Reuters
Published Jun 19, 2018 14:08
New 'spider' ETF captures Facebook, AT&T in its web
By James Thorne
NEW YORK (Reuters) - State Street Global Advisors said on Tuesday that it had launched an exchange-traded fund (ETF) that will track the recently refreshed communication services sector, which includes telecom and social media firms such as Facebook Inc (O:FB) and Verizon Communications Inc (N:VZ).
The Communication Services Select Sector SPDR Fund
The overhauled GICS will replace the old telecommunication services with the broader communication services sector, yanking large companies away from the information technology and consumer discretionary sectors as a result.
Communication services combines the likes of Google owner Alphabet Inc (O:GOOGL), Facebook, and Netflix (O:NFLX), with AT&T Inc (N:T) and Verizon Communications, according to a list released in January that named select companies.
"The underlying constituents have more of a growth tilt, whereas in the old telecom world they were considered value stocks," said Noel Archard, global head of product for State Street ETFs. "It's a pretty significant change."
The communication services sector has underperformed the technology sector in 2018, according to Morgan Stanley (NYSE:MS) research.
Index funds that track current GICS sectors will be forced to sell stocks once the new taxonomy is implemented. Archard said that the asset management arm of State Street Corp (N:STT) was taking steps to minimize the impact that such selling would have on capital gains and fund returns.
The GICS reclassification was announced in November 2017 and will take effect after the market close on September 21.
By launching the fund ahead of the reclassification deadline, Archard said State Street hoped to give investors time to decide how the new sector will fit into their portfolios.
Changes to the sector groupings will affect nearly 10 percent of the S&P 500 (SPX) by market capitalisation, according to Archard.
The new fund brings State Street's catalogue of U.S. sector-based "SPDR" ETFs to 33 funds with $168 billion in assets, the company said in a statement.
Written By: Reuters
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.