Real estate stocks are getting a place of their own in the market this week, and investors are taking notice.
As of the close of trading Friday, the industry will become its own sector in the S&P 500, bringing the broad market index up to 11 divisions. The move primarily affects real estate investment trusts (REITs), moving 28 issues with nearly $600 billion in market cap out of the financial sector and into the new real estate heading.
The decision came primarily because officials at S&P Dow Jones Indices believe the industry has become large enough that it should be split from the broader financials that include commercial and investment banks, insurers, brokerages and exchanges.
Practically speaking, there's an important impact on investors.
Portfolios that track the S&P 500 will have to be readjusted to accommodate the new sector, which is expected to account for just over 3 percent of the total index. Financials, which currently account for about 13.1 percent of the S&P 500, likely will drop below 12 percent.
That means investors looking to achieve balance in their portfolios will have to adjust their allocations accordingly.