Industry

Why invest in industry sectors?

Industry sectors refer to companies that have similar product and/or target market characteristics and hence can be grouped into a specific ‘sector’. On the spectrum of ‘risk’ investing in a specific industry is considered less risk than investing in an individual stock but still more risky than having a diversified portfolio. Economic conditions often make one industry more attractive than another. Industry sectors also offer the opportunity to invest in an industry that is growing at a faster rate than other industries. S&P and MSCI have developed a Global Industry Classification Standard (GICS) taxonomy to categorize major public companies into 10 broad industry sectors as below:

  • Consumer Discretionary
  • Consumer Staples
  • Energy
  • Financials
  • Healthcare
  • Industrials
  • Materials
  • Technology
  • Telecom
  • Utilities

Key factors to consider before investing

  • Sector growth expectations ( relative P/E ratios)
  • Industry demand/ supply
  • Economic headwinds

US Equities – Calendar Year returns by Industry sector since 2009

 

US Equities – Quarterly returns by Industry sector since 2009

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