What is an Industry Group
An industry group is a classification method for companies, grouped based on common lines of business. The Global Industry Classification Standard (GICS), a joint effort by MSCI Inc. and Standard & Poor's (S&P), is regarded as the definitive categorization system in the U.S.
BREAKING DOWN Industry Group
The GICS comprises 11 sectors, 24 industry groups, 68 industries and 157 sub-industries. Currently, the 24 industry groups are (in alphabetical order):
- Automobiles and Components
- Capital Goods
- Commercial and Professional Services
- Communication Services
- Consumer Durables and Apparel
- Consumer Services
- Diversified Financials
- Food, Beverage and Tobacco
- Food and Staples Retailing
- Health Care Equipment and Services
- Household and Personal Products
- Pharmaceuticals, Biotech and Life Sciences
- Real Estate
- Semiconductors and Semiconductor Equipment
- Software and Services
- Technology Hardware and Equipment
The sponsors of GICS reviews the components on an annual basis. With an overall evolution of the economy toward tech and knowledge-based industries, changes in the "industries" and "sub-industries" levels are not uncommon. Sometimes "industry groups" can change, as was the case in late 2017, when the sponsors renamed Telecommunication Services as Communication Services (No. 5 on the above list) in recognition that information and content are now transmitted through many more platform types.
Who Uses GICS?
According to MSCI and S&P, hundreds of asset managers, institutional and retail brokers, custodians, consultants, research analysts and stock exchanges have adopted GICS. "The use of the GICS enables market participants to identify and analyze companies using a common global standard," the sponsors claim. The 24 industry groups, along with the other classifications, facilitate understanding among all market participants with a common language.