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How GICS Changes Will Impact Hottest Stocks and ETFs

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In this episode of ETF Spotlight, I talked with Matthew Bartolini, head of SPDR Americas Research at State Street Global Advisors.

Not many investors are fully aware of the upcoming changes to the Global Industry Classification Standard (GICS). The old Telecom sector is being renamed and broadened as the new Communication Services sector.

Many popular tech and media stocks will be impacted by these changes.

Matthew explained what is driving this shakeup and highlighted some of the important changes.

Some high-profile stocks including Google parent Alphabet (GOOGL ) , Facebook (FB) and Netflix (NFLX) will reside in the new Communication Services sector. So, will it be the new “hottest” sector?

With the reshuffling, Apple (AAPL) , Microsoft (MSFT ) and Amazon (AMZN ) will get more representation in tech and consumer discretionary ETFs. What does it mean for investors?

State Street has already launched a new sector ETF—the Communication Services Select Sector SPDR ETF (XLC) --to get ahead of these changes. FANG stocks currently account for about half of the portfolio weighting.

What should investors know about this interesting new ETF? Find out on the podcast.

Telecom sector is traditionally seen as a defensive sector and a value play. After reorganization, it will be home to some high growth names.

The revamped Communication Services sector will be seen as a cyclical sector with much stronger growth prospects.

Finally, we discussed how investors, including existing shareholders of the Technology Sector SPDR ETF (XLK) and the Consumer Discretionary Sector SPDR ETF (XLY) , should prepare for these changes.

It is very important for investors to understand how the reclassification will affect their portfolios since the ETFs that they currently hold may no longer suit their investment objectives.

To learn more about SPDR ETFs, please visit us.spdrs.com.

Make sure to be on the lookout for the next edition of the ETF Spotlight! If you have any comments or questions, please email podcast@zacks.com

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