The Global Industry Classification Standard (GICS)

The Global Industry Classification Standard (GICS) is a 4-level classification system developed in 1999 by MSCI and S&P Dow Jones Indices to categorize companies traded on public stock exchanges. The GICS is targeted at professionals in the investment business. In addition to classifying companies, the GICS is used in the creation of equity indexes.

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Structure

The current implementation of The Global Industry Classification Standard categorizes companies into:

  • 11 sectors
  • 24 industry groups
  • 69 industries
  • 158 sub-industries

The classification is hierarchical, in that each sub-industry belongs to only one industry, each industry belongs to one industry group, and each industry group belongs to one sector. Knowing the sub-industry to which a given company belongs to, one can easily find the relevant industry, industry group, or a sector of that company.

The codes in the classification are resistant to formatting issues, when a raw classification file is opened in a spreadsheet editor, such as MS Excel. There are no leading zeros and commas which could make these codes be treated as numbers and rounded up as a result (if you don't know the type of the problem, we recommend opening a raw description file of NACE The Statistical Classification of Economic Activities in the European Community). With each level of classification, the number of digits in the code grows by two. The most generic, industry codes are 2-digit (e.g. GICS 20 - Industrials), and most-specific, subsector codes are 8-digit long (e.g. GICS 20304010 - Railroads).

The table below shows the sectors of The Global Industry Classification Standard:

Code Description # of industry groups # of industries # of sub-industries
10 Energy 1 2 7
15 Materials 1 5 17
20 Industrials 3 14 25
25 Consumer Discretionary 4 11 29
30 Consumer Staples 3 6 12
35 Health Care 2 6 10
40 Financials 3 7 17
45 Information Technology 3 6 13
50 Communication Services 2 5 10
55 Utilities 1 5 6
60 Real Estate 1 2 12

The Global Industry Classification Standard (GICS) is a "demand-oriented" classification. It attempts to group companies based on how individuals and companies purchase their products and services, instead of categorizing them based on what product the company makes, or what service it provides (it would be a "production-oriented" approach).

History & versions

The Global Industry Classification Standard (GICS) was developed in 1999 as a result of a cooperation between MSCI and S&P Dow Jones Indices, two major providers of global equity indexes. At that time there were already other industry classifications available, such as ISIC, NAICS, or SIC, however, they were not fit enough for the use in equity investments. Most of these classifications were relevant to a particular geographic region and overrepresented many industries with very few publicly traded companies (e.g. those in the agricultural sector). The GICS creators addressed these issues by creating a globally-applicable classification system based on the quantitative (e.g. revenues, earnings) and qualitative criteria (e.g. an increasingly blurring line between goods and services in the current economy). They also engaged in many conversations with asset owners, portfolio managers, and investment analysts to develop a classification targeted at the use of professionals and institutions in the equity investment business.

The GICS classification undergoes a yearly review process. To date, there were 11 version of GICS published

  • v1 - effective from 1999 until March 28, 2002
  • v2 - effective until April 30, 2003
  • v3 - effective until April 30, 2004
  • v4 - effective until April 29, 2005
  • v5 - effective until April 28, 2006
  • v6 - effective until August 29, 2008
  • v7 - effective until June 30, 2010
  • v8 - effective until February 28, 2014
  • v9 - effective until August 31, 2016
  • v10 - effective until Sep 28, 2018
  • v11 - effective since Sep 29, 2018

Planned changes to the GICS classification are announced well in advance with a document summarizing both the changes and the reasoning behind them. For example, changes planned in the version effective since September 29, 2018, were published on November 15, 2017. To see an actual revision document, check Revisions To The Global Industry Classification Standard GICS Structure in 2018.

Where is it used?

The GICS classification was developed to "to enhance the investment research and asset management process for financial professionals worldwide". Current uses of the GICS classification reflect that purpose. The GICS codes are used:

  • in the development and analysis of equity indexes developed by S&P Global and MSCI. For example, custom equity indexes can be created with the desired composition of different GICS sectors or industries in it (see S&P Global Custom Indexes and MSCI Custom Indexes)
  • in GICS Direct, a database of over 44,000 companies with their corresponding GICS codes. GICS Direct℠ is a service of Standard & Poor’s Financial Services LLC and MSCI.
  • in categorizing the publicly traded companies on NYSE and NASDAQ (see Fidelity Investments e research)
  • in analyzing the current structure of industries in the global equity investment markets. That is, since the GICS classification is updated yearly to stay relevant to the developments in industry structure, the classification itself provides an outlook into the importance of particular industries and their sectors.

Further resources

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