The Global Industry Classification Standard enables all market participants to classify stocks by standardised industry definitions.
GICS is a standardised classification system for equities made up of a hierarchy of 10 sectors, 24 industry groups, 67 industries and 147 sub-industries.
- Level 1: the sector
- Level 2: the industry group
- Level 3: the industry
- Level 4: the sub-industry
Every stock on the ASX is classified and coded for each of these different levels.
GICS allows the SMSF manager to diversify and make asset allocation decisions from within a structured framework. We use the GICS extensively in our Momentum Investment Course when we investigate the level of economic activity in the different areas of the economy.
In the US and Europe there are specific tradable instruments called Exchange Traded Funds (ETFs) that concentrate on specific sectors (GICS Level 1) and industry groups (GICS Level 2), offering investors a straightforward way to participate in the rotation of a specific sector and even specific industries. Within Australia there are a growing number of Exchange Traded Funds that will make it increasingly easier to gain well targeted exposure to specific sectors within the Australian market.
GICS Level 1 and Level 2
Below is a table of GICS Level 1 (sectors) and GICS Level 2 (industry groups). GICS Level 1 is comprised of ten sectors which are then divided into 24 industry groups.
|Commercial & Professional Services|
|Consumer Discretionary||Automobiles & Components|
|Consumer Durables & Apparel|
|Consumer Staples||Food & Staples Retailing|
|Food, Beverage & Tobacco|
|Household & Personal Products|
|Health Care||Health Care Equipment & Services|
|Pharmaceuticals, Biotechnology & Life Sciences|
|Information Technology||Software & Services|
|Technology Hardware & Equipment|
|Semiconductors & Semiconductor Equipment|
|Telecommunication Services||Telecommunication Services|