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- May 1, 2015: Vol. 2, Number 5

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Separating Real Estate from Financial Stocks: An idea whose time has come

by Michael Grupe

 

Stock exchange–listed Real Estate Investment Trusts (REITs) as well as other listed real estate companies have long been included in the Financials Sector of the stock market as classified by the Global Industry Classification Standard (GICS). Now, S&P Dow Jones Indices and MSCI, the co-developers of GICS, have agreed the time has come for this to change — and with good reason. Real estate is about to be recognized as a major part of the U.S. economy and capital markets, as well as a distinct and much more visible investment opportunity for all to see.

Behind this pending change is the decision by S&P Dow Jones Indices and MSCI to move ahead with plans to make Real Estate a new headline Sector and separate it from the Financials Sector of GICS. The change is historic. There have been only 10 GICS sectors in total since the system was first introduced in 1999, and real estate will become the 11th and first new headline sector since then.

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