“The Communication Services sector will become the fourth-largest sector, comprising 10% of the S&P 500® Index, and three out of the five FAANG stocks—Facebook, Netflix and Alphabet’s Google—will now be classified within this new sector, the most for any GICS sector,” said SSgA.
Related: Twitter, Netflix to Join Large-Cap S&P Index ETFs
Facebook and Alphabet previously resided in traditional tech ETFs like XLK while Netflix has been classified as a consumer discretionary stock. Index providers believe the evolution of how people communicate and consume media made changes to the traditional telecommunications sector necessary.
“Change also creates opportunities. The old sector classifications obscured secular shifts apparent within our society. The new sector classifications create more focus on drivers of economic change and potential returns,” said SSgA.
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