Michael P. Regan is a Bloomberg Gadfly columnist covering equities and financial services. He has covered stocks for Bloomberg News as a columnist and editor since 2007. He previously worked for the Associated Press.

AT&T Inc.'s plans to buy Time Warner Inc. for $85 billion is running into possible resistance from both presidential candidates. The takeover should also be raising eyebrows among another group of interested parties: investors in the many exchange-traded funds and mutual funds that count the telecom behemoth as one of their top holdings.

AT&T ticks off many of the boxes that equity investors have sought in recent years: a healthy dividend yield and a history of increasing those dividends with a stable, reliable business that rarely leads to huge volatility in the share price. Shares like these are often called "widow and orphan stocks" because they're perfect for the type of investors who want steady, worry-free income. The ranks of these investors have swollen significantly this year -- crowded by those left orphaned and widowed by bonds that pay record-low yields. 

As a result, it's remarkable how many ETFs count the stock as one of their top holdings, with strategies based on everything from dividends to the technology industry to low volatility, even to momentum-chasing:

Phone It In
AT&T has become one of the top holdings of exchange-traded funds focused on dividends and other popular strategies
Source: Bloomberg

Nowhere is its importance more eye-popping than in the ETFs focused solely on the telephone industry:

Phone Funds
AT&T makes up a fifth or more of some telecom-focused ETFs
Source: Bloomberg

AT&T's stock was one of the highfliers of the year -- returning as much as 30 percent in 2016 as of July and making it the second-biggest contributor to the S&P 500's advance as of that date. 

Dropped Call
AT&T's shares sank 6.4% in the three sessions through Monday, the biggest negative drag on the S&P 500
Source: Bloomberg

But as often happens with companies making a big acquisition, the stock of the acquirer has not performed well. The shares sank 6.4 percent in the three sessions through Monday, the biggest negative drag on the S&P 500, as discussions about the Time Warner takeover were reported and then confirmed. That type of move in share price may be just another day in the office for some stocks, but for the $226 billion market-cap AT&T it was the steepest three-day drop since January 2009 and cut its year-to-date gain in half. 

Donald Trump has promised that, if elected, his administration would not allow AT&T to purchase Time Warner; Hillary Clinton's camp "certainly thinks regulators should look at it." 

You're unlikely to hear owners of these ETFs complain about this bipartisan scrutiny. 

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

To contact the author of this story:
Michael P. Regan in New York at

To contact the editor responsible for this story:
Daniel Niemi at