Sector Breakdown

Today, I’m going to explain what sector breakdown is and explore the GICS sectors.

What is Sector Breakdown?

A sector breakdown is a mix of sectors within an investment fund or portfolio. These sectors are normally presented as a percentage. The distribution of specific sectors within a fund’s portfolio will depend on what goal the fund is trying to achieve. 

Exploring Sector Breakdown

Investment funds will typically provide a sector breakdown for investors to observe before they allocate their money. It’s important for you to view the fund’s sector breakdown so you know what to expect from the fund.

Some funds target specific sectors or even stock exchanges, while others simply try to buy stocks from many different sectors. Investing in a fund that includes stocks from many sectors is a great way to diversify your money.

GICS Sectors

Market sectors are a broad classification. Within each sector, there are many sub-sectors and industries inside them. The primary financial industry-standard we use to identify sectors is called the Global Industry Classification Standard or GICS for short.

The GICS structure consists of 11 sectors, 24 industry groups, 69 industries, and 158 sub-industries. The 11 broad GICS sectors commonly used for sector breakdown are:

  • Energy
  • Materials
  • Industrials
  • Consumer Discretionary
  • Consumer Staples
  • Health Care
  • Financials
  • Information Technology
  • Telecommunication Services
  • Utilities
  • Real Estate

Sectors and Diversification

You should own stocks from most, if not all GICS sectors if you wish to own a diversified investment portfolio. Diversifying across multiple sectors allows you to mitigate risks caused by factors affecting certain companies or industries.

Sector Indexes

You can also use sector indexes if you would like to track the performance of a particular sector. Investment companies like Vanguard offer index funds that target specific sectors for investors who want to get exposure to a particular industry.