Investing term

What is Sector?

An industry grouping inside the equity universe — tech, financials, healthcare, energy, consumer staples, etc.

A sector is a grouping of companies in the same broad industry — technology, financials, healthcare, energy, consumer staples. Sectors behave differently across the economic cycle: defensive ones like utilities hold up in downturns, cyclical ones like industrials swing harder. Watching your sector exposure prevents accidental over-concentration in whatever's currently in fashion.

For example

If three of your favorite stocks are all tech, you may be 40% in one sector — a concentration the sector lens makes visible.

Sector is taught hands-on in Stage 16 — Portfolio Construction.

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Related terms

Broad ETFAn ETF that tracks a wide market index — total US stock market, total international, total bond market.Concentration riskThe risk that one position, sector, or country represents enough of the portfolio that a single bad outcome dominates returns.Position sizeThe fraction of the total portfolio invested in a single holding.RebalanceSelling some of what's grown most and buying more of what's grown least to return the portfolio to its target weights.
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