A change in the way publicly traded companies are categorized will result in the creation of a separate real estate sector, bringing the number of Global Industry Classification Standard sectors to 11, S&P Dow Jones Indices and MSCI said.
The real estate sector is "increasingly being incorporated separately into the strategic asset allocation," Remy Briand, global head of equity research at MSCI, said in a statement on Monday.
The GICS changes will likely be implemented after the market close on Aug. 31, 2016.
Companies including Sears have recently embarked in spinoffs of some of their real estate holdings. In late July, network operator Windstream Holdings received regulatory approval to convert some assets into a real estate investment trust.
S&P Dow Jones indices did not specify the companies that will be components of the new sector. The index provider did say that real estate will be separated from being under the financials sector, which now includes eight real estate investment trust-related categories as well as one for thrifts and mortgage finance and another for real estate services.
With the new classification, financials, the second-largest sector on the S&P 500 as of Oct. 31, with a 16.4 percent weight, will find it hard to lead the index weighting again as it did when the market peaked in 2007.
The creation of a new industry group, which followed an annual review of the GICS structure, could spark the formation of new exchange-traded funds even as real estate ETFs like the iShares Dow Jones US Real Estate already trade on Wall Street.
In addition to the real estate changes, a copper sub-industry is being created in the metals and mining industry.
S&P Dow Jones Indices announced in June it was considering potential changes to the GICS structure and was discussing the issue with members of the investment community.
In the June announcement the index provider also said a review of the telecommunications sector was being considered, but said on Monday no changes will be made there at this time.