Hot tech prompts S&P 500 index revamp
Reorganisation of groupings is the biggest in its history
The hot and rapidly changing tech sector has prompted the S&P 500 stock index to reshuffle its components, opening up more chances to invest in Google, Netflix, Facebook and other stars after yesterday’s trading session.
Facebook did not yet exist and flip phones were cutting edge in 1999 when the industry classification system was launched, but much has changed. The reorganisation of the industry groupings, the biggest in the history of the system, affects three of the 11 sectors within the S&P 500.
A new “communication services” group has been created that will be bigger and more growth-oriented than the sleepy “telecommunication services” sector it is replacing.
The change will split some the five “FAANG” behemoths associated with the market’s surge into different groups, allowing investors to have more exposure to the companies.
“The ways in which people communicate and seek information have transformed,” S&P Dow Jones Indices said. “Integration between telecommunications, media, and internet companies in terms of both infrastructure and content have advanced the communication industry into a much broader field.” In all, 24 companies in the S&P 500 are being shifted.