What are market sectors?
A Sector is a collections of companies that work in the same field of business. Examples are energy, healthcare and real estate.
Each public company is assigned a sub-industry, industry, industry group and sector according to its principal business activity. There are 11 sectors, 24 industry groups, 69 industries and 158 sub-industries.
The market sectors are (with tickers):
- Energy (XLE)
- Materials (XLB)
- Industrials (XLI)
- Consumer Discretionary (XLY)
- Consumer Staples (XLP)
- Healthcare (XLV)
- Financials (XLF)
- Information Technology (XLK)
- Communication Services (XLC)
- Utilities (XLU)
- Real Estate (XLRE)
All of the sectors have ETFs (exchange-traded funds) that track them, some ETFs focus on a specific industry subgroup within a sector.
Why invest in market sectors?
Understanding market sectors may help you diversify your portfolio and gain exposure a broad range of companies in the same sector instead of investing in a single company, you may also want to invest in specific sectors such as energy or healthcare.
Useful Resources
Company classification structure
Disclaimer: This article does not represent investment advice and is solely the author’s opinion. The author is not a financial advisor. Readers are expected to perform their own due diligence before making investment decisions.
Join the mailing list to receive email updates on new posts.
No spam, no nonsense. Ever.