It’s a system devised to categorize companies according to their key business activities and give investors consistent industry definitions.
The current GICS scheme consists of 11 sectors, along with 25 industry groups, 74 industries, and 163 sub-industries, which are used to classify all major public companies.
There were originally 10 GICS sectors, until real estate was removed from financials and made the 11th sector, in 2016.
Companies are reviewed annually and monitored to ensure corporate actions continue to match their classification. A change will be made if there is a major shift in a company’s primary line(s) of business.
Here are the 11 business sectors, as defined by MSCI and S&P Dow Jones Indices LLC (effective close of March 17, 2023):
- Communication Services: 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.
Cellphone service providers, digital media, social media and streaming services make up the bulk of this sector’s constituents.
Companies include: Alphabet (Google), Rogers, and Telus
- Consumer Discretionary: Businesses that tend to be the most sensitive to business 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.
These are the goods and services that consumers will pay for only when the price is right and/or they have adequate disposable income to do so.
Companies include: Sony, Norwegian Cruise Line Holdings, and Nike
- Consumer Staples: Companies whose businesses are less sensitive to business 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.
These are items consumers need and will buy, almost regardless of price or their disposable income.
Companies include: Coca-Cola, PepsiCo, and Colgate-Palmolive
- Energy: Companies engaged in exploration and production, refining and marketing, and storage and transportation of oil and gas, as well as coal and consumable fuels. It also includes companies that offer oil and gas equipment and services.
Companies involved in production, exploration, refining, and/or transport of fuels, but not green energy, which is categorized as utilities.
Companies include: Exxon Mobil, Chevron, and Suncor
- Financials: Companies engaged in banking, financial services, consumer finance, capital markets and insurance activities. It also includes Financial
Exchanges and Data, and Mortgage REITs.
Banks, investment companies, brokers, and insurers dominate here.
Companies include: Citigroup, Goldman Sachs, and Blackrock
- Health Care: Health care providers and services, companies that manufacture and distribute health care equipment & supplies, and health care technology companies. It also includes companies involved in the research, development, production and marketing of pharmaceuticals and biotechnology products, as well as the medical equipment, drugs, clinical services, and health-related insurance that are used in the evaluation, assessment and treatment of patients.
Companies include: AstraZeneca, Pfizer, and Novartis
- Industrials: 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, research and consulting services, as well as companies that provide transportation services.
Within this sector you will also find manufacturers of capital goods and machinery used to produce other goods, resources, and services that indirectly benefit the end customer.
Companies include: Northrop Grumman, Lyft, and General Electric
- 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.
It also includes the electronics, software, computers, AI and data management devices and/or services that people use for personal and/or professional purposes.
Companies include: NVIDIA, Microsoft, and Shopify
- Materials: Companies that manufacture chemicals, construction materials, forest products, glass, paper and related packaging products, and metals, minerals and mining companies, including producers of steel.
Basically anything that comes out of the ground and the companies engaged in the discovery, development, and processing of raw materials.
Companies include: United States Steel, Rio Tinto, and Freeport-McMoRan
- 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).
REITsl dominate the newest sector, along with some storage companies, property managers and developers.
Companies include: Iron Mountain, Digital Realty Trust, and Public Storage
- 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.
These are the electric, gas, or water utilities, and those companies that operate as producers or distributors of power.
Companies include: Tata Power, United Utilities Group, and The York Water Co