Understanding the Importance Of The Industry Classification Benchmark

Learn why the Ftse Industry Classification Benchmark is the most important globally to investment managers

FTSE industry

In 2005 the FTSE Group and Dow Jones Indexes joined forces to create what has become to be known as a definitive and technical classification system. This was subsequently named the Industry Classification Benchmark or (ICB). This now covers and monitors well over sixty thousand (60,000) companies and just fewer than sixty five thousand (65,000) securities globally.

Due to this wide FTSE industry coverage the database is so comprehensive it is an apt tool and methodology for international sectored analysis by investors and investment managers alike. The FTSE industry classification benchmark has several primary features:

The ICB is managed based on a set of transparent rules and are easily scrutinized by others.

The Ftse industry benchmark has four specific classification levels; the Industries, the super sectors, ordinary sectors and finally the subsectors.

It uses a logical and short four digit coding system which makes for easy symbol identification.

Companies are classified or allocated based on revenue earned per annum and not by profit levels.

The ftse industry has clear benefits. Apart from being extremely efficient and effective it operates as a single data source. This negates the need for the maintenance of separate databases. This allows investors and other market players to access data in once central location and to mine data without costly and time consuming research.

The Classification benchmark has led to an ameliorated global sector analysis. The Ftse ICB is an excellent tool for providing a standard base for market analysis, investor stock selection and stock and market performance measurements. However, the ICB helps with more than investment research and analysis but data vendors like the Euro next, the London Stock Exchange, the NASDAQ and New York SE use the data as live feeds.

When trading the market you must have accurate and timely data. The ICB provides news and data which is maintained by several research teams located in major regions globally. This allows the Ftse industry classification benchmark to have their pulse on the global industrial landscape. The FTSE 100 indexes are comprised of an index of just one hundred listed securities. FTSE indices act as a barometer or measure of the large capitalized growth market on the London Stock Exchange. The FTSE index is amended quarterly to ensure that is gives an accurate overview of Britain most capitalized public companies.[tags]ftse industry,industry classification benchmark,ICB,Euronext[/tags]