Sector ETFs set to be impacted by changes to GICS
Posted: March 13th, 2018, 10:29 am
Hi
I was looking for a Consumer Discretionary ETF to give me some more passive exposure to Amazon et al, when I came across this article:
https://www.etfstrategy.co.uk/msci-and-sp-announce-changes-to-gics-57495/
The reclassification will impact ETFs that track the information technology, consumer discretionary and telecoms sectors, and could potentially see consumer discretionary stocks such as Netflix, Disney, Comcast and Time Warner, and tech stocks such as Apple, Google, and Facebook, move to the newly created communications services sector.
...
The changes will affect ETFs that track information technology stocks such as the iShares S&P 500 Information Technology Sector ETF (IITU LN), which currently has major weights assigned to Apple (16.1%), Google (11.3%) and Facebook (7.8%).
...
The changes will take effect after the close of business on 28 September 2018.
I hold IITU already.
Does anyone have any idea on the likely affect of this on holders?
How about on the individual shares themselves? For instance, IITU is ~$1bn. Presumably it will need to sell out of Apple, Google, and Facebook but the new Communications Services sector trackers will not have anything like the same subscriptions ... this would suggest an imbalance between buyers and sellers and perhaps lower prices ...?
Or have I got it totally wrong?
I was looking for a Consumer Discretionary ETF to give me some more passive exposure to Amazon et al, when I came across this article:
https://www.etfstrategy.co.uk/msci-and-sp-announce-changes-to-gics-57495/
The reclassification will impact ETFs that track the information technology, consumer discretionary and telecoms sectors, and could potentially see consumer discretionary stocks such as Netflix, Disney, Comcast and Time Warner, and tech stocks such as Apple, Google, and Facebook, move to the newly created communications services sector.
...
The changes will affect ETFs that track information technology stocks such as the iShares S&P 500 Information Technology Sector ETF (IITU LN), which currently has major weights assigned to Apple (16.1%), Google (11.3%) and Facebook (7.8%).
...
The changes will take effect after the close of business on 28 September 2018.
I hold IITU already.
Does anyone have any idea on the likely affect of this on holders?
How about on the individual shares themselves? For instance, IITU is ~$1bn. Presumably it will need to sell out of Apple, Google, and Facebook but the new Communications Services sector trackers will not have anything like the same subscriptions ... this would suggest an imbalance between buyers and sellers and perhaps lower prices ...?
Or have I got it totally wrong?