Real Estate Strikes Out on Its Own in the Stock Indexes
AUG. 26, 2016 | By PAUL SULLIVAN | New York Times
A change is coming at the end of the month in the way stock indexes are classified. Real estate, now part of the broader financials category, will go out on its own.
But before you yawn and say that the change seems akin to moving the deck chairs around on a ship, consider this: It could, analysts say, have a wide-ranging impact on what individual investors own in their portfolios. That’s because an increasing number of people are investing in index funds, and those funds track the various categories of investments.
First, a bit of background. In 1999, Standard & Poor’s and MSCI, two providers of indexes, joined forces to create 10 categories of investments that they called the Global Industry Classification Standard. The standard has allowed investors to compare the performances of companies within the same sector and analyze why their stock prices are moving as they are. The classification also forms the basis for the MSCI and S.&P. indexes.