Comcast’s Spinoff Highlights a Growing Divide in Telecom ETFs

We’ll take Door No. 3. 

The Comcast spinoff made waves last week, but it’s also creating new interest in exchange-traded funds that gain exposure to the telecommunications sector. The funds generally track companies like landline and mobile phone carriers, as well as mobile phone manufacturers, but AI companies are quickly splitting the segment in two. Behind Door No. 1 are traditional, mid-size telecom companies like Comcast and AT&T, which are struggling from good, old-fashioned competition. Behind Door No. 2 is the large-cap, new wave of companies like Meta, Alphabet and SpaceX, spending heavily on their AI buildout and often more volatile. It’s creating an interesting investing dynamic for advisors looking to leverage telecom. 

“Meta and Alphabet are increasingly being connected to the AI trade, in or out of favor, whereas much of the rest of telecom services is slower growth,” said Todd Rosenbluth, Vettafi head of research.

The Devil Is in the Details

In sector ETFs, fund performance largely comes down to portfolio composition. The State Street Communication Services Select Sector SPDR ETF (XLC), for instance, is down more than 6% this year, with about 40% of the fund allocated to Meta and Alphabet, both of which have slid amid concerns about AI spending. By contrast, the State Street SPDR S&P Telecom ETF (XTL), which holds neither Meta nor Alphabet and instead tracks more traditional telecom services, is up almost 48% over the same period. 

The largest communications ETFs, according to Morningstar data, are:  

• The State Street Communication Services Select Sector SPDR ETF (XLC), the dominant player by a wide margin, with nearly $22.8 billion in assets under management. XLC is down about 6% in 2026, as of the closing bell on Thursday, according to ETF.com. 
• The Vanguard Communication Services Index Fund (VOX), which comes in second, with almost $5.7 billion AUM. VOX is down 2% this year. 
• The Fidelity MSCI Communication Services Index ETF (FCOM) takes the third place, with $1.7 billion AUM. The fund is also down about 2%. 

The good news is that XLC brought in $337 million in net flows last week after bleeding more than $1 billion in assets over the month of June, which Rosenbluth said may signal improved investor sentiment. 

Press S for SpaceX: SpaceX used to be viewed as complementary to the sector rather than competitive. But the aerospace and rocket manufacturer recently signaled bigger ambitions to expand its broadband and wireless services from rural areas into more densely populated markets, bringing it into more direct competition with traditional telecom, said Michael Hodel, Morningstar equity director. “It’s not necessarily a good hedge to own SpaceX as a way of balancing the risk around traditional telecom stocks.”

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