The proliferation of sector indexes has made it easier than ever for investors to implement sector-related strategies. The use of sector index-based strategies provides instant diversification, reducing risk compared to purchasing individual stocks. If you’re looking for exposure to a specific sector, following an index can help capture that trend efficiently without worrying about selecting specific securities in that sector.
Nasdaq provides a wide-ranging family of sector indexes based on the Industry Classification Benchmark (ICB) and designed for different purposes. The Nasdaq Global Equity family offers industry and super sector ICB coverage, and includes the U.S. All Market Benchmark, Large, Mid, and Small Cap ICB indexes. The renowned Nasdaq Biotechnology® Index is one of the most widely watched Biotech indexes and is the basis of 9 ETFs listed in four different countries.
The Nasdaq PHLX® sectors are intended to underlie tradable products like derivatives and ETFs, such as the PHLX Semiconductor Index, which is the basis of the $469 iShares PHLX Semiconductor ETF (SOXX). The PHLX indexes are designed to provide instant exposure and diversification around very specific portions of the market via core large-cap stocks and a rules-based approach. They include indexes covering housing, oil services companies, gold and silver miners, utilities, and others.