Day one: The beginning of the new S&P REIT stock launch

Bloomberg chart shows impact to exchange-traded fund investors

Today, September 1, 2016, marks the first shake-up of the S&P 500 Index in nearly two decades.

For example, the stocks of Real Estate Investment Trusts fall under their own index now.

Although this is a major move for the market and investors, this doesn’t change the intrinsic value of any share of stock, an article in Bloomberg by Anna-Louise Jackson said.

Here’s what it does impact, according to the article:

The action matters for investors, particularly owners of exchange-traded funds tracking financial firms. Sponsors such as State Street Corp. plan a hodgepodge of machinations to accommodate the division, another example of how much indexes matter to money managers as the industry evolves.

Buried inside the financial section of the S&P 500 are 28 REITs, the subjects of the current rearrangement. With more than $580 billion in market value, those stocks are already bigger than the telecommunications and mining sectors, and will become their own top-level industry. As a result, any ETF sponsor that bases its offering on the S&P Dow Jones Indices and MSCI Inc. standards must take steps to align with the new makeup.

While the move has been in the works for awhile, becoming official back in May, it will take some time to see how the changes plays out.

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