GICS and ICB Sector Classification

Every time you see "tech stocks fell today" or a "financials sector ETF," someone had to decide which companies count as tech and which count as financials. The two dominant systems for doing this are GICS (Global Industry Classification Standard, run jointly by MSCI and S&P) and ICB (Industry Classification Benchmark, run by FTSE Russell). Both assign every public company to a single place in a hierarchy, and both are used as the backbone for sector indices, sector ETFs, peer-group comparisons, and factor and style analysis.

GICS uses a four-level hierarchy: sector (11 of them, such as Information Technology, Health Care, Financials), industry group, industry, and sub-industry — each company gets one code that places it precisely at the most granular level, and that code rolls up cleanly to every broader level above it. ICB uses an analogous four-level structure with different labels (industry, supersector, sector, subsector) and its own sector boundaries, which don't map one-to-one onto GICS. A company classified as "Consumer Discretionary" under GICS might land in a differently-named ICB sector, because each provider draws the lines around what counts as a company's "primary business" slightly differently — usually based on where the majority of revenue comes from.

Worked example

A diversified technology company earns most of its revenue from consumer electronics hardware, with a smaller but growing services and subscription business.

Level	GICS classification
Sector	Information Technology
Industry Group	Technology Hardware & Equipment
Industry	Technology Hardware, Storage & Peripherals
Sub-Industry	Technology Hardware, Storage & Peripherals

Because the classification is driven by dominant revenue source rather than brand perception, a company many investors think of as a "services" or "platform" business can still be classified under Hardware if that's where the bulk of its revenue historically comes from — and a large revenue mix shift can eventually trigger a reclassification to a different sector entirely, which in turn moves the company out of one sector ETF's holdings and into another's.

Because sector ETFs and style indices are built directly on these classifications, a mid-year reclassification — triggered by a shift in a company's revenue mix — can cause it to be dropped from one sector fund and added to another, generating real buying and selling with no change in the company's actual business that week.