The 11 Sectors Of The Stock Market & Their Biggest ETFs

With so many stocks to choose from, you might not know where to begin. If you’re trying to decide which sectors to invest in based on returns, then you might use sectors that outperformed the S&P as a baseline. So your list would include consumer discretionary, healthcare and information technology. The real estate sector includes real estate services companies, real estate developers and equity REITs. This sector may offer strong growth opportunities, but shows steady growth overall. Large fund companies that managed index-based funds had to buy more of these real estate stocks in order to match the new weightings in the sector index.

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Finally, it’s also important to keep an eye on market trends and the economy as a whole. As mentioned, some sectors may be more in favor during certain periods of the business cycle than others. The materials sector consists of mining, refining, chemical, forestry, and related companies that are focused on discovering and developing raw materials. Since these companies are at the beginning of the supply chain, it’s natural that their activities tend to move along with the economic cycles. Hence, if you think that the economic recovery is well underway, it doesn’t hurt to have some exposure to this cyclical area of the economy. Grew from $3,471.35 billion in 2021 to $3,938.75 billion in 2022 at a compound annual growth rate of 13.5%.

It has backtesting, great charts, stock screening, and an active community of over 3 million people sharing ideas, plus a free plan available globally. Those powertrend seeking a traditional Utility Stock ETF can examine the Vanguard Utilities ETF . VPU invests in the stocks on the MSCI US Investable Market Index Utilities.

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For example, you might compare one sector to the market using a benchmark like the S&P 500. Given the vast array of other sectors and niches served and improved by information technology companies, inclusion in this sector can be somewhat subjective. But broadly speaking, regardless of the target sector niches of their products and services, information technology stocks either provide or enable technological solutions. 2009 is committed to honest, unbiased investing education to help you become an independent investor.

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This could be oil field exploration, refining fossil fuels or marketing. When deciding which sectors to invest in, it’s important to consider the basics, such as market capitalization and historical performance. From there, you can analyze how likely a market sector is to help you properly diversify your portfolio and reach your investment goals. For example, how you approach investments will differ based on whether you’re chasing growth or looking for long-term buy-and-hold options. The information technology sector includes companies in the software industry, technology hardware and equipment, and semiconductors & related semiconductor equipment (i.e., chipmakers). This sector includes companies that take raw materials or natural resources and turn them into something more usable.

The Financial Sector is vulnerable to interest rates because banks rely on loans for revenue. Some definitions put Financial Technology stocks such as PayPal and Square in the Financial Sector. Wall Street is a popular term many Americans use to describe the Financial Sector. Many British observers call the Financial Sector “the City,” after the City of London.

You’ll find makers of chemicals, construction materials, and containers and packaging within the materials sector, along with mining stocks and companies specializing in making paper and forest products. The sector has seen a lot of changes in recent years due to exciting developments in technology, and is one of the leading sectors on the stock market. Examples of companies in the information technology sector include Microsoft, Mastercard and Adobe. The financials sector consists of companies involved in finance, investing, and the movement or storage of money. This includes companies involved in banking, thrifts & mortgage finance, specialized finance, consumer finance, asset management and custody banks, investment banking and brokerage and insurance. Companies in the financials sector are closely tied to interest rates- as interest rates rise, these companies tend to make more money as banks give out loans and mortgages.

Common investment questions

Or you could invest in a sector mutual fund or exchange-traded fund, such as a utility fund or a tech fund. There are a couple of points to keep in mind, however, when investing by sector. So just because a market sector has done well up to now doesn’t necessarily guarantee that it will deliver the same or a higher level of returns in the future. When you consider the best places to put your money to work as a stock market investor, it’s helpful to understand how and where various publicly traded companies generate revenue and earnings. The GICS system is revised from time to time, especially as industries grow and develop. For example, real estate is the newest addition to the categorization.

The VPU’s holdings include Duke Energy , Dominion Energy , the Southern Company , and Xcel Energy Inc. . The VPU owns many traditional Utility Stocks that are heavily exposed to global warming. An interesting alternative to traditional Utility Stocks is the Invesco WilderHill Clean Energy ETF .

• The Information Technology Stock Sector includes everything from software to consumer electronics to cloud services to social media, streaming video, business services, and e-commerce.
• The telecom sector consists of wireless providers, cable companies, internet service providers and satellite companies, among others.
• When deciding which market sectors to invest in, it’s important to look beyond size and consider how well one sector versus another performs.
• The technology sector is simply the best performing sector in the US stock market.

The belief is that the demand for fuel increases when the economy is good. Warren Buffett buys Consumer Staples because people have to buy those products in any economy. Berkshire Hathaway (BRK.B) owns large amounts of the grocer Kroger and the food manufacturer Kraft Heinz . Many investors buy home-improvement companies such as Home Depot and Lowe’s because those retailers sell tools and building supplies for remodeling projects.

Major Banks

Markets coverage, company profiles and industry insights from Australia’s best business journalists – all collated and delivered straight to your inbox every day. Top companies in the Real Estate sector include American Tower Corporation, Crown Castle International, RE/MAX, Public Storage, Weyerhaeuser, Iron Mountain Incorporated, Redfin , and others. The Communication Services sector is all about connecting humans with other entities — via the internet, media, entertainment, phones, or social media. The key component of the Communication Services sector is the “connecting” part.

Industrials Sector

One safe way to invest in the Utilities Sector is to buy stocks in companies that own energy transmission infrastructure. That includes grid operators, distribution network owners, energy traders, and marketers. Over the last ten years, the top 3 performing companies in the technology sector are Broadcom +1799%, Adobe +1477%, and Cadence Design Systems +1123%. With a market capitalization of $2.9 trillion, it comes in 4th place with a market-beating 980%.

The market is forecasted to reach $5,905.09 billion in 2026 at a CAGR of 10.7%. Financial services, retail and wholesale, manufacturing, and healthcare are some fx choice review end-user markets for the Internet and Information Services industry. About 5.0% to 5.5%, then technology and high growth stocks can potentially recover.

View a complete list of financial ETFs on our sister site ETF Database here. U.S. Sectors & Industries Performance is represented by the S&P 500 GICS® indices. Last % change is the nominal change in the price of the index from the previous trading day’s close expressed as a percentage as of the index value at the time noted in the Date & Time field.

To get us working for you, start with a free trial of daily stock alerts. These businesses include food and beverage makers, household products, supermarkets, beauty products, and for What is CI CD? Continuous integration and continuous delivery explained some reason, tobacco and alcohol companies. This category covers companies that make products or provide services that are nice to have but not necessary for one to stay alive.

However, a few companies have managed solid performance against the market, especially American Water Works Co +475% and CMS Energy +115% over ten years. Many investors love technology stocks because of the high rates of growth. Many people buy the so-called FANG and FAANG stocks because those shares offer high growth rates. The term Information Technology Stocks is misleading because it is a catchall phrase that includes a wide variety of technological goods and services. The Information Technology Stock Sector includes everything from software to consumer electronics to cloud services to social media, streaming video, business services, and e-commerce. The utilities sector encompasses just about every different type of utility company you can think of.

John Smith

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