Global Industry Classification Standard (GICS)
The Global Industry Classification Standard (GICS) is a taxonomy for assigning publicly traded companies to consistent sectors and industries. It was developed by MSCI and Standard & Poor’s to help investors, analysts, and index providers compare companies, build diversified portfolios, and benchmark performance.
How GICS is organized
GICS uses a four-level hierarchy:
* Sectors (11)
* Industry groups (24)
* Industries (69)
* Sub-industries (158)
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Each publicly listed company receives a four-part GICS code that identifies its classification at each level.
The 11 GICS sectors
- Consumer Discretionary
- Consumer Staples
- Energy
- Materials
- Industrials
- Healthcare
- Financials
- Information Technology
- Real Estate
- Communication Services
- Utilities
How classifications are determined
Primary emphasis is placed on a company’s main source of revenue. Other considerations include earnings composition and market perception. Assignments are maintained by MSCI and Standard & Poor’s and are updated periodically to reflect structural changes in the economy.
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Uses and coverage
- Widely used by portfolio managers and analysts to identify competitors, construct sector-based strategies, and conduct relative performance analysis.
- Incorporated into many major indexes and benchmarks; millions or trillions in assets are benchmarked to indexes that use GICS sector definitions.
- Covers tens of thousands of stocks worldwide and represents the vast majority of global listed market capitalization.
Comparison with other systems
GICS competes with the Industry Classification Benchmark (ICB). The primary difference is how consumer-facing businesses are grouped: ICB splits consumer companies into goods vs. services, while GICS emphasizes cyclical (discretionary) vs. noncyclical (staples). At lower levels there are additional mapping differences (for example, coal under energy in GICS vs. basic materials in ICB), but for many practical purposes the two systems produce similar sectoral views.
Criticisms and limitations
Modern corporations often span hardware, software, media, services, and platforms, blurring traditional industry lines. Critics argue that vertical industry classifications can struggle to represent firms with diverse business models (e.g., companies that are simultaneously retailers, cloud-service providers, and content creators). Some suggest updating classification approaches to better reflect business models and cross-sector activities.
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Key takeaways
- GICS provides a standardized, four-level industry classification used by investors and index providers.
- Classification is revenue-driven and maintained by MSCI and S&P.
- It covers the majority of global market capitalization and is central to sector-based investing and benchmarking.
- As corporate business models evolve, the limitations of traditional industry taxonomies have become more apparent.