Sector

Loading the player...

What is a 'Sector'

A sector is 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.

BREAKING DOWN '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. Sector Rotation

    The action of a mutual fund or portfolio manager shifting investment ...
  2. Sector Analysis

    A review and assessment of the current condition and future prospects ...
  3. Sector Breakdown

    The mix of sectors within a fund or portfolio, typically expressed ...
  4. Service Sector

    The portion of the economy that produces intangible goods. According ...
  5. Sector ETF

    A class of exchange-traded fund that invests in the stocks and ...
  6. Financial Sector

    A category of stocks containing firms that provide financial ...
Related Articles
  1. Markets

    What's a Sector?

    The term sector has several applications in economics and finance.
  2. ETFs & Mutual Funds

    How to Choose the Right Sector Funds

    Adding sector funds to your portfolio can pay off but it's important to make sure you're choosing the right market niche.
  3. ETFs & Mutual Funds

    An Introduction To Sector Mutual Funds

    Investing among several different sectors in the economy is a way to diversify your portfolio.
  4. Investing

    Understanding the Financial Sector

    The financial sector is a category of stocks comprised of firms that provide financial services to commercial and retail customers.
  5. Managing Wealth

    Tech Stocks Vs. Financial Stocks in 2016

    Consider the arguments for allocating more of your investment portfolio to either the technology sector or the financial sector for 2016.
  6. ETFs & Mutual Funds

    ETFs For Sector Rotation Strategies

    Find out how exchange-traded funds can take the bumps out of your investing style.
  7. Trading

    Analyzing Mutual Fund Risk

    Find out whether a fund's performance is a result of the manager's abilities, or just a fluke.
  8. Markets

    What's The Difference Between Industry And Sector?

    The terms industry and sector are often used interchangeably to describe companies that operate in the same segment of the economy, or that share a similar business type. But they actually have ...
  9. ETFs & Mutual Funds

    Top-Down Analysis: Finding The Right Stocks And Sectors

    The top-down investment strategy depends on economy and market strength. Find out what you should know before jumping in.
  10. Markets

    What is the Private Sector?

    The private sector encompasses all for-profit businesses that are not owned or operated by the government.
RELATED FAQS
  1. What is the internet sector?

    Learn what products and services comprise the Internet sector and some of the key companies that shape it. Also what part ... Read Answer >>
  2. What are the main benchmarks that track the performance of the financial services ...

    Learn about some of the primary benchmarks utilized by investors and analysts to track the performance of the financial services ... Read Answer >>
  3. How attractive is the internet sector for a growth investor?

    Learn why the Internet sector is an attractive option for growth investors, as well as what many of them do to reduce the ... Read Answer >>
  4. What happens to the intangible assets of a company when it is bought or sold?

    Discover the best-performing stock market sectors over the past five years and learn which sectors continue to offer high ... Read 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 Answer >>
  6. What phase of the economic cycle tends to be strongest for companies in the Internet ...

    Learn which phase of the economic cycle features the best performance for the Internet sector and how portfolio managers ... Read Answer >>
Hot Definitions
  1. Put Option

    An option contract giving the owner the right, but not the obligation, to sell a specified amount of an underlying security ...
  2. Frexit

    Frexit – short for "French exit" – is a French spinoff of the term Brexit, which emerged when the United Kingdom voted to ...
  3. AAA

    The highest possible rating assigned to the bonds of an issuer by credit rating agencies. An issuer that is rated AAA has ...
  4. GBP

    The abbreviation for the British pound sterling, the official currency of the United Kingdom, the British Overseas Territories ...
  5. Diversification

    A risk management technique that mixes a wide variety of investments within a portfolio. The rationale behind this technique ...
  6. European Union - EU

    A group of European countries that participates in the world economy as one economic unit and operates under one official ...
Trading Center