In 2018, the Global Industry Classification Standard (GICS), which is widely considered to be an objective language and classification system for sector investing, declared a new sector that was symbolic of the 21st century.
Considering GICS hadn’t classified U.S. equities with a new sector since 2015, this was significant news. By pulling together communications and media companies into a new sector deemed “Communication Services,” this offered investors access to the new digital economy with a thoughtful approach to these emerging industries and companies.
Soon after the GICS announcement, Select Sector SPDR ETFs launched a new exchange-traded fund (ETF), the Communication Services Select Sector SPDR Fund (XLC), which captures this growing digital side of the U.S. economy.
XLC tracks a market-cap-weighted index of U.S. telecommunication & media components of the S&P 500 index.
XLC’s top holdings are everyday names for the products and services the companies produce.
Meta Platforms (Facebook) is the top holding at 25.83%, followed by Alphabet (Google) Class A (13.92%) and Class C (12.18%), Netflix (5.09%), Comcast (4.20%), and Activision (3.87%). T-Mobile and Verizon are similar in weighting to Activision. In total there are 24 holdings in the fund that represent key economic drivers to the 21st century’s economy.
XLC has attracted more than $11 billion in assets under management in less than five years, signaling that this new sector is something being embraced by investors. The companies in XLC are household names because consumers use the products and services daily, both domestically and globally.
Fine-Tuned and Low Cost
The Communication Select Sector SPDR brings a more fine-tuned approach to key subsectors that have matured and deserve their own classification, considering the industries’ size and success.
XLC offers that access in an easy and low-cost manner with the size that also brings liquidity and tradability to this important sector.
Beyond its impressive holdings, XLC is a low-cost holding with an expense ratio of 0.10%** to invest in the leaders of the communication and media industries. That is made possible through the structure of an exchange-traded fund that brings a low-cost and index-based approach to investing in various parts of the equity world.
DISCLAIMER: This is a work of research and should not be taken as investment or financial advice. Therefore, Select Sector SPDRs or the publisher is not liable for any decision made based on the publication.
About the Company:
Select Sector SPDR ETFs offer flexibility and customization opportunities. Many investors have similar outlooks, but no two are exactly alike. Select Sector SPDR ETFs let investors select the sectors that best meet their investment goals.
*Holdings, Weightings & Assets as of 5/31/23 subject to change
**Ordinary brokerage commissions apply
The S&P 500 Index is an unmanaged index of 500 common stocks that is generally considered representative of the U.S. stock market. The index is heavily weighted toward stocks with large market capitalizations and represents approximately two-thirds of the total market value of all domestic common stocks. The S&P 500 Index figures do not reflect any fees, expenses or taxes. An investor should consider investment objectives, risks, fees and expenses before investing.
One may not invest directly in an index.
Transparent ETFs provide daily disclosure of portfolio holdings and weightings
All ETFs are subject to risk, including loss of principal. Sector ETF products are also subject to sector risk and nondiversification risk, which generally will result in greater price fluctuations than the overall market. Diversification does not eliminate risk.
An investor should consider investment objectives, risks, charges and expenses carefully before investing. To obtain a prospectus, which contains this and other information, call 1-866-SECTOR-ETF (732-8673) or visit www.sectorspdrs.com. Read the prospectus carefully before investing.
ALPS Portfolio Solutions Distributor, Inc., a registered broker-dealer, is distributor for the Select Sector SPDR Trust.
Company: Select Sector SPDRs
Contact: Dan Dolan*
Address: 1290 Broadway, Suite 1000, Denver, CO 80203
Country: United States
*Dan Dolan is a Registered Representative of ALPS Portfolio Solutions Distributor, Inc. ALPS Portfolio Solutions Distributor, Inc., a registered broker-dealer, is the distributor for the Select Sector SPDR Trust.
SEL006589 EXP 7/31/23
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