XLC: Did the Communication Services ETF Actually Earn Its Place in Your Portfolio From 2019 to 2025?

You might think the communication sector is a boring and slow moving industry. Things like phone companies and cable providers.

But XLC, the Communication Services Select Sector SPDR Fund, holds some of the biggest and most powerful companies in America. The real question is how does this sector perform?

This article will analyze XLC from 2019 to 2025. We will compare it to inflation, the money supply, the broad market, gold, and every other S&P 500 sector ETF.

Nothing in this article is financial advice. We will just analyze the data together and see what we learn.

What Is XLC?

XLC is the Communication Services Select Sector SPDR Fund. It was created by State Street Global Advisors and launched in June 2018. This ETF lets people invest solely in the communications sector.

When most people hear “communication services,” they picture AT&T or Verizon. Slow, steady, dividend-paying phone companies. That’s not really what XLC is.

Some of the top holdings in XLC include: Meta, Alphabet, and Netflix.

Here are XLC’s top holdings as of April 2026:

A Brief History of the Communication Services Sector

XLC was created in 2018 as part of a broader reshuffling of how the S&P 500 categorizes its companies. Before that, companies like Google and Facebook were spread across the Technology and Consumer Discretionary sectors. When regulators and index providers started recognizing that media, telecom, and internet platforms all belong under one roof, the Communication Services sector was born.

XLC is a relatively young ETF, and its composition reflects the modern economy rather than the old-school telecom world. That is a big reason why its returns look so different from what you might expect from a “communication” fund.

The Benchmarks I Used

Before we get into the returns, let’s go over what we are comparing XLC to and why each benchmark matters.

CPI (Consumer Price Index)

CPI is the most commonly used measure of inflation. It tracks how much more expensive everyday goods and services are getting over time. From 2019 to 2025, CPI grew at 3.94% per year. Any investment that does not beat CPI is losing purchasing power in real terms, even if the dollar amount in your account is going up.

For more on how inflation affects your everyday life, check out my article on wages vs. inflation.

M2 Money Supply

M2 measures the total amount of money circulating in the US economy. When M2 grows, each dollar you hold becomes worth a little less because there are more dollars competing for the same goods and assets. From 2019 to 2025, M2 grew at 6.51% per year. I use it as a benchmark because if your investment cannot beat M2 growth, you are not really building new wealth. You are just keeping up with money creation.

For a deeper look at what M2 is and why it matters, read my article on the M2 money supply.

SPY (The Broad Stock Market)

SPY is the most widely held S&P 500 index fund. It represents what an average investor who simply bought the entire US stock market got in return during this period. From 2019 to 2025, SPY had a CAGR of 17.19% per year.

Gold

Gold had a CAGR of 19.00% per year from 2019 to 2025. I include gold as a benchmark because it reflects what happens to the value of money when the money supply keeps expanding. Gold does not produce any earnings or pay any dividends. It simply holds its value against the declining purchasing power of the dollar.

XLC From 2019 to 2025: The Data

Alright, let’s get into the actual numbers.

XLC had a compounded annual growth rate (CAGR) of 17.25% per year from January 2019 to December 2025 with dividends reinvested.

In simple terms, that means if you had put $10,000 into XLC at the start of 2019 and just let it sit there, you would have ended up with about $29,700 by the end of 2025.

Here is how that compares to the broad market and gold:

XLC and SPY were separated by just 0.06 percentage points per year. In dollar terms, that gap amounts to only $80 on a $10,000 investment over seven years. XLC essentially matched SPY over this period.

Gold, however, outpaced both XLC and SPY by nearly 2 percentage points per year and turned $10,000 into roughly $4,000 more than either of them. How was gold able to outperform some of the largest communications and the broad market? It doesn’t produce anything. It doesn’t pay any dividends. Did monetary debasement grow faster than actual productive companies? It’s something worth thinking about.

What the Data Shows

XLC vs. Inflation

XLC beat CPI inflation by 13.31 percentage points per year. This is a significant outperformance. XLC investors grew their investments faster than the increase in cost of living.

However, this is the bare minimum standard you want your investments to beat.

XLC vs. the M2 Money Supply

XLC beat M2 money supply growth by 10.74 percentage points per year. XLC investors were creating wealth faster than the increase in monetary debasement.

That’s the ultimate goal for any investor looking to create real wealth. This shows how well communication companies have done during this period.

XLC vs. the Broad Stock Market

XLC beat SPY by just 0.06 percentage points per year. That is essentially a tie.

The communication sector didn’t provide any real advantage over buying the whole market. This raises the question, why take on all the risk of investing in one sector when it has simply matched the market’s return?

XLC vs. Gold

XLC underperformed gold by 1.75 percentage points per year. In dollar terms, gold turned $10,000 into $33,930 while XLC turned $10,000 into $29,700. That is a $4,230 difference over seven years on a single $10,000 investment.

Remember that gold is just a metal. It doesn’t innovate, have earnings, or produce anything. But it was able to outperform a collection of the largest companies in the US.

As I’ve covered before, gold’s strong performance in recent years is less about gold getting more valuable and more about the dollar getting less valuable. When the M2 money supply grows at 6.51% per year, the purchasing power of each dollar shrinks. Gold simply reflects that reality.

How XLC Compares to Other S&P 500 Sectors

We did a full breakdown of all eleven S&P 500 sector ETFs in our sector returns analysis. Here is how XLC stacks up against every other sector from 2019 to 2025:

XLC ranked second among all eleven sectors over this period. Only XLK (Technology) performed better, and it was not particularly close. XLK turned $10,000 into $46,380 while XLC turned $10,000 into $29,700. That is a gap of over $16,000 on the same starting investment.

The Bottom Line

XLC is not the boring telecom fund the name might suggest. It is a concentrated bet on the companies that control how billions of people communicate, consume media, and spend time online. From 2019 to 2025, that bet paid off.

XLC returned 17.25% annually with dividends reinvested. It crushed inflation and money supply growth by wide margins. It essentially matched the broad market almost dollar for dollar.

However, gold still outperformed it despite producing nothing. The broad market matched it with more diversification.

So was it worth it to invest in the communications sector?

I’m not saying to buy or avoid XLC. I just look at the data and try to help you understand its performance.

Frequently Asked Questions

What is XLC and when did it launch?

XLC is the Communication Services Select Sector SPDR Fund. It was created by State Street Global Advisors and launched in June 2018. It tracks the performance of communication services companies inside the S&P 500, including media, telecom, and internet platform companies.

What companies are inside XLC?

The top holdings in XLC include Meta, Alphabet (Google), Netflix, T-Mobile, and Walt Disney. Despite the name “communication services,” XLC is heavily weighted toward digital advertising, social media, and streaming platforms rather than traditional phone or cable companies.

What was XLC’s CAGR from 2019 to 2025?

XLC had a compounded annual growth rate of 17.25% per year from January 2019 to December 2025 with dividends reinvested.

A $10,000 investment at the start of that period would have grown to approximately $29,700 by the end.

Did XLC beat inflation from 2019 to 2025?

Yes, by a wide margin. XLC beat CPI inflation of 3.94% per year by 13.31 percentage points annually. In real purchasing power terms, XLC investors more than doubled their buying power over the seven-year period.

How did XLC compare to SPY?

XLC and SPY were essentially tied. XLC returned 17.25% per year and SPY returned 17.19% per year. In dollar terms, a $10,000 investment in XLC grew to $29,700 while the same investment in SPY grew to $29,620. That $80 difference is about as close to identical as two investments can get over a seven-year period.

Why did gold outperform XLC?

Gold returned 19.00% per year from 2019 to 2025 compared to XLC’s 17.25%. Gold’s strong performance during this period largely reflects the declining purchasing power of the dollar as M2 money supply grew at 6.51% per year. Gold does not produce earnings or pay dividends. It simply holds its value against a dollar that is being diluted over time.

How did XLC perform compared to other S&P 500 sectors?

XLC ranked second among all eleven S&P 500 sectors from 2019 to 2025. Only XLK (Technology) at 25.69% performed better.

Why did XLC drop so sharply in 2022?

XLC fell sharply in 2022 primarily because the Federal Reserve raised interest rates aggressively to fight inflation. Growth companies like Meta and Alphabet are valued based on future earnings expectations. When rates rise, those future earnings get discounted more heavily by investors, which pushes prices down. Meta alone lost over 60% of its value in 2022, and since it is one of XLC’s largest holdings, that had an outsized impact on the fund.