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Let's start with the basics. What's the Materials sector made of? If you said "commodities," you'd have plenty of company, but that's not exactly correct. Technically, a commodity is anything with no differentiation in quality (i.e., it's generally fungible — one unit of specified size and characteristics is perfectly interchangeable with any other unit). In other words, gold is gold.
But Fisher Investments recognizes that not all commodities fall in the Materials sector. Most notably oil, by far the largest commodity of all by value, falls in the Energy sector. Most agricultural products — also commodities — are found in the Consumer Staples sector.
The Materials sector is composed largely of metals, chemicals, paper, lumber, cement, crushed rock (called construction aggregate), and packaging. Chapter 4 of Fisher Investments on Materials discusses that these products are not equally represented in the sector — some are more important than others (i.e., they drive more revenue). But before we get into the specific industries, let's cover some broad characteristics all Materials firms generally share.
For more information or to purchase Fisher Investments on Materials, click here.
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