As one of the smallest sector weights in the S&P 500 and as a group dominated by two behemoth stocks, the telecom sector often goes overlooked. Still, telecom is a sector beloved by some conservative, income-seeking investors, and there are several exchange-traded funds (ETFs) with which to meet that demand. The telecom industry is usually thought of as a slow-growth space, but it has been undergoing an array of transformations in recent years. Plus, telecom stocks and ETFs such as the Vanguard Telecommunication Services ETF (VOX) and the iShares U.S. Telecommunications ETF (IYZ) often display sensitivity to rising interest rates, meaning the current environment could be tricky for this group.

"It's certainly a more exciting – and a more uncertain – sector than it has been for a while," said Morningstar in a note. "And uncertainty around the sector's prospects have driven down the S&P 500 Telecommunications Services subindex 6.7 percent since January." (See also: The Industry Handbook: The Telecommunications Industry.)

Investors in telecom ETFs should note that the fortunes of those funds are largely tied to two stocks – Dow component Verizon Communications Inc. (VZ) and former Dow member AT&T Inc. (T). IYZ allocates 18.5 percent of its combined weight to those telecom giants, a percentage that seems small when measured against the 46 percent VOX devotes to those two stocks. Put another way, VOX holds only 27 stocks, and just two command almost half the ETF's weight. Underscoring the point that telecom is not as heavily populated as some other S&P 500 sectors, IYZ holds just 21 stocks.

Due to the fact that AT&T and Verizon are down this year, the year-to-date performances from IYZ and VOX are unimpressive. The two telecom ETFs are down an average of 5 percent. Other bond-like sectors, including utilities, are performing much better. How AT&T digests some recent acquisitions could prove important regarding the stock's rebound potential and that of IYZ and VOX. (See also: The World's Top 10 Telecommunications Companies.)

"If AT&T's purchase of Time Warner Inc. (TWX) goes through, it will own a lot of high-quality programming, such as HBO's lineup, which could allow it to generate advertising revenues and reduce the price it pays to show content on its various platforms," said Morningstar. "It may also give subscribers content-specific benefits, similar to how AT&T provides customers free data streaming for DirectTV Now. (AT&T purchased the satellite business in 2014.)"

Investors should also beware of telecom sector volatility. Year to date, IYZ and VOX have both been noticeably more volatile than the S&P 500, and IYZ's three-year standard deviation is well above the comparable metric on the S&P 500. (See also: Why Telecom Mergers Will Rise Even Higher in 2017.)