Stock Market Sector Classifications
There are four competing systems for classifying stocks into sectors and industries: the Global Industry Classification Standard (GICS), the Industrial Classification Benchmark (ICB), The Refinitiv Business Classification (TRBC), and Morningstar's stock sector structure. For the most part, the systems are functionally equivalent and have largely converged in recent years, but the terminology differs.
ICB Classification System
The Industry Classification Benchmark or ICB, was developed by Dow Jones and FTSE, and is used by the NASDAQ and New York Stock Exchanges. The ICB structure consists of 11 industries, 20 supersectors, 45 sectors and 173 subsectors. The system underwent a major restructuring in 2019 following the integration of Russell Global Sectors (RGS). So the highest level is an "industry". The ICB system is used by most Dow Jones and FTSE indexes.
The eleven industries are:
- Technology
- Telecommunications
- Health Care
- Financials
- Real Estate
- Consumer Discretionary
- Consumer Staples
- Industrials
- Basic Materials
- Energy
- Utilities
GICS Classification System
The Global Industry Classification Standard (GICS) was developed in 1999 by MSCI and Standard & Poor's for use by the global financial community. The GICS structure consists of 11 sectors, 25 industry groups, 74 industries and 163 sub-industries. The highest level is a "sector", unlike with the ICB system, where the highest level is an "industry". GICS is used as a basis for S&P and MSCI financial market indexes. Originally, the GICS system had 10 sectors, but in 2016, real estate was turned into its own sector rather than being part of the financials sector.
The eleven sectors are:
- Energy
- Materials
- Industrials
- Consumer Staples
- Consumer Discretionary
- Health Care
- Communication Services
- Utilities
- Financials
- Information Technology
- Real Estate
Note that prior to September 2018, the "Communication Services" sector of the GICS was named the Telecommunication Services sector. Previously, the Telecommunication Services sector was pretty small. As part of the renaming, the sector was expanded to include companies that facilitate communication and offer related content and information through various media.
GICS 2023 Update
In March 2023, GICS implemented significant changes affecting five sectors: Consumer Discretionary, Consumer Staples, Financials, Industrials, and Information Technology. The most notable change was the reclassification of payment processing companies (Visa, Mastercard, PayPal, Fiserv, and others) from Information Technology to Financials. This substantially altered the composition and weightings of both sectors in major indexes.
Comparing GICS and ICB
After the 2019 ICB restructuring, the main classification systems have largely converged in their approach. Both GICS and ICB now break out real estate as its own top-level category, and both classify consumer stocks as either "staples" (non-cyclical) or "discretionary" (cyclical). The primary differences now lie in the granularity of lower-level classifications and the specific methodology used to assign companies to categories.
The Refinitiv Business Classification
The TRBC (now part of LSEG/London Stock Exchange Group) classification scheme has a five-level hierarchical structure:
- 10 Economic sectors
- 25 Business sectors
- 52 Industry groups
- 136 Industries
- 837 Activities
The ten sectors are:
- Energy
- Basic Materials
- Industrials
- Consumer Cyclicals
- Consumer Non-Cyclicals
- Healthcare
- Utilities
- Financials
- Technology
- Real Estate
Morningstar Stock Sector Structure
The Morningstar stock sector structure consists of 11 sectors (the highest level in their system is also a "sector"). Underneath the 11 sectors, Morningstar uses 55 industry groups and approximately 145 industries.
The eleven sectors are:
- Energy
- Basic Materials
- Industrials
- Consumer Cyclical
- Consumer Defensive
- Healthcare
- Communication Services
- Utilities
- Financial Services
- Technology
- Real Estate
Morningstar Super Sectors
A unique feature of Morningstar's classification is the grouping of 11 sectors into three "super sectors" based on their sensitivity to economic cycles:
- Cyclical: Basic Materials, Consumer Cyclical, Financial Services, Real Estate
- Defensive: Consumer Defensive, Healthcare, Utilities
- Sensitive: Communication Services, Energy, Industrials, Technology
This structure helps investors evaluate portfolio diversification from an economic sensitivity perspective.
Classification Methodology
All major classification systems assign companies primarily based on their main source of revenue. GICS additionally considers earnings and market perception during its annual review. TRBC uses specific thresholds: for companies with two business segments, 60% of revenue is required for category assignment; for three or more segments, 51% is required. Companies may be reclassified if their business structure changes significantly.
Annual Reviews
All major classification systems conduct regular reviews. GICS and ICB are reviewed annually, with major structural changes announced 6-12 months in advance. Changes can affect the composition of sector indexes and ETFs, triggering portfolio rebalancing. Investors should monitor announcements from MSCI/S&P (for GICS) and FTSE Russell (for ICB).
Our sectors
On our website, every stock is classified into one of the 143 industries and then into one of the 11 sectors - see our list of industries.
Sector performance varies
In any given year, the different sectors of the stock market can have significantly different performance. The different sectors also act differently during different economic conditions and cycles. So stock market investors have always paid significant attention to sector performance.
Market Concentration and the Magnificent Seven
In recent years, sector dynamics have been significantly influenced by the dominance of mega-cap technology companies. The so-called Magnificent Seven (Apple, Microsoft, Nvidia, Amazon, Alphabet, Meta, Tesla) are distributed across three sectors: Information Technology, Communication Services, and Consumer Discretionary, making these sectors closely interconnected. The Information Technology sector alone accounts for over one-third of S&P 500 market capitalization.
There are a handful of ETFs that attempt to dynamically invest in those sectors of the stock market that are currently performing well. See our discussion of sector rotation ETFs.
S&P 500 sector ETFs
State Street (SPDRs) has a line of ETFs that follow indexes that split the stocks in the S&P 500 into the 11 stock market sectors of the GICS system. These sector ETFs are heavily traded:
| Name | Symbol | Last price | Currency | AUM | Expense ratio, % | Inception date |
|---|---|---|---|---|---|---|
| SPDR S&P 500 | ARCX:SPY | 672.38 | USD | 633,120,180,000 | 0.09 | Jan 22, 1993 |
| SPDR Select Sector Fund - Technology | ARCX:XLK | 137.29 | USD | 73,478,220,000 | 0.09 | Dec 16, 1998 |
| SPDR Select Sector Fund - Financial | ARCX:XLF | 50.57 | USD | 52,569,700,000 | 0.09 | Dec 16, 1998 |
| SPDR Select Sector Fund - Health Care | ARCX:XLV | 152.70 | USD | 39,417,860,000 | 0.09 | Dec 16, 1998 |
| SPDR Select Sector Fund - Energy Select Sector | ARCX:XLE | 56.57 | USD | 37,517,220,000 | 0.09 | Dec 16, 1998 |
| SPDR Select Sector Fund - Consumer Discretionary | ARCX:XLY | 114.44 | USD | 23,753,150,000 | 0.09 | Dec 16, 1998 |
| SPDR Select Sector Fund - Industrial | ARCX:XLI | 169.94 | USD | 22,300,790,000 | 0.09 | Dec 16, 1998 |
| The Communication Services Select Sector SPDR Fund | ARCX:XLC | 117.46 | USD | 20,522,020,000 | 0.09 | Jun 18, 2018 |
| SPDR Select Sector Fund - Utilities | ARCX:XLU | 46.74 | USD | 17,896,150,000 | 0.09 | Dec 16, 1998 |
| SPDR Select Sector Fund - Consumer Staples | ARCX:XLP | 85.78 | USD | 16,898,270,000 | 0.09 | Dec 16, 1998 |
| Real Estate Select Sector SPDR Fund (The) | ARCX:XLRE | 42.89 | USD | 7,839,170,000 | 0.09 | Oct 07, 2015 |
| Materials Select Sector SPDR | ARCX:XLB | 49.86 | USD | 6,134,390,000 | 0.09 | Dec 16, 1998 |
Alternative Sector ETF Providers
In addition to SPDR Select Sector ETFs from State Street, sector ETFs for S&P 500 stocks are offered by Vanguard (VG Sector ETFs series) and Fidelity. Vanguard ETFs feature minimal expense ratios (starting from 0.10%), while Fidelity MSCI Sector ETFs cover the entire market including small caps. When choosing sector ETFs, consider expense ratio, liquidity (trading volume), tracking error, and assets under management.
Small cap sector ETFs
Invesco (formerly PowerShares) offers a line of ETFs that follow indexes splitting small cap stocks into stock market sectors. These ETFs provide exposure to the small-cap segment of each sector.
| Name | Symbol | Last price | Currency | AUM | Expense ratio, % | Inception date |
|---|---|---|---|---|---|---|
| iShares Core S&P Small-Cap ETF | ARCX:IJR | 125.37 | USD | 93,591,154,891 | 0.06 | May 26, 2000 |
| Invesco S&P SmallCap Information Technology ETF | XNAS:PSCT | 58.81 | USD | 328,062,960 | 0.29 | Apr 07, 2010 |
| Invesco S&P SmallCap Industrials ETF | XNAS:PSCI | 158.26 | USD | 229,807,470 | 0.29 | Apr 07, 2010 |
| Invesco S&P SmallCap Health Care ETF | XNAS:PSCH | 41.50 | USD | 192,266,810 | 0.29 | Apr 07, 2010 |
| Invesco S&P SmallCap Energy ETF | XNAS:PSCE | 56.43 | USD | 108,362,961 | 0.29 | Apr 07, 2010 |
| Invesco S&P SmallCap Consumer Staples ETF | XNAS:PSCC | 33.73 | USD | 55,477,120 | 0.29 | Apr 07, 2010 |
| Invesco S&P SmallCap Consumer Discretionary ETF | XNAS:PSCD | 107.35 | USD | 27,949,440 | 0.29 | Apr 07, 2010 |
| Invesco S&P SmallCap Financials ETF | XNAS:PSCF | 58.09 | USD | 20,202,120 | 0.29 | Apr 07, 2010 |
| Invesco S&P SmallCap Materials ETF | XNAS:PSCM | 92.90 | USD | 19,591,200 | 0.29 | Apr 07, 2010 |
| Invesco S&P SmallCap Utilities & Communication Services ETF | XNAS:PSCU | 59.91 | USD | 18,267,970 | 0.29 | Apr 07, 2010 |
Total market sector ETFs
Fidelity has a line of ETFs that follow indexes that split the entire stock market into the 11 stock market sectors of the GICS system. These are based on MSCI's "investable market indexes" or IMI indexes. IMI indexes include large, mid and small cap stocks.
| Name | Symbol | Last price | Currency | AUM | Expense ratio, % | Inception date |
|---|---|---|---|---|---|---|
| Fidelity MSCI Information Technology Index ETF | ARCX:FTEC | 214.29 | USD | 13,263,289,130 | 0.08 | Oct 24, 2013 |
| Fidelity MSCI Health Care Index ETF | ARCX:FHLC | 72.89 | USD | 2,602,457,920 | 0.08 | Oct 24, 2013 |
| Fidelity MSCI Consumer Discretionary Index ETF | ARCX:FDIS | 97.58 | USD | 2,058,202,875 | 0.08 | Oct 24, 2013 |
| Fidelity MSCI Financials Index ETF | ARCX:FNCL | 71.87 | USD | 2,040,867,000 | 0.08 | Oct 24, 2013 |
| Fidelity MSCI Utilities Index ETF | ARCX:FUTY | 60.18 | USD | 1,624,759,400 | 0.08 | Oct 24, 2013 |
| Fidelity MSCI Energy Index ETF | ARCX:FENY | 31.37 | USD | 1,438,287,730 | 0.08 | Oct 24, 2013 |
| Fidelity MSCI Communication Services Index ETF | ARCX:FCOM | 72.16 | USD | 1,370,276,280 | 0.08 | Oct 24, 2013 |
| Fidelity MSCI Industrials Index ETF | ARCX:FIDU | 90.45 | USD | 1,267,844,700 | 0.08 | Oct 24, 2013 |
| Fidelity MSCI COnsumer Staples Index ETF | ARCX:FSTA | 54.26 | USD | 1,222,825,345 | 0.08 | Oct 24, 2013 |
| Fidelity MSCI Real Estate Index ETF | ARCX:FREL | 28.40 | USD | 977,410,350 | 0.08 | Feb 05, 2015 |
| Fidelity MSCI Materials Index ETF | ARCX:FMAT | 57.92 | USD | 522,109,800 | 0.08 | Oct 24, 2013 |