How Many Stock Market Sectors Are There on the TSX and How Does It Differ from the S&P 500?
There are thousands of stocks traded on the major U.S. markets. The New York Stock Exchange (NYSE) is the world’s largest exchange with a market cap of $24.2 trillion and more than 2,500 companies listed. The NASDAQ, meanwhile, is the second largest exchange in the world with a market cap of $18.6 trillion and more than 3,750 companies listed.
In Canada, there are 1,640 stocks listed on the Toronto Stock Exchange (TSX) and 1,649 on the TSXV (Venture) giving it a total market cap of $3.3 trillion, making it the ninth largest stock exchange in the world.
Companies choose to list on different exchanges for different reasons. Each exchange has its own requirements for listing, which means a company might qualify for one exchange and not another.
Some exchanges are also known for listing certain types of stocks. The Nasdaq is geared toward the tech industry while the NYSE is home to many of the world’s oldest, most well-established blue-chip stocks. The TSX is known for the number of commodity and energy stocks.
How Many Stock Market Sectors Are There?
To keep track of different stocks, the global exchanges create sectors which group similar stocks together. There are 11 different stock market sectors: Financials, Energy, Industrials, Materials, Information Technology, Communications Services, Utilities, Consumer Staples, Consumer Discretionary, Real Estate, Healthcare.
Even here, these sectors are just broad titles. Within each sector there are subindustries—158 at last count. For example, Consumer Discretionary is broken down into numerous sub industries including, Consumer Retail, Consumer Retail Luxury, Casinos and Gambling, Footwear, and Restaurants.
Grouping stocks together in sectors makes it a lot easier to compare companies and do research.
That said, it can still be difficult to keep track of that many stocks. To get a better grasp of how the overarching stock market is doing there are indexes that keep track of the leading publicly traded companies and ensure you have a well-diversified portfolio.
The most popular one in the U.S. is the Standard & Poor’s 500 Index, or S&P 500. It’s a market capitalization weighted index of the 500 leadingpubliclytraded U.S. companies. In Canada, there is the S&P/TSX Composite Index, a benchmark made up of about 235 companies, representing roughly 70% of the total market cap of the TSX.
Here is a list of the 11 different sectors and how they are weighted differently on the S&P 500 and the S&P/TSX.
Sector | S&P 500 | TSX/S&P |
Financials | 11.73% | 30.60% |
Energy | 5.40% | 19.10% |
Industrials | 8.45% | 13.30% |
Materials | 2.69% | 11.30% |
Information Technology | 26.47% | 5.60% |
Communication Services | 7.33% | 4.90% |
Utilities | 2.92% | 4.70% |
Consumer Staples | 6.80% | 4.10% |
Consumer Discretionary | 10.59% | 3.60% |
Real Estate | 2.70% | 2.50% |
Healthcare | 14.90% | 0.40% |
As you can see in the chart above, the S&P 500 and TSX/SPX are known for specializing in different sectors. The TSX is heavily weighted toward Financials (30.60%) and Energy (19.10%). On the S&P 500, Energy accounts for just 5.4% of all holdings.
The two biggest sectors on the S&P 500 are Information Technology (26.47%) and Healthcare (14.90%).
All 11 sectors play an important role in the global stock market and, today, it’s easier than ever for investors to gain a broad exposure to individual stocks or an entire sector, industry, or subindustry.
Sharp Asset Management for Your Retirement Planning
Different stock market exchanges are known for specializing in different stocks, as a result, the 11 different sectors will be weighted differently. Instead of trying to guess which sectors will outperform others at any given time, a private wealth management firm can help you build a diversified portfolio that can include all, or some, of the different sectors.
If you live in Toronto, Mississauga, or anywhere in the GTA and are looking for a portfolio management firm or asset management company to help you through every stage of your financial journey, Sharp Asset Management can help.
Sharp Asset Management Inc. is an independent portfolio management firm that is 100% owner-operated. We are not affiliated with any financial institution, securities firm, or mutual fund company. Nor do we earn any commissions or fees on investments we choose for our clients. That means our team of wealth management professionals is focused exclusively on helping you achieve your unique, long-term investing objectives. To learn more about investing with Sharp Asset Management, contact us today.
