Invesco has broadened its range of US sector products with the launch of an ETF that provides exposure to the newly created Communications sector of the S&P 500 index.
This is the 11th fund in the Invesco S&P Select Sector UCITS ETF range, which Invesco says offers investors the lowest cost exposures available in Europe at just 0.14 per cent per annum. The new fund gives investors targeted access to one of the most powerful growth themes seen so far this century.
Chris Mellor, Head of EMEA ETF Equity Product Management at Invesco, says: “Communication has changed dramatically in recent years, with digital technology providing easy and instant access for just about anything you want. For example, people now get their news from online feeds and watch on-demand movies on their mobile devices, whenever and wherever they choose. Companies that provide these services are benefiting from huge demand from a truly global customer base.”
S&P and MSCI are amending their GICS sector classifications to reflect these developments. The new Communication Services sector classification expands the previous Telecommunication Services sector to include those companies involved more widely and directly in the new communication era. Companies are being reclassified from segments of the Technology and Consumer Discretionary sectors.
The 26 stocks in the new sector will include some of the largest and most innovative companies in the world, with household names such as Twitter, Alphabet, Facebook, NetFlix and Disney. Communications will make up around 10 per cent of the S&P 500, making it one of the largest sectors in the index.
Mellor says: “The new sector is significant in terms of size and economic exposure, and the greater number of stocks enables us to create a diversified, investable fund to track its performance. The old Telecommunication Services sector contained only three stocks, so you couldn’t create a standalone fund for it and instead it was combined with the IT sector in our Technology sector ETF. Plus, those companies are defensive in nature whereas the new, broader Communications sector will offer higher growth potential, albeit with higher risk, and give investors the opportunity to access more cyclical companies.”
