American equity indexes are getting a long-discussed revamp, designed to keep up to speed with changes in tech and communications.
The world's two biggest index providers S&P and MSCI have announced they will dump the telecoms sector from their vast warehouse of indexes (after a series of M&As telecoms has only three companies left in the US. This includes a particularly controversial ) and smash what's left of it together with entertainment and media, thus making a new communications sector.
The change is of particular significance to ETFs, which often track sectoral indexes.
The new sector will be split into two sub-sectors. One will be a new widened form of telecoms, essentially, which will include internet and wireless service providers. The other will be a media group which will consist of companies leeched out of the consumer discretionary sector. It will consist of advertisers, broadcasters, publishers and entertainment companies.
The index providers, in a joint press release, said the change was to keep up with the evolving industry. It's unclear at this stage which companies (and thus ETFs) will be fired and rehired.
The changes will take effect in September 2018.
The announcement is available here.
