- May 1, 2016: Vol. 28, Number 5

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Real estate gets a taste of GICS chic

by Loretta Clodfelter

At the close of business Aug. 31, 2016, S&P Dow Jones Indices and MSCI will add an 11th sector to the Global Industry Classification Standards: real estate. And while it is likely very little will change overnight, the addition to GICS could have significant effects for publicly traded real estate stocks over the next few years. In addition, Standard & Poor’s will use the new GICS sectors when it rebalances its indices Sept. 16.

Real estate will be moved out of the financial sector and assigned a top-level sector classification. In a statement announcing the change a year ago, Remy Briand, managing director and global head equity research at MSCI, noted: “Investors told us that there are significant differences between public real estate and financial companies and, therefore, real estate deserves a dedicated GICS sector.”

The U.S. equity REIT market has grown substantially over the past 25 years, from about $6 billion in 1990 to $886 billion at the end o

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