Sector investing allows an investor to concentrate a specific allocation of their portfolio to companies that share similarities in their line of business. The market is comprised of eleven sectors with unique characteristics. Sector mutual funds or exchange -traded funds (ETFs) now exist to permit someone to devote resources to an area they believe will supplement their investment selections.
Different techniques and strategies are employed while using sectors in an investment portfolio. At Childs Company, we use a core and satellite approach while building our models. Core investments capture the broader market and make up a large portion of the portfolio. The satellite investments complement the core, which may include a few sector funds. Our view is to invest in sectors that will perform well over a long period of time. For example, we believe the health care and technology sectors meet the criteria for short and long-term investing.
See attached article on Fidelity’s take around the health care sector given the current environment.
Give us a call to talk about our sector strategy.
Matt and Andrew
Disclosure: Investing involves risk, including the possible loss of principal. Past performance does not guarantee future results. Asset allocation alone cannot eliminate the risk of fluctuating prices and uncertain returns. There is no guarantee that a diversified portfolio will outperform a non-diversified portfolio in any given market environment. No investment strategy, such as asset allocation, can guarantee a profit or protect against a loss. Actual client results will vary based on investment selection, timing, and market conditions. It is not possible to invest directly in an index.