What are the 11 GICS stock market sectors?
If you are new to investing, you may have heard of the 11 GICS stock market sectors. But what exactly are they, and how are they classified? In this article, we have summarised each one with some of the most prominent players in that sector to better understand the stock market and how each industry may impact your investment returns.
What is a stock market sector?
A set of stocks with lots in common is referred to as a ‘stock market sector’, typically because they operate in comparable industries. According to the Global Industry Classification Standard (GICS), the most widely used classification system, there are 11 different stock market sectors.
GICS divides the stock market into 11 sectors, and further subdivides the market into 24 industry groups, 69 industries and 158 sub-industries.
The reason why these sectors exist is to make it simple to compare businesses with similar business concepts. Comparing which stocks are the most lucrative and bring in the most money is also simpler when looking at sectors.
Stock Market Sector 1: Energy
Companies that operate in the oil and natural gas industries fall within the energy sector. Along with manufacturers of other consumable fuels like coal and ethanol, it also includes corporations engaged in the exploration and production of oil and gas.
The businesses that supply tools, supplies, and services to oil and gas producers are also considered part of the energy sector. Surprisingly, it contains few renewable energy businesses because they are categorised as utilities.
The two largest U.S. firms in the energy sector are ExxonMobil and Chevron.
Stock Market Sector 2: Materials
Companies that offer a range of products for use in manufacturing and other applications are included in the materials industry. The materials industry includes companies that produce chemicals, building materials, containers, packaging, mining stocks and businesses that specialise in producing paper and forest commodities.
Well-known material stocks in this sector are paint manufacturer Sherwin-Williams and chemical supplier DuPont.
Stock Market Sector 3: Industrials
The industrial sector includes a diverse range of firms that typically use heavy machinery. The industrials sector has businesses in the aerospace, defence, construction, and engineering fields, as well as transportation equities, including railways, airlines, and logistics firms.
This sector includes businesses that produce machinery, electrical equipment, and building materials, as well as several conglomerates.
Transportation and railroad holding company Union Pacific and Airplane manufacturer Boeing are two of the largest U.S. industrial stocks, who are of course both in this sector.
Stock Market Sector 4: Utilities
You’ll find nearly all utility companies you can imagine included in the utilities industry. Utilities that specialise in providing electrical power to residential and commercial clients and experts in the transmission and distribution of natural gas can be found within the sector.
Other utilities handle customers’ water delivery. Some utilities work in more than one of these specialised fields. Even if they don’t resemble the typical regulated utility in a deregulated period, independent power producers and renewable electricity also fall under the utilities sector.
Due to the geographical nature of utilities, consumers in America may be familiar with Consolidated Edison in the Northeast of the US, Duke Energy in the Southeast, and American Electric Power in the bulk of the states in the Southern Plains and Ohio Valley.
Stock Market Sector 5: Healthcare
There are two main parts of the healthcare sector. Companies that create medications and therapies based on biotechnology are one component, as are the supplies and equipment required for the clinical studies used to test those treatments.
The other includes healthcare products and services such as medical diagnostic equipment, surgical supplies, and health insurance.
Pharmaceutical giant Johnson & Johnson and Insurance company UnitedHealth Group are the two companies with the most valued healthcare companies.
Stock Market Sector 6: Financials
Businesses with a focus on handling money are included in the financial industry. Banks are a major industry group inside the sector, along with brokerage firms, consumer finance companies, insurance companies, and real estate investment trusts focusing on mortgages.
Warren Buffett’s Berkshire Hathaway and the financial giant JPMorgan Chase are two of the most well-known stocks in the financial sector.
Stock Market Sector 7: Consumer Discretionary
The consumer discretionary industry includes products and services where consumer financial situations influence demand. For instance, if your annual income is $25,000, you most likely will purchase a different vehicle than someone who earns $25,000,000.
The industry consists of businesses that market luxury goods, high-end vehicles, and leisure products. In this sector, along with stocks for hotels and restaurants, are retail businesses operating offline and online.
Fast food giants McDonald’s and online retailer Amazon.com are two of the most significant stocks in the sector.
Stock Market Sector 8: Consumer Staples
Whatever their financial situation, people need the items and services that make up the consumer staples industry. Firms in the food, drink, and tobacco sectors, as well as manufacturers of home goods and cosmetics, fall under this category. This sector also includes retailers, such as supermarkets, that focus on selling essentials.
Unsurprisingly, Coca-Cola and also Procter & Gamble have two of the most valuable and prized consumer staples stocks on the market.
Stock Market Sector 9: Information Technology
Companies engaged in many types of technological innovation are included in the information technology sector. While some information technology businesses concentrate on developing software or offering services connected to putting technical ideas into practice, others are primarily involved in developing the tools, parts, and hardware that enable technology.
Manufacturers of semiconductors and the machinery used to create semiconductor chips are also included in information technology.
Apple and Microsoft, the top two key U.S. stocks in the information technology industry, have switched back and forth as the leading company in this sector.
Stock Market Sector 10: Communication Services
The newest of the GICS sectors, the communication services sector, comprises a few significant areas that were formerly a part of other sectors. One arm of the industry is devoted to companies that offer telecommunication services, such as wireless telecom networks and companies that provide traditional landline services.
The opposite end is occupied by media and entertainment businesses, including interactive media via the internet, more recent modes of communication, and more traditional media like television and radio.
Alphabet and the social media titan Meta are two of the most well-liked stocks in the communication services sector.
Stock Market Sector 11: Real Estate
Two distinct forms of investments in real estate are typically included in the real estate sector. Some companies in the industry are in charge of creating new real estate plans and managing them by finding tenants for different spaces on the project’s real estate.
Also included in the real estate sector are most real estate investment trusts, which have been unique tax-favoured business entities active in various facets of the real estate market.
American Tower, a company specialising in cellular communications towers, and prominent shopping mall owner and operator Simon Property Group, are two of the leading companies in the real estate sector.
What to do next?
As for Brite, our investment philosophy is based on taking the long view and focusing on protection first, as nobody knows what’s around the corner.
Brite portfolios offer you a reduced cost, end to end solution. This transparent investment approach broadly tracks the market delivering better returns and over time consistently growing your assets.
Our investment platform lets you decide your investment approach based on your goals and attitude to risk. We then do all the hard work using our asset management professionals and technology to execute portfolio solution trading.
Market volatility is a normal occurrence, however, over the long term, the stock market has always proved to be the best way of growing your money and maintaining your purchasing power. Contact Brite Advisors here if you want to learn more about how we invest: