Global Financial Data has reorganized its sector and industry classification system to make Communications a separate sector. The introduction of the internet 25 years ago has transformed the world and will continue to change the global economy in ways we still cannot predict. Many services which formerly were provided through brick and mortar stores are now provided online. Businesses which formerly were included in Consumer Discretionary, such as Media and Broadcasting or the Internet in Information Technology have more in common with each other than was formerly realized.
A company such as Amazon not only has a huge retail business, but also hosts huge amounts of data on the cloud and provides streaming services for video and music. Netflix not only rents and streams video, but produces its own movies and series, as does Amazon. These changes have caused a re-evaluation of the classification system of industries and sectors by all of the index providers.
Global Financial Data’s classification system is based upon 12 sectors and 72 industries. While most other providers have Sectors and Sub-Sectors, Industries and Sub-Industries, we keep it simple and limit our system to Sectors for the whole economy and the industries that make them up.
GFD’s sectors differ from other index providers because we keep Transportation as a sector rather than making it part of the Industrials as other providers do. GFD focuses on sectors and industries that have existed over the past 200 years, not just the ones that exist today. The Transportation sector laid the foundations of the stock market back in the 1800s and deserves to be recognized for this as a separate sector.
While other index providers periodically rejig their classification system to adjust to new trends in the market and investing, Global Financial Data has created a timeless system that covers over two centuries of sector classification and recognizes industries that no longer exist. Canals and Docks have their own industry because that industry dominated the stock market in England in the early 1800s. Telegraphs, Cables and Express were all important industries in the 1800s, but no longer exist. We don’t delete industries that economic change has eliminated.
