Financial

When most people hear the term "financial sector," they think of banks. Although this is certainly the largest part of the financial sector, several other types of companies are included in the sector as well.

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We invest in several different types of companies that make up the financial sector besides just banks. Companies in the financial sector vary widely by function, size, growth potential, and other factors.

  • Banks: As previously mentioned, bank stocks make up the bulk of the financial sector. These include commercial banks, such as Wells Fargo (NYSE:WFC), which provide deposit accounts and loans to individuals and businesses; investment banks, such as Goldman Sachs (NYSE:GS), which provide services to institutions and high-net-worth investors; and universal banks, such as JPMorgan Chase, which serve both commercial and institutional clients.
  • Insurance: The second-largest part of the financial sector is the insurance subsector, which includes property and casualty insurers, life and health insurers, specialty insurers, and insurance brokers. Berkshire Hathaway is the largest company in the insurance subsector. This also includes so-called "insurtech" companies, such as Lemonade (NYSE: LMND).
  • Financial services: Some companies provide services related to investing and the public markets without being classified as banks or insurers. The ratings agency S&P Global (NYSE:SPGI) and the futures exchange CME Group (NYSE:CME) are two examples of financial service providers.
  • Mortgage REITs: Companies that own mortgages and other financial real estate instruments, known as mortgage real estate investment trusts (REITs), are another group in the financial sector.
  • Fintech: Financial technology companies, or fintech, are those that leverage technology to create new solutions for the financial industry. Visa, PayPal Holdings (NASDAQ:PYPL), and Block (NYSE:SQ) (formerly known as Square), fit into this category.
  • Blockchain and cryptocurrencies: Some companies in the financial sector develop products and services using blockchain technology and conduct businesses related to cryptocurrencies such as Bitcoin (CRYPTO: BTC).
  • SPACs: A special purpose acquisition company, or SPAC, is a company with no business operations that exists to take another company public. Also known as "blank check" companies, SPACs are considered part of the financial sector.