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

Sector SPDR ETFs

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.

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