Streaming & entertainment | Netflix, Disney | Growth, content-driven |
| Telecom carriers | Verizon, AT&T, T-Mobile | Mature, dividend-paying |
| Cable & media | Comcast and peers | Mixed growth and income |
Important: XLC and VOX are not diversified plays on communication. Two stocks — Alphabet and Meta — can drive most of the fund's movement, so it behaves more like a concentrated bet on a couple of internet giants than a broad sector fund.
Watch the Overlap With Tech and Growth
Because the sector is dominated by Alphabet and Meta, a communication services fund overlaps heavily with the growth and technology exposure many investors already hold. If you own a broad-market fund, an S&P 500 fund, or a Nasdaq-100 fund like QQQ, you already own large positions in those same internet giants. Adding XLC or VOX on top stacks even more weight onto a small group of mega-cap growth names.
This is the trap to watch. A buyer who adds a communication services fund thinking they are diversifying into a new sector may actually be doubling down on the exact stocks driving the rest of their portfolio. The sector's modern composition makes it a growth-and-internet bet, not the income-and-utility play its name might suggest. You can compare a broad tech index to the market with the QQQ vs XLK comparison to see how concentrated mega-cap exposure can get.
When Communication Services Makes Sense
A communication services fund can be a reasonable satellite for an investor who specifically wants concentrated exposure to the dominant internet-advertising and digital-media platforms, and who understands that this is a growth, not a defensive, bet. It is a cheaper, more diversified way to own that theme than picking individual platform stocks.
For most investors, though, the sector's heavy overlap with existing holdings means a dedicated fund adds concentration more than diversification. If you hold it, account for the overlap, size it as a small satellite, and do not mistake it for the defensive telecom sector it used to be. Knowing exactly what is inside is the whole game here.
Tip: Before buying XLC or VOX, check how much Alphabet and Meta you already own through your existing funds. The communication services sector is largely those two names, so you may be more exposed than you think.
Frequently Asked Questions
What do communication services ETFs hold?
Since a 2018 sector reshuffle, they hold a mix dominated by internet platforms — Alphabet and Meta lead by a wide margin — alongside streaming and entertainment names like Netflix and Disney, plus traditional telecom carriers such as Verizon and AT&T. Funds like XLC and VOX are therefore far more growth-oriented than the old telephone sector the name suggests.
What's the difference between XLC and VOX?
Both track the U.S. communication services sector cheaply and are dominated by Alphabet and Meta. XLC holds the sector's S&P 500 members, while VOX uses a slightly broader index that reaches further down the cap scale. Their top holdings and overall behaviour are very similar, since the same few mega-cap names drive most of each fund's movement.
Is the communication services sector defensive?
No, not anymore. Before 2018 the old telecommunications sector was a small, defensive, dividend-heavy group of phone companies. The redrawn communication services sector is dominated by high-growth internet platforms like Alphabet and Meta, which makes it a growth-oriented, more volatile sector that behaves nothing like a defensive utility-style holding.
Does a communication services ETF overlap with my tech funds?
Heavily. Because Alphabet and Meta make up a large share of the sector, a communication services fund overlaps with broad-market, S&P 500 and Nasdaq-100 funds like QQQ that already hold those giants. Adding XLC or VOX often concentrates your portfolio further in mega-cap growth rather than diversifying it, so check your existing exposure first.
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Alex Harrington
CFA Level II Candidate, Finance & Economics
Alex Harrington is an independent ETF researcher and personal finance writer with over 8 years of experience analyzing exchange-traded funds. A CFA Level II candidate with a background in economics, Alex has reviewed 800+ ETFs and helped thousands of beginners build their first investment portfolios through clear, jargon-free education.
This content is for educational purposes only and does not constitute financial advice. Past performance does not guarantee future results. Consult a licensed financial advisor before making investment decisions.