Get ready to pull out your notebooks, cause we’ve planned to teach a concept of investing that has needed some explanation for a long while. I would’ve liked to insert a drumroll here, but you’ve already read the title, so you already know we’re tackling market sectors today.
What are Market Sectors?
When it comes to creating an investment plan – especially if yours includes stocks – it’s helpful to know what a sector is to make sure your interests are represented accurately. It’s not common knowledge that the economy is broken up into eleven different market sectors, and each sector has its own unique amount of industries that live inside of it. So basically, a sector is its own grouping of related industries, and knowing what sectors you’re interested in can help guide you into choosing the right investments for your goals.
What do the Market Sectors look like?
To give you a quick overview, we’ve listed out all eleven sectors and attached which of the sixty-nine industries belong to them. Once you’ve looked through them all and figured out which ones catch your eye you can then choose to invest in individual stocks within a sector or look for a sector mutual fund to invest in.
Communication services – 5 industries
Diversified Telecommunication Services, Entertainment, Interactive Media & Services, Media, and Wireless Telecommunication Services.
Consumer discretionary – 11 industries
Auto Components Industry, Automobile Industry, Distributor Industry, Diversified Consumer Services, Household durable goods, Textiles, Apparel, Hotels & Restaurants, Leisure equipment, Internet and Catalog Retail, and Multiline Retail.
Consumer staples – 6 industries
Beverages, Food and staples retailing, Food products, Household products, Personal products, and Tobacco.
Energy – 2 industries
Energy Equipment & Services Industry and the Oil, Gas & Consumable Fuels Industry.
Financials – 7 industries
Banking Industry, Capital Markets Industry, Consumer Finance Industry, Diversified Financial Services Industry, Insurance Industry, Mortgage Real Estate Investment Trusts (REITs) Industry, and Thrifts & Mortgage Finance Industry.
Healthcare – 6 industries
Biotechnology Industry, Health Care Equipment & Supplies Industry, Health Care Providers & Services Industry, HealthCare Technology Industry, Life Sciences Tools & Services Industry, and the Pharmaceuticals Industry.
Industrials – 14 industries
Aerospace & Defense Industry, Air Freight & Logistics Industry, Airlines Industry, Building Products Industry, Commercial Services & Supplies Industry, Construction & Engineering Industry, Electrical Equipment Industry, Industrial Conglomerates Industry, Machinery Industry, Marine Industry, Professional Services Industry, Road & Rail Industry, Trading Companies & Distributors Industry, and the Transportation Infrastructure Industry.
Information technology – 6 industries
Communications Equipment Industry, Electronic Equipment, Instruments & Components Industry, IT Services Industry, Semiconductors & Semiconductor Equipment Industry, Software Industry, Technology Hardware, and the Storage & Peripherals Industry.
Materials – 5 industries
Chemicals Industry, Construction Materials Industry, Containers & Packaging Industry, Metals & Mining Industry, and the Paper & Forest Products Industry.
Real estate – 2 industries
Equity Real Estate Investment Trusts, and the Real Estate Management & Development.
Utilities – 5 industries
Electric Utilities Industry, Gas Utilities Industry, Independent Power and Renewable Electricity Producers Industry, Multi-Utilities Industry, and the Water Utilities Industry.
Pitting the Market Sector’s Against Each Other
Now, because not everything in our world is fair, and we live in a free-market society, not all sectors perform the same, and not all of the sectors are the same size. We’ve relisted the sectors and included their overall value and stats on how well they’ve performed in the prior year.
Communication services +76.58%, $5.50 trillion
Consumer discretionary +324.02%, $5.85 trillion
Consumer staples +136.13%, $4.06 trillion
Energy + 1.56%, $3.25 trillion
Financials +154.81%, $7.53 trillion
Healthcare +224.66%, $6.26 trillion
Industrials +179.82%, $4.58 trillion
Information technology +357.78%, $9.58 trillion
Materials +87.38%, $1.99 trillion
Real estate +29.18% (3-year return), $1.42 trillion
Utilities +114.00%, $1.56 trillion
Overview & Our advice
We know that was a lot, but hopefully, it’s given you a little bit more insight into where you’d like to place your investments. And don’t fret! Who says you have to stick to one sector? Not us. Diversifying your portfolio by investing in multiple market sectors and across different industries helps you balance risk if one sector underperforms. We believe in creating investment portfolios that reflect your interests and your values no matter what sectors they might include.
