Sector

AAA

DEFINITION of 'Sector'

1. An area of the economy in which businesses share the same or a related product or service. Economies are comprised of four sectors. The primary sector involves the extraction and harvesting of natural products from the earth (e.g., agriculture, mining and forestry). The secondary sector consists of processing, manufacturing and construction. The tertiary sector provides services, such as retail sales, entertainment and financial services. The quaternary sector is made up of intellectual pursuits, like education.


2. An industry or market sharing common characteristics. Investors use sectors to place stocks and other investments into categories like technology, health care, energy, utilities and telecommunications. Each sector has unique characteristics and a different risk profile.

INVESTOPEDIA EXPLAINS 'Sector'

1. Dividing an economy into different like-pieces allows for more in-depth analysis of the economy as a whole. Any economy can be divided into sectors, such as the economy of a particular city, or the global economy. The oil and gas sector is an example of an economic sector.

2. It is common for analysts to specialize in certain sectors. For example, at a large research firm, an analyst may cover only pharmaceutical companies. Investment funds often specialize in a particular economic sector, a practice known as sector investing.

RELATED TERMS
  1. NY Empire State Index

    A seasonally adjusted index that tracks the results of the Empire ...
  2. Demographic Dividend

    The freeing up of resources for a country's economic development ...
  3. Conglomerates Sector

    A category of stocks of large corporations with diverse and often ...
  4. Sector Fund

    A stock mutual, exchange-traded or closed-end fund that invests ...
  5. Sector Rotation

    The action of a mutual fund or portfolio manager shifting investment ...
  6. Net Lending

    The amount of extra funds that a sector has available to provide ...
RELATED FAQS
  1. What countries represent the largest portion of the global Internet sector?

    As of December 2013, Internet users in 20 countries made up 74% of the global Internet sector, according to Internet World ... Read Full Answer >>
  2. How much does China's growth affect the price of industrial metals?

    Chinese buyers demand more industrial metals than the rest of the world combined. When China experiences strong growth and ... Read Full Answer >>
  3. What is the internet sector?

    According to the Department of Homeland Security (DHS), the Internet sector is a collaboration between the information technology ... Read Full Answer >>
  4. At what levels are core competencies required for businesses operating in the primary ...

    Core competencies help businesses understand their best abilities to perform in the market. Primary sector businesses mine ... Read Full Answer >>
  5. What is the difference between an industry and a sector?

    The terms industry and sector are often used interchangeably to describe a group of companies that operate in the same segment ... Read Full Answer >>
  6. How does the risk of investing in the electronics sector compare to the broader market?

    The risk of investing in the electronics sector closely approximates the risk of investing in the broader market. The electronics ... Read Full Answer >>
Related Articles
  1. Investing Basics

    Industry Handbook

    In this feature, we take an in-depth look at the various techniques that determine the value and investment quality of companies from an industry perspective.
  2. Insurance

    A Checklist For Successful Medical Technology Investment

    Find an investment that will give your portfolio a shot in the arm.
  3. Fundamental Analysis

    Sector Rotation: The Essentials

    We look at how the market signals impending economic cycles and sector performance during each stage.
  4. Investing Basics

    Long-Term Investing: Hot Or Not?

    Forget the latest craze - you're more likely to succeed with a buy-and-hold strategy.
  5. Mutual Funds & ETFs

    Major Blunders In Portfolio Construction

    Do you have the best mix of investments? Find out how to make sure.
  6. Mutual Funds & ETFs

    Investing In Leisure Funds

    If you thought investing and fun don't go together, think again. Find out more here.
  7. Economics

    The Stock Market: A Look Back

    The past century was marked by furious economic change. What can it tell us about what lies ahead?
  8. Mutual Funds & ETFs

    GICS Vs. ICB: Competing Systems For Classifying Stocks

    Global Industry Classification Standards and the Industrial Classification Benchmark separate stocks into sectors.
  9. Retirement

    Where Top Down Meets Bottoms Up

    Find the investing "sweet spot" by combining these two styles.
  10. Insurance

    Four Big Investor Errors

    These simple lessons can cut your losses.

You May Also Like

Hot Definitions
  1. Expected Return

    The amount one would anticipate receiving on an investment that has various known or expected rates of return. For example, ...
  2. Carrying Value

    An accounting measure of value, where the value of an asset or a company is based on the figures in the company's balance ...
  3. Capital Account

    A national account that shows the net change in asset ownership for a nation. The capital account is the net result of public ...
  4. Brand Equity

    The value premium that a company realizes from a product with a recognizable name as compared to its generic equivalent. ...
  5. Adverse Selection

    1. The tendency of those in dangerous jobs or high risk lifestyles to get life insurance. 2. A situation where sellers have ...
Trading Center