Core Viewpoint - The Communication Services ETF (XLC) has a significant concentration of 46% of its assets in just three stocks: Meta, Alphabet, and Netflix, which poses an unusual risk for sector ETF buyers [1] Group 1: ETF Composition and Strategy - XLC provides concentrated exposure to companies that dominate communication, content consumption, and online connectivity, primarily through its top three holdings [1] - The fund's strategy allows investors to gain direct exposure to the digital advertising duopoly and streaming entertainment without selecting individual stocks [1] Group 2: Financial Performance - XLC has returned 10.79% over the past year, which is lower than the broader market represented by SPY, indicating that legacy telecom holdings have negatively impacted performance [1] - Meta and Alphabet maintain profit margins above 30%, showcasing their strong market positions in digital advertising, while Netflix has shifted to a profit-generating model with 24% margins [1] Group 3: Risks and Trade-offs - The concentration of three companies controlling over 40% of the portfolio presents a risk; any regulatory challenges or market weaknesses affecting these companies could lead to underperformance [1] - XLC is not designed for diversification but rather as a sector bet, making it suitable for investors seeking concentrated exposure to digital advertising and streaming [1]