CNBC recently ran another article with a "misinterpreted" headline ("Technology stocks make up too much of the S&P 500, but index has a fix in the works"), but a few threads have popped up here and elsewhere with concern, so wanted to take a quick minute for it.
Here are the classification changes (xlsx), published by MSCI: https://www.msci.com/documents/1296102/1339060/StructureReviewChanges2018+%281%29.xlsx/caf0a852-5e7b-4a02-b20a-45aa462fbc07
MSCI has not yet published per-sector percentage breakdowns for these. However, the SP500 Index is weighted by market cap, and so too are common SP500 index funds like Vanguard's VFIAX/VOO/etc. These funds are not changing.
You can see, though, that some companies like Facebook are changing from IT to Communications Services (sub-industry "Interactive Media & Services"), a change which has long been needed (GICS was originally created 20 years ago). What CNBC was going over in their article (ex-headline, which was a garbage headline and they should feel bad) was how some smaller sector-specific funds WILL be changing. It is worth noting, as CNBC did, that affected stocks will likely see significant volume on fund rebalancing days, and that because some sector funds have greater AUM than others, the volume's going to be lopsided (e.g. FB, CMCSA).
These will rebalance this Fall (changes go into effect September 28th), so if you have sector-specific funds (specifically consumer discretionary, communication services, or information technology), you should be aware what your funds were providing for your portfolio is no longer necessarily what they will be providing, and you may want to consider checking with your fund's website to see if they've posted about changes.
SPDR's done some good write-ups on this, which follow:
https://us.spdrs.com/docs-commentary/gics-sector-structure-changes.pdf
Submitted August 10, 2018 at 06:06PM by amy31415 https://ift.tt/2MCdqzm
