Morningstar reported today that is enhancing its global equity classification system, beginning at the industry level and extending up to the sector and super-sector level. Morningstar stated that they are making these changes for the following reasons:
- Our current sector classification system was created nearly 10 years ago, and since that time, the markets and our clients' needs have evolved. We believe the foundation of the new equity classification system, economic sensitivity of a company's revenues, is a better way to break down the investment universe.
- The new classification system is more intuitive and adds a more global perspective to our research. It also has some important elements in common with the widely used S&P GICS, which simplifies comparison.
- Overall, our revised system is more logical, allows for intelligent diversification, and makes it easier to understand the decisions made by portfolio managers. It presents a robust classification tool in line with both macro-economic factors as well as global market developments.
The changes will take place according to the following schedule:
- New Industry Classifications: October 2010
- New Sectors and Super-Sectors: March 2011