Friday, December 24, 2010

Sector

A sector is generally understood as a grouping of similar companies. In other words a group of stocks or securities in the same industry or market, for example energy stocks, pharmaceuticals, financials, resources/mining, utilities, real estate, and so-on. Typically research analysts (active managers usually staff a number of research analysts to generate stock ideas for the portfolio manager to consider placing in the portfolio) will tend to specialize in a sector or a couple of sectors, meaning that they gain a stronger understanding and intuition for the sector and the types of business models and standards of profits/growth/etc characteristic of that sector. Some fund managers and ETF providers specialise in providing products that invest in only one sector, these can be useful tools for active investors who prefer to build their own portfolios.

Synonyms:  Industry group, GICS, Global Industry Classification Standard, Sector group, Peer companies

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