Functional Information System (FIS) Technology Reorganizes Economic Data
Company classification is an old problem. Commonly used systems for determining which business activities a company is engaged in, or which companies are its peers, are based on decades-old technology. Syntax’s FIS technology rethinks how to organize company data to go beyond sectors to see companies from hundreds of different angles. Syntax's FIS technology underpins our innovative index construction, portfolio analysis, and more.
FIS allows Syntax to precisely define sector classifications and assign companies and their underlying revenue streams in a five-level taxonomy. The Sector Taxonomy consists of 8 top-level sectors, 24 sub-sectors, 72 industries, 191 sub-industries, and 310 business activities, as well as 8,000+ product revenue lines. Learn more about the structure of the Taxonomy.
Instead of looking only at a company's primary business, FIS works at the product line level. Amazon, for example, isn't just an online retailer; it also offers cloud services, runs third party fulfillment services, generates considerable recurring subscription revenues, and even operates brick and mortar stores like Whole Foods. Each of these business lines carries with it exposures to different business risks and economic themes. If your classification system only considers Amazon as an online retailer, you're not seeing the full picture. FIS considers all product lines, weighted by company revenue.
For each product line, FIS standardizes dozens of different business characteristics: what is the product, who is the customer, what inputs are used, how is it distributed, how does it get used, and more. These characteristics can be used to identify all of the different exposures relevant to the company. Uber, for example, creates software used to facilitate consumer transportation – does this make it an Industrials company or a Technology company? FIS recognizes that it is both.
FIS gleans company information from official regulatory filings. It keeps a meticulous log of where key data is found in the relevant filing. There is no guesswork, only cold, hard facts that help you develop a crystal-clear assessment of risks and opportunities on over 10,000 companies worldwide.