Fidelity MSCI Communication Services Index ETF

FCOM

Market cap $1.86B

Comcast Corp. (CMCSA) sent shockwaves through the media landscape with the announcement that it would spin off its media business today. The telecommunications giant will divest its traditional cable television networks, namely NBCUniversal and Sky, into a standalone, publicly traded company.

The communication services sector is a concentration bet dressed up as diversification.

Alphabet stuns with a 93% earnings beat as cloud and AI fuel growth, lifting shares and spotlighting ETFs with heavy exposure.

Fidelity MSCI Communications Services Index ETF (FCOM) earns a buy rating for its blend of growth and underappreciated dividend growth potential. FCOM's top holdings—META, GOOGL, GOOG, NFLX—drive both capital appreciation and future dividend growth, with nearly 50% portfolio weight in these mega-caps. Despite a modest 0.95% yield, FCOM's 3-year dividend growth CAGR exceeds 25%, and its 0.08% expense ratio enhances relative value versus peers.

The Magnificent Seven stocks represent 35% to 40% of the S&P 500, creating historically high concentration risk for investors heading into 2026.

Fidelity MSCI Communication Services Index ETF earns a 'Buy' rating for its strong growth potential and low expense ratio of 0.08%. FCOM's top holdings—Meta and Alphabet—drive performance, supported by resilient digital advertising revenue and robust user growth. Telecom giants AT&T, Verizon, and T-Mobile provide stability and attractive dividends, balancing the fund's high-growth tech exposure.

Wednesday, July 23 came and went with another spate of earnings to report. While the still-hot theme of artificial intelligence (AI) living through big tech earnings may grab headlines, the communications sector specifically may also speak to investors.

Fidelity MSCI Communication Services Index ETF: Competitive long-term performance, minimal expense ratio, and over 100 holdings. FCOM's heavy top-10 concentration makes it highly dependent on the risk and return of Meta and Google. In fact, it has an EPS growth of 15% and FCF growth of nearly 9%. With a forward P/E of 17x, it sets up a classic GARP investing scenario.

Look at telecom ETFs as companies report fourth-quarter 2024 earnings.

Now is a great time for investors to consider their ideal asset allocation and rebalance portfolios accordingly. Investment weights in portfolios will change over time, as some investments may perform better than others.