Investment writers have been advised of changes to the Global Industry Classification Standards (GICS) classifications which took effect in March 2023.
These changes affect the composition of key sector indices, such as the S&P 500, and have resulted in dozens of companies being reclassified in Information Technology, Industrials, Financials, Consumer Discretionary and Consumer Staples.
“While the changes are not as significant as the 2016 and 2018 GICS changes that created new sectors, they will trigger industry level changes, as industries are being both eliminated and created,” said Matthew J Bartolini, head of SPDR Americas Research at State Street Global Advisors.
“Information Technology will see the largest reduction in market capitalisation among the 11 GICS sectors as a result of the removal of Data Processing & Outsourced Services stocks, which account for around 12% of the IT sector.”
Within this sector, Broadridge Financial Services, Mastercard, and Visa are among the major names to be reclassified.
There are also notable changes that affect listed retailers, recognising the increasingly blurred lines between legacy bricks and motor and legacy digital retailers.
Internet & Direct Marketing Retail has been discontinued as a sub- classification and major names such as Amazon and eBay were moved to sub-sectors relevant to the goods they sell. Remaining Internet & Direct Marketing companies will now sit in the Broadline Retail sub-category.
The GICS classification system was developed by MSCI and S&P Dow Jones Indices in 1999 to allow the investment industry to better standardise investment reporting. Each company is assigned a class at sub-sector level, according to its primary business activity, by revenue.