What Advisors Should Know About GICS Structure Changes

The GICS revision is the result of a consultation with market participants. Various GICS Industry and Sub-Industry names will be updated to increase clarity and consistency across the GICS structure, in addition to other changes. These changes to the GICS structure will be implemented in GICS Direct and S&P DJI’s indexes after the close of business (ET) on March 17, 2023. 

The annual GICS methodology review is intended to ensure that the GICS structure continues to appropriately represent the global equity markets, and thereby enable asset owners, asset managers, and investment research specialists to make consistent global comparisons by industry, according to a statement from the firms.

The new GICS structure will consist of 11 Sectors, 25 Industry Groups, 74 Industries, and 163 Sub-Industries.

S&P DJI and MSCI will discontinue Internet & Direct Marketing Retail and classify companies according to the nature of goods sold, merge General Merchandise Stores and Department Stores into a new Sub-Industry called Broadline Retail, shift consumable merchandise sellers to the Consumer Staples Sector, and update the GICS nomenclature for select Retail classifications by replacing the word “Stores” with “Retail,” according to a statement from the firms.

Data Processing & Outsourced Services Sub-Industry under the Information Technology Sector will be discontinued and moved to the Industrials Sector with an updated definition.

In addition, transaction and payment processing companies will be reclassified to a newly created Sub-Industry called Transaction and Payment Processing Services under the Financials Sector. Payroll processing companies will be moved to the Industrials Sector under the Human Resource & Employment Services Sub-Industry with an updated definition. Companies offering travel-related data processing and outsourced services will be moved to the Consumer Discretionary Sector under the Hotels, Resorts & Cruise Lines Sub-Industry, according to a statement from the firms.

There will be no change to the Diversified Banks Sub-Industry, Thrifts/Savings banks will be merged with Regional Banks, and the change for Thrifts and Mortgage Finance Sub-Industry will be implemented as proposed, according to a statement from the firms.

It was proposed that Residential REITs will be split into two distinct Sub-Industries and Specialized REITs will be split into five Sub-Industries. In addition, eight Industries for REITs and a new Industry Group for Equity REITs will be created. A new Real Estate Management & Development Industry Group and Industry will also be created, according to a statement from the firms.

The Trucking Sub-Industry will be split into two new Sub-Industries to be called Passenger Ground Transportation and Cargo Ground Transportation. For additional clarity, the Airlines Industry and Sub-Industry will also be renamed as Passenger Airlines to better reflect the companies classified there, according to a statement from the firms.

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