Summary
Investors focusing on the mega-cap stocks impacted by the upcoming GICS sector shift could be missing opportunities among smaller names.
Small-cap telecom stocks are uniquely positioned to benefit from being both growth and value stocks going forward.
Communication growth is expected by offering concentrated exposure to companies like Alphabet, Facebook, and Netflix that have helped drive several billions into technology funds.
Smaller names like Frontier can have outsized roles in the portfolio compared to the broader communications sector.
Getting beyond the headlines with small-cap telecom stocks
Let's be honest, Elon Musk's twitter account can barely budge the broader market no matter how much the financial media may overhype the influence of stocks like Tesla (TSLA) on amorphous concepts like "market sentiment." To put it into perspective, TSLA is just one stock and a mere .13% of the $100B Vanguard Total Stock Market ETF (VTI). By comparison, index providers like S&P Dow Jones and MSCI can easily move the market because they ARE the market, or at least the ones who determine who gets to be in a major index or a fast-growing sector. That fact, along with the trillions of dollars in passive investment assets linked to indexes they manage, was why we devoted the first part of our series (Turning Lead Into Gold: Tech Changes Ahead) on the upcoming sector shift to understanding the issues that drove the change along with the mechanics of the actual reconstitution. For this second and final part, we're going to take a deeper dive into some of the companies that could be the biggest winners when the new communications sector comes into being next month.
