Big Index Changes Are Coming Soon, and Many Advisors Are Unaware

Haviland's numbers are stark. In conversations with hundreds of advisors in more than 50 meetings, only one person knew of the sector shifts set for September, he said.

Some of the main changes involve removing roughly 18 media companies, including Netflix Inc. and Walt Disney Co., from the consumer discretionary category and adding them to the new communications service sector. Facebook Inc. and Google parent Alphabet Inc. will be moved as well, along with several other technology stocks, according to Beaumont Capital Management.

Index changes such as these aren't common, happening once every few years, according to Spencer Mindlin, an analyst at Boston consulting firm Aite Group. And when they occur there can be consequences for funds that track the gauges.

Some exchange-traded fund firms are already making changes ahead of the moves. According to Mindlin, index providers will often work with large managers that are benchmarked to their products to smooth the process, but some can slip through the cracks.

"It's impossible for a large index provider to keep track of all the portfolio managers tracking their index and try to ensure they are all consulted and notified in advance of changes," he said. "It's not uncommon for portfolio managers to discover that a change was made after the fact and have to 'true up' their holdings to match the index."