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Global Industry Classification Standard (GICS)

The Global Industry Classification Standard (GICS) is a system developed by MSCI and S&P Dow Jones Indices to classify companies into sectors, industries, and sub-industries based on their primary business activities. GICS provides a standardized framework for investment analysis, benchmarking, and portfolio management, allowing investors to compare companies and sectors across global markets. The classification system is widely used in financial markets to structure investment portfolios, conduct sector analysis, and identify market trends.

Example

A technology fund uses the GICS classification to select stocks within the Information Technology sector, focusing on companies involved in software, hardware, and IT services.

Key points

• Classifies companies into sectors, industries, and sub-industries based on business activities.

• Provides a standardized framework for investment analysis and portfolio management.

• Widely used for sector comparison, benchmarking, and market trend analysis.

Quick Answers to Curious Questions

GICS provides a clear and consistent structure for categorizing companies, enabling better sector analysis, portfolio diversification, and risk management.

GICS includes 11 sectors such as Information Technology, Healthcare, Financials, Consumer Discretionary, and Industrials, each divided into industries and sub-industries.

GICS is used by major indices, like the S&P 500, to group companies into sectors, providing a basis for sector weightings and performance analysis.