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SSGA to launch communications ETF following S&P reclassification


A new SSGA  ETF will offer access to three FAANG stocks

A new SSGA ETF will offer access to three FAANG stocks

State Street Global Advisors (SSGA) is launching an ETF offering exposure to the US communication sector, which includes Facebook, Netflix and Alphabet.

The SPDR S&P US Communication Services Select Sector UCITS ETF will list on the London Stock Exchange on 17 August.

Communication Services is a new index from S&P Dow Jones Indices and MSCI, which will launch this September following a reclassification of the S&P 500. 

The S&P 500 sectors were reclassified last November which saw the telecommunications sector replaced by communications, divided into telecommunications services and media & entertainment.

There was previously just 1.8% allocated to telecommunications but, from 24 September, this will increase to 10.4% in a dedicated communications sector in terms of market capitalisation. As a result, the weighting of companies in the technology category will fall from 26% to 20.5%. 

S&P said: “The last several years have seen an evolution in the mode in which people communicate and access entertainment content and other information. This evolution is a result of the integration between telecommunications, media, and internet companies.

“Companies have moved further in this direction by consolidating through mergers and acquisitions and many now offer bundled services such as cable, internet services, and telephone services.”

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The communications index includes Facebook, Netflix and Alphabet, the largest number of FAANG stocks to be included in any Global Industry Classification Standard (GICS) index. As well as the three FAANGs it will also include companies such as Verizon, Comcast and AT&T. 

State Street said this index reflects the “updated ecosystem of how we communicate and access entertainment today”. 

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Mandy Chiu, head of product for SPDR ETFs in EMEA and APAC, said: “This September, GICS will introduce a new communication services sector to reflect massive changes in the way we communicate, interact, and consume content.

“The new communications services sector will comprise roughly 10% of the S&P 500 index in terms of market capitalisation and the launch of the SPDR S&P US Communication Services Select Sector UCITS ETF will offer our clients cost-effective access to this new investment opportunity in a single trade.” 



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