Sector SPDRs To Add 11th Fund

April 02, 2018

The Select Sector SPDRs ETF family marketed by State Street Global Advisors has filed to add another fund to its 10-ETF family. The Communication Services Select Sector SPDR Fund (XLC) reflects planned changes to the Global Industry Classification Standard (GICS) set for Friday, Sept. 28, 2018, that will result in a major adjustment to its sector configuration.

GICS is set to undergo a major shift with the introduction of the communications services sector, which will encompass not just telecom companies, but internet media companies, mobile gaming app makers, online streaming services, search engines, social media platforms and more. In addition to including all telecom stocks, the new sector will pull companies from the consumer discretionary and technology sectors.

A Little History

Back in 2015, GICS broke the real estate sector out of the broad financial sector, and in response, the Select Sector SPDRs introduced the Financial Services Select Sector SPDR Fund (XLFS) and the Real Estate Select Sector SPDR Fund (XLRE), while maintaining the broader Financial Select Sector SPDR Fund (XLF). After just a year, XLFS was shut down, deemed unnecessary since the better-established XLF had divested its real estate holdings and now provided almost the exact same exposure.

It's unclear if State Street will use a similar blueprint when it launches XLC. Vanguard has already announced the use of transition indexes for its sector ETFs tracking MSCI’s U.S. sector benchmarks.

Like the other ETFs in the Select Sector SPDR family, XLC is slated to list on the NYSE Arca.

Contact Heather Bell at [email protected]

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