Nicholas Zaiko, CIMA
Changes to the S&P 500 Index
Effective September 24, 2018, S&P Dow Jones Indices and Global Industry Classification Standard (GICS) created a new sector for technology, media, and telecommunication companies. S&P Global Ratings and MSCI oversee the Global Industry Classification Standard (GICS). These are the first changes by MSCI and S&P on how technology companies are categorized in the S&P 500 since 1999. It's only the second sector addition since 1999 and is a recognition of how consolidation has melded the telecom, media, and internet industries together.
Standard & Poors renamed and expanded the Telecom sector to Communications Services of the S&P 500 index. S&P added a few stocks from the Consumer Discretionary and Technology sectors. The decision to reclassify certain companies was intended to rebalance the S&P 500 in order to mitigate the disproportionate influence of the Tech sector.
Verizon (VZ), AT&T (T) and CenturyLink (CTL) were the only three stocks remaining in the Telecom sector. With the reclassification, Facebook and Alphabet, combined, comprise up to 45% of the new Communication Services sector weighting.
The new Communications Services sector consists of the following companies:
Activision Blizzard (ATVI)
Charter Communications (CHTR)
Discovery Communications (DISCA)
DISH Network (DISH)
Electronic Arts (EA)
IPG Photonics (IPGP)
News Corp (NWSA)
Take-Two Interactive (TTWO)
Twenty-First Century Fox (FOXA)
Walt Disney (DIS)
In addition, eBay (EBAY) moved from the Technology sector to the Consumer Discretionary sector to join Amazon (AMZN) and other e-commerce stocks.
The Communications Services will now be the largest sector of the S&P 500 representing approximately 10% of the index’s capitalization.