Sector

A A A

DEFINITION

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

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 State Manufacturing ...
  2. Demographic Dividend

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

    A category of stocks of large corporations with diverse and often unrelated ...
  4. Best Of Breed

    A stock that represents the most optimal investment choice for a specific sector ...
  5. Sector Breakdown

    The mix of sectors within a fund or portfolio, typically expressed as a percentage ...
  6. Industry

    A classification that refers to a group of companies that are related in terms ...
  7. Mutual Fund

    An investment vehicle that is made up of a pool of funds collected from many ...
  8. Sector Fund

    A stock mutual, exchange-traded or closed-end fund that invests solely in businesses ...
  9. Sector Rotation

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

    The amount of extra funds that a sector has available to provide for either ...
Related Articles
  1. Long-Term Investing: Hot Or Not?
    Investing Basics

    Long-Term Investing: Hot Or Not?

  2. Major Blunders In Portfolio Construction
    Mutual Funds & ETFs

    Major Blunders In Portfolio Construction

  3. Sector Rotation: The Essentials
    Fundamental Analysis

    Sector Rotation: The Essentials

  4. Investing In Leisure Funds
    Mutual Funds & ETFs

    Investing In Leisure Funds

  5. Four Big Investor Errors
    Insurance

    Four Big Investor Errors

  6. GICS Vs. ICB: Competing Systems For ...
    Mutual Funds & ETFs

    GICS Vs. ICB: Competing Systems For ...

  7. A Checklist For Successful Medical Technology ...
    Insurance

    A Checklist For Successful Medical Technology ...

  8. What is the difference between an industry ...
    Investing

    What is the difference between an industry ...

  9. The Stock Market: A Look Back
    Economics

    The Stock Market: A Look Back

  10. Where Top Down Meets Bottoms Up
    Retirement

    Where Top Down Meets Bottoms Up

comments powered by Disqus
Hot Definitions
  1. Leased Bank Guarantee

    A bank guarantee that is leased to a third party for a specific fee. The issuing bank will conduct due diligence on the creditworthiness of the customer looking to secure a bank guarantee, then lease a guarantee to that customer for a set amount of money and over a set period of time, typically less than two years.
  2. Degree Of Financial Leverage - DFL

    A ratio that measures the sensitivity of a company’s earnings per share (EPS) to fluctuations in its operating income, as a result of changes in its capital structure. Degree of Financial Leverage (DFL) measures the percentage change in EPS for a unit change in earnings before interest and taxes (EBIT).
  3. Jeff Bezos

    Self-made billionaire Jeff Bezos is famous for founding online retail giant Amazon.com.
  4. Re-fracking

    Re-fracking is the practice of returning to older wells that had been fracked in the recent past to capitalize on newer, more effective extraction technology. Re-fracking can be effective on especially tight oil deposits – where the shale products low yields – to extend their productivity.
  5. TIMP (acronym)

    'TIMP' is an acronym that stands for 'Turkey, Indonesia, Mexico and Philippines.' Similar to BRIC (Brazil, Russia, India and China), the acronym was coined by and investor/economist to group fast-growing emerging market economies in similar states of economic development.
  6. Pension Risk Transfer

    When a defined benefit pension provider offloads some or all of the plan’s risk – e.g.: retirement payment liabilities to former employee beneficiaries. The plan sponsor can do this by offering vested plan participants a lump-sum payment to voluntarily leave the plan, or by negotiating with an insurance company to take on the responsibility for paying benefits.
Trading Center