Investors pour money into ETF ahead of index reorganization

Impending change benefits State Street's communications exchange-traded fund

Sep 19, 2018 @ 10:33 am

By Bloomberg News

Investors are starting to shift their cash to maintain exposure to some big tech names like Facebook Inc., Google parent Alphabet Inc. and Netflix Inc. before indexers reclassify the stocks.

State Street Corp.'s Communication Services Select Sector SPDR Fund (XLC) took in $135 million last week, the most since the exchange-traded fund was launched in June.

Last November, S&P Global Ratings and MSCI Inc., two of the world's biggest index providers, announced that they were reorganizing sectors by combining phone companies with some internet and media stocks — such as Facebook and Netflix — into a new group called "communication services."

The moves are scheduled to take effect Monday. State Street designed XLC to reflect this restructuring of the Global Industry Classification Standard, or GICS.

In light of the changes, the third-largest ETF issuer also is rebalancing its Technology Select Sector SPDR Fund (XLK) and Consumer Discretionary Select Sector SPDR Fund (XLY). The technology fund will dump its holdings of Facebook and Alphabet and the consumer discretionary fund will unload its positions in Netflix, Walt Disney Co. and Comcast Corp.

"Institutional investors that use sector ETFs are getting in front of the GICS implementation," said Todd Rosenbluth, director of ETF and mutual fund research at CFRA Research. "XLC will be the only way to get Facebook, Google and Netflix exposure through a State Street ETF."

(More: How do you spell investor relief in a bear market? E-T-Fs)


What do you think?

View comments

Most watched


Young advisers envision a radically different business in five years

Fintech and sustainable investing are two factors being watched closely by some of the 2019 class of InvestmentNews' 40 Under 40.


Young professionals see lots of opportunity to reinvent the advice experience

Members of the 2019 InvestmentNews class of 40 Under 40 have strategies to overcome the challenges of being young in a mature industry.

Latest news & opinion

Target-date fund design may be wrong for retirees

Researchers suggest the funds don't adequately hedge against sequence-of-returns risk in retirement.

InvestmentNews' 2019 class of 40 Under 40

Our 40 Under 40 project, now in its sixth year, highlights young talent in the financial advice industry. These individuals illustrate the tremendous potential of those coming up in the profession. These stories will surprise, entertain, educate and inspire.

New Jersey fiduciary rule: Pressure leads to public hearing, comment deadline extension

Industry push results in chance to air grievances on July 17 and another month to present objections.

Galvin to propose fiduciary rule for Massachusetts brokers

The secretary of the commonwealth is proposing a fiduciary standard in response to an SEC investment-advice rule he views as too weak.

Summer reading recommendations from financial advisers

Here are some books that will keep you informed and entertained during summer's downtime


Hi! Glad you're here and we hope you like all the great work we do here at InvestmentNews. But what we do is expensive and is funded in part by our sponsors. So won't you show our sponsors a little love by whitelisting It'll help us continue to serve you.

Yes, show me how to whitelist

Ad blocker detected. Please whitelist us or give premium a try.


Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print