Industry Group

What Is an Industry Group?

An industry group is a classification method that groups together individual companies or stocks in view of common lines of business.

The Global Industry Classification Standard (GICS), a joint exertion by MSCI Inc. furthermore, S&P Dow Jones Indices, is viewed as the definitive classification system for industry groups in the United States. Investors track the performance of stocks across various groups in light of the fact that the destiny of one company is frequently tied to more extensive trends inside the industry.

Understanding Industry Groups

As indicated by MSCI and S&P, many asset managers, institutional and retail brokers, overseers, advisors, research analysts, and stock exchanges have adopted GICS. They claim this is the case in light of the fact that GICS empowers market participants to distinguish and break down companies utilizing a common global standard.

The patrons of GICS survey the parts of its classification system on an annual basis. With an overall development of the economy toward technology and information based industries, changes in the "industries" and "sub-industries" levels are normal.

Once in a while industry groups can change, just like the case in late 2017, when the backers renamed Telecommunication Services as Communication Services in recognition that data and content are currently sent through a lot more platform types.

GICS Industry Groups

The industry groups, alongside different classifications, work with understanding among all market participants with a common language. At present, there are 24 industry groups, which are listed below in sequential order:

1. Autos and Components
2. Banks
3. Capital Goods
4. Commercial and Professional Services
5. Consumer Durables and Apparel
6. Consumer Services
7. Diversified Financials
8. Energy
9. Food, Beverage, and Tobacco
10. Food and Staples Retailing
11. Medical care Equipment and Services
12. Household and Personal Products
13. Insurance
14. Materials
15. Media and Entertainment
16. Drugs, Biotechnology, and Life Sciences
17. Real Estate
18. Retailing
19. Semiconductors and Semiconductor Equipment
20. Software and Services
21. Technology Hardware and Equipment
22. Telecommunication Services
23. Transportation
24. Utilities

Industry Group versus Market Sector

An industry group isn't equivalent to a market sector. The GICS order system incorporates 11 sectors, 24 industry groups, 69 industries, and 158 sub-industries, demonstrating that a market sector is normally more extensive than an industry group. The market sectors under GICS are:

1. Communication Services
2. Consumer Discretionary
3. Consumer Staples
4. Energy
5. Financials
6. Medical services
7. Industrials
8. Data Technology
9. Materials
10. Real Estate
11. Utilities

Note that some industry groups, including utilities, materials, and energy, are likewise market sectors. Simultaneously, it's workable for certain sectors to house a number of various industry groups. For instance, the financial sector comprises of banks, insurance, and diversified financials.

Understanding how the different industry groups exist inside market sectors can assist investors with compartmentalizing the overall market and get a handle on market activity over time. Some investment vehicles have additionally been made to partake in stocks by industry group or sector. Models incorporate exchange traded funds (ETFs, for example, the Energy Select Sector SPDR Fund (XLE), the VanEck Vectors Semiconductor ETF (SMH), and the iShares U.S. Real Estate Fund (IYR).

Different Usages of Industry Group

The term industry group is likewise used to allude to a group of companies in the very sector that are actively working together to address issues facing their industry. The activities of an industry group might be essentially as fundamental as distributing or sharing data on trends and new innovations among a small number of members.

Bigger industry groups are much of the time more structured professional organizations that can pool member resources for activities, for example, research and development (R&D), as well as political lobbying in policy areas where there is a shared interest.

Features

• Compartmentalizing stocks by sector or industry can assist investors with getting a handle on market moves and furthermore recognize potential investment opportunities.
• Market sectors are regularly more extensive than industry groups, yet some industry groups, for example, energy and utilities are likewise market sectors.
• GICS classifies stocks into 24 industry groups and 11 sectors.
• An industry group is an approach to grouping individual companies or stocks in light of common business lines.