Industry Classification Benchmark - ICB

Shoe shopping can be an overwhelming experience. Think about it: if we wander into a place like DSW and have no idea what we’re looking for, there’s a really good chance we’ll never find it, because there are just so many options to choose from. Sneakers, boots, flip-flops, wedges, clown shoes, stilettos, gladiator sandals, loafers…the list goes on and on. And for uninformed buyers, picking and choosing between all of those different kinds of products can be a really time-consuming and frustrating experience. Sometimes it can be so paralyzing that we might opt to just avoid shopping altogether and just wear our old tennies for another year.

Dow Jones and FTSE Russell, two of the biggest names in the securities world, know this, and that’s why they created the Industry Classification Benchmark, or ICB. They don’t want people to forego investing, because they’re overwhelmed by the possibilities. It won’t help us find a pair of shoes, but the ICB can help us find appealing investment opportunities by categorizing securities into easier-to-understand chunks.

The stocks in question are first divided by industry (there are ten industry categories). Then each category is further segmented by super-sector (19 categories), sector (41 categories), and subsector (114 categories). When we’re ready to invest, we can use the ICB categories, which are an internationally-recognized standard of categorization, to find the stocks that most closely align with what we’re looking for.

They publish info daily and weekly, so our stock choices (like our footwear) need never be out of style.