The Global Industry Classification Standard (GICS) was developed in 1999 by S&P Dow Jones Indices and MSCI. Its methodology aims to enhance the investment research and asset management process for financial professionals worldwide, and is the result of numerous discussions with asset owners, portfolio managers and investment analysts around the world. It was designed in response to the global financial community’s need for accurate, complete and standard industry definitions.

The GICS methodology has been widely accepted as an industry analysis framework for investment research, portfolio management and asset allocation. Its universal approach to industries worldwide has contributed to transparency and efficiency in the investment process, and the GICS methodology supports the trend toward sector-based investing.

GICS is structured into four levels of classification: sectors, industry groups, industries and sub-industries. This hierarchical structure allows for a detailed analysis of companies and their respective markets. The 11 sectors are the broadest level of classification, followed by 25 industry groups, 74 industries and 163 sub-industries. This structure provides a comprehensive framework for analyzing and comparing companies worldwide.This structure provides a comprehensive framework for analyzing and comparing companies worldwide. The GICS structure is:

1. Energy

Comprises companies engaged in exploration and production, refining and marketing, and storage and transportation of oil, gas, coal and consumable fuels. It also includes companies that offer oil and gas equipment and services.

2. Materials

Includes companies that manufacture chemicals, construction materials, forest products, glass, paper and related packaging products, and metals, minerals and mining companies, including producers of steel.

3. Industrials

Includes manufacturers and distributors of capital goods such as aerospace and defense, building products, electrical equipment and machinery, and companies that offer construction and engineering services. It also includes providers of commercial and professional services including printing, environmental and facilities services, office services and supplies, security and alarm services, human resource and employment services, and research and consulting services. It also includes companies that provide transportation services.

4. Consumer Discretionary

Encompasses those businesses that tend to be the most sensitive to economic cycles. Its manufacturing segment includes automobiles and components, household durable goods, leisure products, and textiles and apparel. The services segment includes hotels, restaurants, and other leisure facilities. It also includes distributors and retailers of consumer discretionary products.

5. Consumer Staples

Comprises companies whose businesses are less sensitive to economic cycles. It includes manufacturers and distributors of food, beverages and tobacco, and producers of non-durable household goods and personal products. It also includes distributors and retailers of consumer staples products including food and drug retailing companies.

6. Health Care

Includes health care providers and services, companies that manufacture and distribute health care equipment and supplies, and health care technology companies. It also includes companies involved in the research, development, production and marketing of pharmaceuticals and biotechnology products.

7. Financials

Contains companies engaged in banking, financial services, consumer finance, capital markets and insurance activities. It also includes financial exchanges and data, as well as mortgage REITS.

8. Information Technology

Comprises companies that offer software and information technology services, manufacturers and distributors of technology hardware and equipment such as communications equipment, cellular phones, computers and peripherals, electronic equipment and related instruments, and semiconductors and related equipment and materials.

9. Communication Services

Includes companies that facilitate communication and offer related content and information through various mediums. It includes telecom and media and entertainment companies including producers of interactive gaming products and companies engaged in content and information creation or distribution through proprietary platforms.

10. Utilities

Comprises utility companies such as electric, gas and water utilities. It also includes independent power producers and energy traders and companies that engage in generation and distribution of electricity using renewable sources.

11. Real Estate

Contains companies engaged in real estate development and operation. It also includes companies offering real estate related services and Equity Real Estate Investment Trusts (REITs).

GICS classifies a company according to its principal business activity. This determination is primarily based on a company’s revenues, but also incorporates earnings and market perception.

Based on a company’s principal business activity, it is assigned to one of the 163 sub-industries. This then determines – in decreasing order of granularity – the company’s membership of one of the 74 industry groups, one of the 25 industry groups, and one of the 11 GICS sectors.

GICS company classifications are updated annually so that the classifications remain relevant and reflective of the evolving global economy. Updates are based on feedback from market participants and changes in the global economic landscape. By regularly updating the classification system, GICS continues to meet the needs of the investment community and reflects the current state of the global economy.

S&P DJI and MSCI review the GICS structure periodically as needed, which can include Advisory Panels or open consultations with market participants as required.

GICS differs from other classification standards in its comprehensive and flexible structure. While other classification systems may focus on specific regions or sectors, GICS provides a global framework that encompasses all regions and sectors. This makes it a valuable tool for investors looking to compare companies across different markets. Additionally, GICS is regularly updated to reflect changes in the global economy.

The hierarchical structure of GICS includes industry groups, industries and sub-industries, which provide additional levels of detail for analysis. This structure allows for varying degrees of granularity in analysis, offering insights into specific market segments and enhancing the understanding of company operations and market position.

The industry groups, industries and sub-industries provide a comprehensive understanding of the market, allowing investors to analyze companies at different levels of detail. This hierarchical structure is essential for gaining insights into specific market segments and understanding the competitive landscape.

The Global Industry Classification Standard (GICS) is a vital tool for the investment community, offering numerous benefits and applications that can aid in investment research, portfolio management and asset allocation. By providing a standardized framework for classifying companies, GICS facilitates informed decision-making and enables investors to navigate the complexities of the global financial markets.

GICS enhances investment research by providing a consistent and reliable framework for analyzing companies across different sectors and industries. This standardized classification system allows investors to compare companies on a like-for-like basis, identify trends and potentially uncover investment opportunities. By offering a comprehensive view of the global economy, GICS enables investors to conduct in-depth research and make informed investment decisions.

GICS enhances investment research by providing a consistent and reliable framework for analyzing companies across different sectors and industries. This standardized classification system allows investors to compare companies on a like-for-like basis, identify trends and potentially uncover investment opportunities. By offering a comprehensive view of the global economy, GICS enables investors to conduct in-depth research and make informed investment decisions.

By offering a detailed framework for analyzing companies, GICS may help investors identify growth opportunities, manage risk and make informed asset allocation decisions.

GICS benefits the global investment community by providing a standardized classification system that enhances transparency, comparability and consistency. This standardized system allows investors to analyze companies across different regions and sectors, facilitating informed decision-making and promoting efficient capital allocation. By offering a common language for the investment community, GICS enhances communication and collaboration among market participants.

GICS adapts to changes in the global economy by regularly updating its classification system based on feedback from market participants and changes in the economic landscape. By adapting to changes in the global economy, GICS continues to meet the needs of the investment community and provides a reliable framework for analyzing companies.

Companies can be reclassified within GICS if their primary business activities change significantly, ensuring that through regular updates and feedback from market participants, GICS remains reflective of the current global economy. This reclassification process may occur due to mergers, acquisitions or operational shifts, and is essential for maintaining the accuracy and relevance of GICS.