Plain-English definitions, reviewed by an independent investor
Sector
A sector groups companies by business type — tech, energy, healthcare — so you can see where performance comes from.
A sector groups companies by business type — tech, energy, healthcare — so you can see where performance comes from.
(A classification, not a formula)
Why it matters
It is the first layer of diversification beyond owning the whole market.
Common confusion
Sectors move on different cycles; tech and utilities rarely rhyme.
Frequently Asked Questions
How many sectors?
Common frameworks list 11 broad sectors like GICS.
Why diversify by sector?
It avoids betting the portfolio on one industry’s fate.