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Stock Sectors - The 11 Classic Stock Market Sectors
Sector Rotation  >  Stock Sectors

Investing in Stock Sectors to Maximize Sector Rotation Returns

The 11 Stock Sectors

In the classic sector rotation model there are 11 key stock sectors that the stock market index is divided into for investors seeking broad exposure to a single sector.  There are many mutual funds and ETFs available that aim to replicate the returns of these common sector breakouts. Some funds are better than others, and you need to look closely at the expense ratios and the prospectus.

If you know what stage of the business cycle we are in from the economic clues available in the marketplace, you should be able to determine which sectors to invest in now.


Overview of the 11 Classic Stock Sectors

Each of the following stock sectors will behave differently in each of the business cycles and economic cycles we face.  Let's explore each of the 11 popular stock sectors now.

Cyclical / Consumer Discretionary

The Consumer Discretionary Sector includes companies from industries, such as media; retail (specialty, multi-line, Internet and catalog); hotels, restaurants and leisure; textiles, apparel and luxury goods; household durables; automobiles, auto components and distributors; leisure equipment and products, and diversified consumer services.

Technology

The Technology Sector includes companies from industries, such as computers and peripherals, software, diversified telecommunication services, communications equipment, semiconductor and semiconductor equipment, Internet software and services, information technology services, electronic equipment, instruments and components, wireless telecommunication services and office electronics.

Telecommunications

The Telecommunications Sector includes companies in industry groups, such as fixed-line telecommunications and mobile telecommunications.

Industrial

The Industrial Sector includes companies from industries such as aerospace and defense, building products, construction and engineering, electrical equipment, conglomerates, machinery, commercial services and supplies, air freight and logistics, airlines, marine, road and rail, and transportation infrastructure companies.

Basic Industry

The Basic Industry Sector primarily consists of companies involved in such industries as chemicals, construction materials, containers and packaging, metals and mining, and paper and forest products.

Energy

The Energy Sector consists of companies that primarily develop and produce crude oil and natural gas, and provide drilling and other energy-related services.

Staples

The Staples Sector includes companies that are primarily involved in the development and production of consumer products that cover food and drug retailing, beverages, food products, tobacco, household products and personal products.

Utilities

The Utilities Sector includes companies from industries, such as electric utilities, multi-utilities, independent power producers and energy traders, and gas utilities.

Finance

The Finance Sector includes companies from industries, such as diversified financial services, insurance, commercial banks, capital markets, real estate investment trusts (REITs), consumer finance, thrifts and mortgage finance, and real estate management and development.

Heath Care

The Index measures the performance of the healthcare sector of the United States equity market, and includes companies in industry groups, such as healthcare equipment and services, pharmaceuticals and biotechnology.


Next up:  Sector Rotation Funds

 

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