An aerial view showing a newly unveiled logo for Meta Platforms, outside the company’s headquarters in Menlo Park, Calif.
Noah Berger/AFP via Getty Images
Live by Alphabet and Meta Platforms , die by them.
The Communications Services Select Sector SPDR exchange-traded fund (ticker XLC) has a 23% weighting in Meta Platforms (FB), formerly Facebook, and 23% in Google parent Alphabet (GOOGL and GOOG) based on Wednesday’s close.
The ETF has one of the highest exposures to Meta and Alphabet among any ETF or mutual fund. The fund was up 2% on Wednesday, to $76.08 a share, as Alphabet rose 7.4% to $2,960 based on its nonvoting GOOG stock after reporting stronger-than-expected results for the fourth quarter.
The fund was down 5.8%, at $71.68, in early trading Thursday. Meta was down 24%, to $244.24 after its fourth-quarter earnings miss and weak current-quarter guidance.
The $14 billion ETF offers investors a way to play a depressed Meta as well as a group of out-of-favor telecom and cable stocks like AT&T (T), Verizon Communications (VZ) and Comcast (CMCSA). Another laggard, Walt Disney (DIS), is also in the ETF. Disney is one of the worst performers in the Dow Jones Industrial Average over the past year with a drop of 19%. AT&T, Verizon, Comcast, and Disney all have roughly 4% weightings in the ETF. The ETF is up about 10% over the past year.
Many investors may not realize that Meta and Alphabet are classified by S&P Dow Jones Indices as communications companies and not technology businesses. Thanks to that classification, the pair dominates the XLC ETF, which has a yield of less than 1%, reflecting the lack of dividends at Meta and Alphabet.
Write to Andrew Bary at [email protected]
