BlackRock has launched the iShares S&P 500 Communication Sector UCITS ETF (IUCM LN) on London Stock Exchange, providing exposure to large- and mid-cap equities from firms operating in the newly created communications sector of the S&P 500.
The newly created Communications sector accounts for roughly 10% of the S&P 500’s market capitalization.
The sector was introduced by S&P Dow Jones Indices and MSCI following their latest annual review of the Global Industry Classification Standard (GICS).
The shake-up of GICS aims to facilitate a transformation of the existing Telecommunications Services sector to include those companies involved more widely and directly in the new communication era, including select companies from the Information Technology and Consumer Discretionary sectors.
While the new sector currently contains just 26 stocks, its constituents include some of the largest and most innovative companies in the world with household names such as Twitter, Google (traded as Alphabet), Facebook, Netflix and Disney making the list.
The sector accounts for around 10% of the entire market capitalization of the S&P 500.
The fund tracks the S&P 500 Capped 35/20 Communication Services Index. Constituents are weighted based on free float-adjusted market capitalisation with the largest stock capped at 33% and all other stocks capped at 19%. Rebalancing occurs quarterly, although monthly capping will apply if the largest constituent or second largest constituent breaches the 35% and 20% weight limits respectively.
In practice, the stock cap is not currently close to be triggered with the largest constituent being Facebook with a weight of 16.5%. Alphabet’s Class C and Class A shares each account for around 14.5% of the index weight, and the next largest stocks are AT&T (9.8%) and Verizon Communications (8.9%).
IUCM trades in US dollars and comes with a total expense ratio (TER) of 0.15%. Income is accumulated within the fund.
The ETF has also been cross-listed on Xetra where it trades in euros under the ticker IU5C GR.
The full range of iShares S&P 500 sector ETFs also includes funds offering exposure to consumer discretionary, consumer staples, energy, financials, health care, industrials, materials, information technology and utilities stocks. It provides investors with a toolkit to manage US equity sector exposure through different stages of the economic cycle, or to complete portfolios (fill a gap in portfolio exposure) or tilt them towards specific themes on an opportunistic basis.
The range collectively houses over $5.5bn in assets under management with funds ranging in size from the $7m iShares S&P 500 Materials Sector UCITS ETF to the $1.5 billion iShares S&P 500 Financials Sector UCITS ETF.
Other providers in Europe offering a range of US sector ETFs based on GICS include Invesco and State Street Global Advisors.