The Industrials Sector of the ASX

Companies listed on the ASX are organised into sectors. These are groups of companies that share similar characteristics, such as industry, size, or growth potential. The Australian share market is often referred to as mainly holes and homes. So the bulk of the market is in the Materials sector (think mining) or the Financials sector (think banks). But today I want to look at the Industrials sector. This is the sector that generally makes things, like goods and services.

The Industrials sector on the ASX is one of the 11 sectors that make up the Australian stock market. It includes companies that provide services such as transportation, engineering, construction, infrastructure, and waste management.

• The industrial sector is often seen as a proxy for the health of the Australian economy, as it reflects the demand for goods and services from both consumers and businesses.
• The ASX industrial sector is a group of companies that produce goods and services for various industries.
• These include transportation, engineering, construction, mining, utilities, infrastructure, airlines and more.
• The ASX industrial sector is important for the Australian economy because it creates jobs, generates income, and supports innovation.
• The ASX industrial sector is dynamic and diverse, adapting to changing market conditions and customer needs.

As of August 2023 these are the top 10 companies in the Industrials sector:

1. TCL Transurban Group
2. BXB Brambles Ltd
3. CPU Computershare Ltd
4. REH Reece Ltd
5. QAN Qantas Airways Ltd
6. AIA Auckland International Airport Ltd
7. SVW Seven Group Holdings Ltd
8. WOR Worley Ltd
9. ALX Atlas Arteria
10. IFT Infratil Ltd

Using ASX sectors to diversify your portfolio.

Investors may reduce their overall portfolio volatility and enhance their long-term returns by diversifying across ASX sectors. Depending on your risk profile and goals, you could balance your exposure to cyclical sectors, such as consumer discretionary or materials, which tend to perform well when the economy is expanding, with defensive sectors, such as health care or utilities, which tend to be more stable and resilient during downturns.

However, you should not rely solely on sectors for diversification. You can consider diversification via asset classes (bonds, cash), geographies (international markets), and styles (growth, value).

The industrial sector on the ASX can offer investors exposure to a diverse range of businesses that operate across different industries and geographies. The sector can also benefit from economic growth, population growth, urbanisation, and infrastructure spending. However, the sector also faces some challenges, such as environmental regulations, labour costs, competition, and cyclical demand. Investors who are interested in the industrial sector on the ASX should do their own research and analysis before making any investment decisions.

Some other sectors on the ASX are financials, materials, energy, consumer discretionary, consumer staples, health care, information technology, communication services, utilities, and real estate. Each sector has its own characteristics, opportunities, and risks that investors should be aware of. The Market Index website provides more information and data on each sector and its constituents.

Any advice in this blog post is general financial advice only and does not take into account your objectives, financial situation or needs. Because of that, you should consider if the advice is appropriate to you and your needs before acting on the information. If you do choose to buy a financial product read the PDS and TMD and obtain appropriate financial advice tailored to your needs. Finpods Pty Ltd & Philip Muscatello are authorised representatives of MoneySherpa Pty Ltd which holds financial services licence 451289. Here's a link to our Financial Services Guide.