The tech sector is about to lose a lot of titans in reallocations.

The already beleaguered tech sector is about to snap up even more companies, with the recent confusion of industry definitions pushing stock concentration to unprecedented highs.

In the year In 2018, old tech titans Facebook (now Meta), Netflix, Twitter, Snap, and Google’s parent company Alphabet were classified as communications services companies under the widely followed Global Industry Classification Standards (GICS) framework. Amazon is already classified as a consumer-savvy company, which means it’s only one of the five FAANGs — Apple was technically still a tech stock.

Visa and MasterCard are now ranked among the top five technology companies in finance, along with the likes of PayPal and PayServer, among those sending automated data processing and Paychecks to industries.

The moves would increase the weighting of Apple and Microsoft, which account for 44.4 percent of the S&P 500 information technology sector, to nearly 50 percent.

“The changes reinforce our pessimistic view on tech exchange-traded funds, adding more focus. We prefer equal-weight sector ETFs,” analysts at BofA Securities said.

The impact varies widely from fund to fund. The $158bn Invesco QQQ ETF ( QQQ ), often thought of as a technology fund, is unaffected by investing in large non-financial Nasdaq-listed companies regardless of sector, from PepsiCo to Walgreens Boots Alliance and Marriott International.

The $49 billion Vanguard Information Technology ETF ( VGT ) and the $40.1 billion Technology Select Sector SPDR ETF ( XLK ) are the world’s two largest sector ETFs, according to data from Morningstar Direct, but in part because some are already concentrated as much as U.S. regulations allow.

Under the U.S. Internal Revenue Code, regulated investment companies that include funds must ensure that no more than 25 percent of their assets are invested in a single issuer or company at the end of each quarter. The weight of all issuers representing more than 5 percent shall not exceed 50 percent.

The S&P 500 Technology Select Sector Index, which is tracked by XLK, already seems to be completely out of these parameters: Apple, Microsoft and Nvidia in the third place are the remaining technology companies with a combined weight of 50.45 percent and Apple alone with 23.04 percent.

This means their weighting cannot increase after the rejig, which happens after the close of business on March 17 for the S&P indices.

As a result, the index and any funds that track it, such as XLK, tend to underweight the largest, in terms of underlying market capitalization, and the rest of the tech companies are led by Broadcom, Cisco Systems and Salesforce.

Matthew Bartolini, head of SPDR Americas research at State Street Global Advisors, said the changes are “relatively small in terms of weight and the fund will continue to have very diversified exposure to the technology sector.”

In contrast, VGT tracks small- and mid-cap technology stocks as well as the blue-chip names in the S&P 500, so its exposure to larger companies is somewhat diluted.

The latest data as of January 31 showed VGT’s combined exposure to Apple, Microsoft and Nvidia was 43.6 percent, when MSCI (whose index VGT tracks) implemented GICS changes, which pushed it higher in May.

So VGT’s exposure will likely be consistent with the underlying market capitalization, but will be more concentrated in a handful of stocks.

Vanguard said it was still analyzing the impact on its funds, but said “the GICS changes will have no impact on investors in broadly diversified equity funds such as the general stock market index or the 500 index.”

The story is different again for the $8.8bn iShares US Technology ETF ( IYW ), which tracks the Russell 1000 Technology Index. FTSE Russell does not follow the GICS framework, using its own industry classification benchmark.

As a result, IYW invests in some companies outside the VGT and XLK limits, such as Meta, Alphabet and Pinterest. The upcoming GICS changes will narrow the division, as FTSE Russell will no longer classify Visa and MasterCard as tech stocks (they will instead be classified as America’s two largest industrial companies).

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Waves from the GICS rejig are even more spread out. BofA believes it will lead to net sales of payments giants, with technology funds selling $15 billion worth of stocks while financial funds buying just $11 billion.

With a market value of nearly $800 billion, Visa and MasterCard are on track to become the second and fourth largest stocks, respectively, in the S&P 500 financial sector.

Bartolini supported the transfer of Visa and Mastercard, “perhaps they should be in financials considering their relationship with the financial industry. In our discussions, that change is acceptable to investors,” he added.

Regarding the association of the FAANGs acronym with technology, Bartolini says: “It is fascinating, it is catchy and it can cause confusion.

“It has become a staple in the financial lexicon and is unlikely to go away, even though FAANGs do not represent technology or innovation or high growth.”