In a rare reorganization, S&P index organizers are separating real estate investment trusts from the rest of the financial sector, bringing the number of major industries in the index to 11.
That means exchange-traded funds tracking the index’ financial sector or that represent all areas may have to rebalance.
“The creation of an 11th sector recognizes the growing importance of real estate in the world’s equity markets,” says David Blitzer, managing director and chair of the index committee at S&P Dow Jones, in a release.
Organizers say the change “reflects the position of real estate as a distinct asset class and a foundational building block of a modern portfolio, rather than an alternative.”
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About US$68 billion in fund investments already track real estate investment trusts, Bloomberg reports.
There are currently 28 real estate investment trusts in the S&P 500, with more than US$580 billion in market capitalization.
This article originally appeared on the website of Benefits Canada’s sister publication, advisor.ca.