SSGA launches new US Communication Services sector ETF in Europe

Aug 17th, 2018 | By | Category: Equities

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State Street Global Advisors (SSGA) has launched the SPDR S&P US Communication Services Select Sector UCITS ETF in Europe.

SSGA launches new communication services sector ETF in Europe

Mandy Chiu, head of product for SPDR ETFs in EMEA and APAC.

The fund tracks the S&P Communication Services Select Sector Daily Capped 25/20 Index, providing exposure to the newly created Communication Services sector of the US equity market, as defined by the Global Industry Classification Standard (GICS).

The sector was unveiled by GICS creators S&P Dow Jones Indices and MSCI in November 2017 following a consultation with investors.

The reclassification, effective 21 September 2018, transforms the existing Telecommunications Services sector, expanding it to include selected companies from the Information Technology and Consumer Discretionary sectors.

The addition of more growth-oriented stocks from the media, entertainment and interactive media & services industries will change the profile of the sector, which was previously dominated by a concentration of stable dividend-paying stocks. The sector will lose its value tilt and also gain more of globally diversified revenue footprint than its purely telecoms predecessor.

“This September, GICS will introduce a new Communication Services sector to reflect massive changes in the way we communicate, interact, and consume content,” said Mandy Chiu, head of product for SPDR ETFs in EMEA and APAC. “The new Communications Services sector will comprise roughly 10% of the S&P 500 Index in terms of market capitalisation and the launch of the SPDR S&P US Communication Services Select Sector UCITS ETF will offer our clients cost-effective access to this new investment opportunity in a single trade.”

Constituents in the index are drawn from the bellwether S&P 500 Index and weighted by market capitalization. The largest constituent is capped at 25% while the second largest constituent is capped at 20%. Rebalancing occurs on a quarterly basis.

The sector will include three out of the five FAANG stocks—Facebook, which currently has a fund weight of 16.1%; Netflix, with a weight of 4.2%; and Google’s parent Alphabet, which holds a collective weight of 23.2% across its two share classes. Also classified within the new sector will be more traditional telecommunication services companies like Verizon (5.1%) and AT&T (5.2%), as well as media and entertainment companies like Comcast (5.1%) and Walt Disney (4.8%).

The ETF comes with a total expense ratio (TER) of 0.15%, in line with the firm’s other US sector ETFs.

It has been listed on Xetra under the ticker ZPDK GY, where it trades in euros, and on the London Stock Exchange with pound sterling (GXLC LN) and US dollar (SXLC LN) share classes. All listings are capitalising with income reinvested in the fund.

SSGA manages over $165 billion in sector ETF strategies worldwide. The new launch brings the firm’s suite of UCITS registered sector ETFs to 30 spanning global, US and European exposures.

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