Sector

Loading the player...

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.

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. 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. Mutual Fund

    An investment vehicle that is made up of a pool of funds collected ...
  5. Industry

    A classification that refers to a group of companies that are ...
  6. Sector Fund

    A stock mutual, exchange-traded or closed-end fund that invests ...
Related Articles
  1. Stock Analysis

    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.
  2. Fundamental Analysis

    Consumer Discretionary Vs. Consumer Staples in 2016

    Learn why understanding the seasonal tendencies of consumer discretionary and consumer staple sectors will help improve investors' portfolio performance.
  3. Mutual Funds & ETFs

    5 Low-Fee Neuberger Berman Mutual Funds

    Learn about five Neuberger Berman mutual funds with relatively low expense ratios and key characteristics about each of the mutual funds.
  4. Mutual Funds & ETFs

    4 Best US Large-Cap Value Index Mutual Funds

    Discover the top four mutual funds that use a passive investment approach by following indexes composed of value stocks of U.S. large-cap companies.
  5. Term

    What's a Sector?

    The term sector has several applications in economics and finance.
  6. 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.
  7. Insurance

    A Checklist For Successful Medical Technology Investment

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

    Sector Rotation: The Essentials

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

    Long-Term Investing: Hot Or Not?

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

    Major Blunders In Portfolio Construction

    Do you have the best mix of investments? Find out how to make sure.
RELATED FAQS
  1. What is the average annual dividend yield of companies in the automotive sector?

    As of May 2015, using trailing 12-month data, the annual dividend yields of industries in the automotive sector are 1.01% ... Read Full Answer >>
  2. What is the average debt/equity ratio of airline companies?

    As of May 2015, based on trailing 12-month data, the average long-term debt/equity ratio of airline companies is 91.53. Airline ... Read Full Answer >>
  3. What is the average price-to-book ratio for companies in the automotive sector?

    The automotive sector provides its investors with value-investing opportunities. It includes auto dealerships, auto parts ... Read Full Answer >>
  4. What is the average annual dividend yield of companies in the wholesale sector?

    The wholesale sector includes auto parts, basic materials, building materials, computers, drugs, electronics, food, industrial ... Read Full Answer >>
  5. What is the average debt/equity ratio for the food and beverage sector?

    The food and beverage sector provides its investors with a variety of investing opportunities ranging from major soft drink ... Read Full Answer >>
  6. What level of return on equity is average for a company in the drugs sector?

    The drugs sector provides a variety of investing opportunities ranging from major drug manufacturing companies to generic ... Read Full Answer >>
  7. 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 >>
  8. 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 >>
  9. 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 >>
  10. 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 >>
  11. 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 >>
Hot Definitions
  1. Presidential Election Cycle (Theory)

    A theory developed by Yale Hirsch that states that U.S. stock markets are weakest in the year following the election of a ...
  2. Super Bowl Indicator

    An indicator based on the belief that a Super Bowl win for a team from the old AFL (AFC division) foretells a decline in ...
  3. Flight To Quality

    The action of investors moving their capital away from riskier investments to the safest possible investment vehicles. This ...
  4. Discouraged Worker

    A person who is eligible for employment and is able to work, but is currently unemployed and has not attempted to find employment ...
  5. Ponzimonium

    After Bernard Madoff's $65 billion Ponzi scheme was revealed, many new (smaller-scale) Ponzi schemers became exposed. Ponzimonium ...
  6. Quarterly Earnings Report

    A quarterly filing made by public companies to report their performance. Included in earnings reports are items such as net ...
Trading Center