Why invest in Sector ETFs?

Are you optimistic about a particular sector/industry but don't have time to figure out which stock to buy?

If you consult your investment advisor, he/she may recommend that you buy a fund or ETF. Among them, sector ETFs, which invest specifically in the stocks and securities of a particular sector, are a simple and cost-effective tool to gain access to an entire slice of the stock market.

Those sectors, determined by the Global Industry Classification Standard, are energy, materials, industrials, consumer discretionary, consumer staples, healthcare,financials, technology, communication services, utilities, and real estate.

However, sectors typically are considered broad classifications, and each sector could be further divided into numerous sub-sectors and industries. The ETFs market also provides options for investors to target a subset of the broader industry.

Sector ETFs typically track an index made up of companies from a specific sector of the economy.
Sector ETFs allow you to gain exposure to a broad range of companies within aspecific sector rather than holding a single stock.
Sector ETFs could also be used for hedging and speculating and have become increasingly popular nowadays.

Below is a chart listing the number of ETFs, the representative ETF with the largest assets under management (AUM) in each sector, ranked by sectors' AUM.