What Is Sector? Meaning & Example
Definition
A sector is a broad group of companies in similar lines of business, such as technology, healthcare or energy. Investors use sectors to compare companies and diversify.
Related terms
Diversification means spreading money across different investments so one poor performer does not sink your whole portfolio. It reduces risk but cannot eliminate it.
Market IndexA market index tracks the performance of a selected group of securities to represent part of the market. Indexes are used as benchmarks and as the basis for index funds.
ETF (Exchange-Traded Fund)An ETF is a fund that holds a basket of assets and trades on an exchange like a stock. Many ETFs track an index and offer low-cost diversification.
What is Sector?
A sector is a broad group of companies in similar lines of business, such as technology, healthcare or energy. Investors use sectors to compare companies and diversify.
Can you give an example of Sector?
Holding stocks from five different sectors reduces the impact if one industry struggles.