Industry Classification Benchmark and Russell Global Sectors
Product Update
05 September 2017
FTSE Russell would like to inform clients of the following updates to the Industry Classification
Benchmark (ICB®) and Russell Global Sectors (RGS) schemes, effective January 1, 2019.
Following the completion of the “FTSE Russell Client Consultation for Integrating Industry Classification
Structures” and based on additional research and client feedback, the ICB structure will be enhanced andexpanded to include 11 Industries (+1), 20 Supersectors (+1), 45 Sectors (+4) and 171 Subsectors(+57). ICB will continue to assign a company to the Subsector whose definition most closely coincides
with the source of the company’s revenue or the source of the majority of its revenue (see Section 4 ofthe ICB Ground Rules). The new ICB scheme takes effect after the close of December 31, 2018, and theRGS classification scheme and RGS Complete product will be discontinued. FTSE Russell index series may
transition to the new ICB scheme starting June 2018 and over the course of 2019.
The new ICB structure combines the best features of the ICB and RGS classification systems, reflects theevolution across industries and accommodates future ICB expansion beyond the current coverage:
Both ICB and RGS users will benefit from the enhanced ICB structure, which provides additional
granularity from the Industry through Subsector levels.
The new ICB numeric code system is robust and will accommodate future structural additions orchanges.
RGS users will shift to ICB's four-tiered system, gaining an additional interim classification level.
Comparison of ICB and RGS schemes at the headline level
ICB (11 Industries) - effective January
1, 2019

ICB (10 Industries) current

TechnologyTelecommunications
Health CareFinancials
Real EstateConsumer Discretionary
Consumer Staples
Industrials
Basic Materials
EnergyUtilities

Technology
Telecommunications
Health Care
Financials
Consumer Services
Consumer Goods
Industrials
Basic Materials
Oil and Gas
Utilities

RGS (9 Sectors) - to bediscontinued December 31,
2018
Technology
Health Care
Financial Services
Consumer Discretionary
Consumer Staples
Producer Durables
Materials and Processing
EnergyUtilities

Key changes at the broadest headline level are the addition of Real Estate as an Industry, the expansionof the Telecommunications Industry and the adoption of Consumer Discretionary and Consumer Staples
Industries to better align with global markets and industry practices:Addition of the Real Estate Industry: With approximately US$2 trillion in investable market
capitalization or 4% of the FTSE Global All Cap Index, the real estate segment has reachedcritical mass, resulting in its addition as the 11th ICB Industry. Listed real estate including realestate investment trusts (REITs) provides access to the global commercial real estate market
with the added liquidity, transparency and regulation associated with investing in publicly tradedstocks. Given the growth of REITs globally, ICB will maintain REITs as a Sector and will include
additional REITs Subsectors. Mortgage REITs will remain within the ICB Financials Industry,

because they derive revenue from financing. As separate Industries, based on market cap
weights of the FTSE Global All Cap Index as of June 30, 2017, the ICB Financials Industry isexpected to remain the largest Industry, and the ICB Real Estate Industry is expected to be thetenth largest ICB Industry, with a higher weight than that of the ICB Utilities Industry. Funds
tracking the ICB Financials Industry may choose to combine Real Estate and Financials Industries
to maintain the current allocation or to track the new ICB Real Estate Industry separately.
Expansion of the Telecommunications Industry: To reflect the continuing significance of theTelecommunications Industry globally and the evolution of the Telecommunications-MediaTechnology (TMT) segment, the ICB structure will expand the Industry by adding
Telecommunications Equipment (technology) and Cable Television Services (media) Subsectors.
RGS users will gain a 10th Industry, with the segmentation of Telecommunications from Utilities.
Adoption of Consumer Staples and Consumer Discretionary Industries: Currently, ICB
groups companies by Consumer Goods and Consumer Services at the Industry level. However,investment professionals globally use Consumer Staples and Consumer Discretionary segments
as the basis of economic timing and risk allocation given they exhibit distinct characteristics
during different phases of economic cycles. The new ICB Consumer Discretionary and Consumer
Staples Industries are a blend of the existing ICB Consumer Goods and Consumer Services
Industries. ICB will be further enhanced with Subsector granularity, e.g. Specialized Consumer
Services will be split into seven new Consumer Discretionary Services Subsectors.

Other highlights:Energy Industry: The ICB Oil & Gas Industry will be renamed Energy and add the ICB CoalSubsector (from the Basic Materials Industry). In addition, Energy Subsectors will be grouped atthe Sector level as Renewable Energy or Non-Renewable Energy.
Airlines Subsector: Given the consumer-sensitive nature of Airlines, ICB will maintain thedistinction between passenger airlines (classified as the Airlines Subsector within the new ICB
Consumer Discretionary Industry) and freight air transport (classified as the Delivery Services
Subsector within the ICB Industrials Industry). Airlines demonstrated similar levels of correlation
to companies currently classified as Industrials and with companies classified as Consumer
Discretionary, despite slightly higher near-term correlation with Industrials companies.
Consumer Digital Services Subsector: The ICB Internet Subsector will be renamed andredefined as the Consumer Digital Services Subsector within the Technology Industry, to classify
companies involved in digital platforms that generate revenues from advertising, content delivery
and other virtual products related to consumers. Although companies within this Subsector may
serve consumers, revenues are derived primarily from providing technology services.

In order to minimize impact to index funds tracking ICB Supersectors, few structural changes will bemade to the ICB Supersectors:
The largest weight shift at the ICB Supersector level is due to the transition to ICB Consumer
Staples/Discretionary Industries (from Consumer Goods/Services), with approximately half of theweight of Personal & Household Goods (6% of FTSE Global All Cap Index) allocated to the new
Personal Care, Drug & Grocery Stores Supersector (within the new ICB Consumer StaplesIndustry) and the remaining half allocated to the new Consumer Products & Services Supersector(within the new ICB Consumer Discretionary Industry).
Because the Real Estate Supersector exists in the current ICB structure, the addition of the Real
Estate Industry does not cause a structural change for clients who track the ICB Real EstateSupersector.
Key target dates are listed in the table below:TargetDates
September 5,
2017

Details

December 1,
2017

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Technical notice and supporting materials are available at
http://www.ftserussell.com/industry-classification-benchmark-icb.
Preliminary security map based on June 2017 month-end index constituents forFTSE Global All Cap Index, FTSE UK Index Series and Russell US Indexes isavailable to index, ICB Universe and RGS Complete clients.
Client query period to provide feedback on security-level classifications opens.
Sample daily open/close holdings and index values files and technicalspecifications will be made available to FTSE Global All Cap Index, FTSE UK IndexSeries, Russell US Indexes.
Sample New ICB Universe file and technical specification will be made available toICB Universe and RGS Complete clients.
Update to the preliminary security map based on September 2017 month-endindex constituents will be available on DDS to FTSE Global All Cap Index, FTSE UK

January 1,
2018 December31, 2018
February 28,
2018




April 2,2018

June 2018,2019
January 1,
2019


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


Index Series and Russell US Indexes clients.
Parallel ICB Universe and index files in the new ICB scheme, including indicative
open/close holdings and index value files, will be available to clients, beginningwith FTSE Global All Cap Index, FTSE UK Index Series and Russell US Indexes.
Parallel or sample files for additional index series will be made available to clientsin subsequent phases throughout 2018.
10 years of preliminary historical security-level mapping and performance data will
be available in the new ICB scheme for FTSE Global All Cap Index, FTSE UK IndexSeries and Russell US Indexes. The final historical security-level mapping andperformance data will be available post client query period.
Client query period to provide feedback on security-level classifications closes.
Following this date, client queries will be addressed in accordance with the regularquarterly ICB review schedule.
Final historical security-level mapping and performance data will be available in
the new ICB scheme for FTSE Global All Cap Index, FTSE UK Index Series andRussell US Indexes.
FTSE Russell index transition dates will be announced in a forthcomingcommunication.
The new ICB structure takes effect.
10 years of historical security-level mapping in new ICB scheme will be available
in the new ICB scheme for ICB Universe and RGS Complete clients.
Clients using the RGS Complete product will be transitioned to the ICB Universeproduct.

Client support materials:
The ICB Ground Rules effective January 2019 is available at:
http://www.ftserussell.com/industry-classification-benchmark-icb

A map of the existing ICB and RGS structures to the new ICB structure is available at:
http://www.ftserussell.com/industry-classification-benchmark-icb

The Insights paper "Industry Classification Benchmark: Structural enhancements to the industry
categorization framework" is available at www.ftserussell.com/research

For further information please contact FTSE Russell Client Services at info@ftserussell.com or call:
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New York+1800 653 680+852 2164 3333
+81 3 3581 2764
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+1866 551 0617

Alternatively please visit our website at www.ftserussell.com

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