To keep up with the new GICS changes that will transform the telecommunications services sector, State Street Global Advisors launched a new telecom ETF on Tuesday.
The Communication Services Select Sector SPDR Fund (NYSEArca: XLC), which has a 0.13% expense ratio, includes select companies from the information technology and consumer discretionary sectors.
“State Street Global Advisors always seeks to provide investors with the tools necessary to implement sector views across the entire GICS framework,” Noel Archard, global head of product for State Street ETFs, said in a note. “The launch of XLC allows our clients immediate access to this new investment opportunity that will represent roughly 10 percent of the S&P 500 Index in terms of market capitalisation.”
The Communication Services Select Sector SPDR Fund will try to reflect the performance of the, Communication Services Select Sector Index, which includes companies that have been identified as Communication Services companies by the Global Industry Classification Standard, according to the fund’s prospectus.
Specifically, XLC will include securities of companies from diversified telecommunication services; wireless telecommunication services; media; entertainment; and interactive media & services.
GICS Structure Reclassification
Under the new reclassification of the GICS structure, the new sector will be renamed Communication Services effective September 21, 2018 and will include select tech and consumer discretionary names.
XLC’s current top holdings include Facebook (NasdaqGS: FB) 20.6%, Alphabet Class C (NasdaqGS: GOOG) 11.9%, Alphabet Inc. Class A (NasdaqGS: GOOGL) 11.8%, AT&T (NYSE: T) 6.1% and Netflix (NasdaqGS: NFLX) 4.8%.
Sub-sector weights include internet software & services 46.8%, media 26.2%, diversified telecom services 11.9%, software 9.8% and internet & direct marketing retail 5.4%.
Furthermore, as the communication services sector comes to life, big changes are coming for some well-known consumer discretionary and technology exchange traded funds, including the Consumer Discretionary Select Sector SPDR (NYSEArca: XLY) and the Technology Select Sector SPDR (NYSEArca: XLK). State Street will make changes to XLK and XLY’s underlying indices effective after the close on September 21, 2018.
“Existing shareholders of XLK and XLY do not need to take action at this time; however, investors will likely want to analyze their sector positions,” Archard added.
For more information on new fund products, visit our new ETFs category.