Industry Classification Benchmark (ICB) is the world’s leading resource for evaluating the inherent characteristics of publicly traded companies. Developed by Dow Jones and FTSE Group and maintained by FactSet, the ICB has become the industry standard for classifying companies globally. Designed to provide increased clarity over securities’ underlying business activities, the Benchmark is a comprehensive classification of 10 industries, 19 supersectors, 40 sectors, 104 subsectors, and more than 95,000 individual companies.
To aid understanding of the ICB’s structure and purpose, the framework is structured according to three primary components: supersectors, sectors, and subsectors. Supersectors are the broadest level of categorization, consisting of nineteen distinct categories that each represent a distinct type of economic activity. Sectors further break down each supersector into more precise areas of activity. Each sector is subdivided into anywhere from one to thirty-four subsectors which provide more granular levels of data classification.
The ICB has become a go-to reference point for investors and analysts who wish to gain a better understanding of the investments they are making. The Benchmark provides a broad-spectrum of data points that can be used to accurately classify the nature of a stock’s underlying business, allowing investors to make more informed decisions when evaluating investments. Beyond this, the Benchmark’s structure and data is used by financial institutions in a variety of markets, providing industry-standard classification of stocks across the globe.
The core data behind the Core ICB is divided over five main segments, each representing a distinct level of data classification; supersectors, sectors, subsectors, industry groups and industry details. Each segment adds to the level of detail available for each stock, providing a comprehensive understanding of the nature of the industry.
The Benchmark uses a series of indicators that look at a variety of factors for each stock, including liquidity, size, volatility and momentum. These factors are then used to assign a numerical score to each stock, allowing the ICB to determine where each stock should appear within the Framework. This gives investors and market professionals detailed insight into the industries in which each stock belongs.
To ensure the consistency of the data, the ICB regularly reviews the stocks within the Benchmark to ensure they are still meeting the criteria for classification. When necessary, stocks are removed, renamed or reclassified as needed in order to maintain the accuracy of the Industry Classification Benchmark.
Beyond its use in the financial world, the ICB also serves as a great resource for other segments of the business world. From verifying business licenses and permits to confirming the correct tax codes of companies, the ICB is an integral resource for many other types of businesses, providing industry-standard classification to the millions of companies around the world.
By providing a reliable and consistent way to classify companies worldwide, the ICB has become an essential tool for many segments of the business world. A powerful resource for investors and analysts as well as countless other businesses, the Industry Classification Benchmark is an invaluable tool for understanding the world of business.
