The Global Industry Classification Standard (GICS) is a framework used by global investors, investment bankers and securities analysts to estimate the business performance of various industries. The GICS is used to identify the performance of companies within specific industries and sub-industries. Investors, analysts and business leaders use the GICS to make decisions and take strategic steps in their companies. For example, an investor may choose to invest in a company if the expected earnings are within the industry’s expected performance range.The GICS’s 3-classifications provide market participants and investors with an easy to understand framework for evaluating stocks and securities. The GICS consists of 13 industry classifications, 10 product groups and 7 economic sectors. The classifications are based on the primary activities of a company’s industries as well as its products.For example, primary activities that may be considered for an industry classification may include manufacturing, agriculture, services, etc. Products for each classification include consumer goods, technology products and capital goods.The GICS is a popular framework that is widely used throughout the global financial world: stocks and securities are assigned to one of the 3 classifications (i.e., technology, consumer discretionary and consumer staples). In addition to investment firms and analysts, financial institutions such as banks use the GICS framework when structuring their business strategies. They use it when making loan decisions or setting interest rates on consumer loans such as credit cards or mortgages. In fact, many countries have adopted their own local version of the GICS— such as Canada’s C2000 — for use in local markets.
