SSGA launches Communication Services Select Sector SPDR ETF

Jun 19th, 2018 | By | Category: Equities

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State Street Global Advisors (SSGA) has launched the Communication Services Select Sector SPDR ETF (XLC US) on NYSE Arca.

Noel Archard, global head of product for State Street ETFs.

Noel Archard, global head of product for State Street ETFs.

The fund provides exposure to the new Communication Services sector of the US equity market as defined by the Global Industry Classification Standard (GICS).

The sector was unveiled by S&P Dow Jones Indices and MSCI following the latest annual review of the GICS.

The reclassification will transform the existing Telecommunications Services sector, expanding it to include selected companies from the Information Technology and Consumer Discretionary sectors. It will be renamed Communication Services, effective 21 September 2018.

S&P DJI and MSCI officially announced the new sector in November 2017, detailing their motivation for shaking up the GICS structure.

XLC has an expense ratio of 0.13% due to a contractual fee waiver in place until at least February 2022. Its gross expense ratio is 0.15%. The expense ratio is in line with the ten other US-listed SPDR Select Sector ETFs which also cost 0.13%. Income from the fund is distributed to investors on a quarterly basis.

“State Street Global Advisors always seeks to provide investors with the tools necessary to implement sector views across the entire GICS framework,” said Noel Archard, global head of product for State Street ETFs. “The launch of XLC allows our clients immediate access to this new investment opportunity that will represent roughly 10 percent of the S&P 500 Index in terms of market capitalisation.”

In addition to the launch of XLC, SSGA will rebalance the Technology Select Sector SPDR ETF (XLK US) and Consumer Discretionary Select Sector SPDR ETF (XLY US) to reflect the changes brought about by the reconstitutions of the Information Technology and Consumer Discretionary sectors

The rebalances will also take effect after the close of business on 21 September 2018.

“Existing shareholders of XLK and XLY do not need to take action at this time; however, investors will likely want to analyze their sector positions,” said Archard. “Given the breadth of our insights and data, we are prepared to help investors navigate these changes by leveraging our capabilities as a steward of $2.7 trillion in assets under management and 25 years of managing ETFs.”

SSGA’s US-listed suite of Select Sector SPDR ETFs has approximately $137 billion in assets under management. The largest funds are the $31.0bn Financial Select Sector SPDR ETF (XLF US) and the $22.1bn Technology Select Sector SPDR ETF (XLK US). The suite allows investors to take a view on a specific area of the US equity market and also provides the tools needed to construct a sector-rotational strategy.

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