Changes to indices from S&P and MSCI will move some of tech’s biggest companies into other classification categories, drastically altering the look of some tech fund benchmarks. Bloomberg’s Carolina Wilson and Sarah Ponczek report:
(Bloomberg) — ETF investors have ridden tech stocks to outsized returns during the record bull market in U.S. equities. But a major shakeup coming next week to the indexes some of the biggest funds track could leave fans cheering for a team they barely recognize.
S&P Global Ratings and MSCI Inc., two of the world’s biggest index providers, are reorganizing their gauges by combining phone companies with some internet and media stocks into a new group called “communication services.” The shakeup will rip giants like Facebook Inc. and Google parent Alphabet Inc. out of many exchange-traded funds that track technology benchmarks.
“Tech is losing some of its biggest stars,” said Bloomberg Intelligence analyst Eric Balchunas. “It’s like the Golden State Warriors losing Kevin Durant and Steph Curry.” The changes to the Global Industry Classification Standard Structure, better known as GICS, were announced in November and will be in effect at the market open on Monday. Investors need to be careful, however, because not all ETF issuers will respond in the same way to reflect the restructuring.
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