Sector Investing

One of the most popular methods of investing in stocks is with sectors. Investment professionals group companies based on their primary industry. These groupings are known as sectors.

The most commonly recognized classification method breaks stocks into 10 major sectors. Each sector has distinctive risk and return characteristics. When included in a portfolio, sectors can add diversification and the ability to target top performers. Exposure to poorly performing sectors can be reduced or eliminated.

In difficult markets certain sectors have historically provided reduced risk. Health Care, Utilities and Consumer Staples typically outperform when the economy is slowing. In a growing economy, Technology and Consumer Cyclical stocks often prosper. Understanding how the business cycle impacts stocks helps investors navigate changing markets.

Sector rotation, the change of market leadership, offers opportunities to invest directly in top performing sectors. The best performers often maintain their leadership for months at a time. Owning these top performing sectors, as part of a broader allocation strategy, increases portfolio returns.

Muecke Financial utilizes sectors when constructing client portfolios. These targeted investments offer the ability to emphasize what’s working. By investing in sectors we can build adaptive portfolios and respond to changing markets.


Past performance is not a guarantee of future results. This is for informational purposes only and should not be construed as an investment recommendation or solicitation. Please consult an advisor to discuss your individual situation prior to making any investment decision.