New investor? How the ASX 200 heavy hitters started the year

Getting started on your investment journey can be overwhelming. There are more than 2,000+ companies listed on the ASX, and there are many ways to group them. 

For example, the S&P/ASX 200 Index (ASX: XJO) includes the 200 largest companies on the ASX by market capitalisation.

However, looking at the ASX sectors is another way to organise the stock market.

Sectors of the ASX

There are 11 sectors on the ASX. Understanding these sectors is important not only as a way to categorise the stock market, but also as you consider diversifying your portfolio. 

Diversification means not putting all your eggs in one basket.

When talking about the share market, think about spreading investments across a range of ASX shares (and sectors) rather than putting all your money into just one. 

The 11 sectors are:
 

• Energy – Companies engaged in the exploration, production, and sale of oil, gas, electricity, and renewable energy projects. 
• Materials – Companies involved in the extraction, production, and processing of natural resources, such as metals, minerals, chemicals, and construction materials.
• Industrials – Transportation, logistics, machinery, and construction companies. 
• Consumer discretionary – Companies that sell electronics (like TVs and smartphones), jewellery, cars, and luxury items like designer clothes.
• Consumer staples – Companies that sell necessities like food, beverages, household items, and personal care products.
• Healthcare – Pharmaceutical and biotechnology companies, and healthcare providers like clinics and hospitals.
• Financials – Banks and insurance companies.
• Information technology – Software developers, hardware designers, smartphone engineers, artificial intelligence, and cybersecurity companies. 
• Communication services – Media, entertainment, marketing, and advertising companies. 
• Utilities – Companies that take the raw energy created by the energy sector and distribute it to people's homes and businesses, including renewable energy companies.
• Real estate – Companies that own and operate shopping centres, retirement villages, and other residential communities. Includes REITs.

For the purpose of this exercise, let's look at some of the largest companies based on market capitalisation in each sector and how they have performed year to date (YTD). 

Market capitalisation (commonly abbreviated as 'market cap') measures the total dollar value the share market assigns to a listed company at any given time – nothing more, nothing less.

Essentially, it gives investors a snapshot of what the market believes a company is worth at a given moment.

Generally speaking (but not always), these companies are considered well-established and have investor confidence. 

The start to the year for these ASX 200 shares

In the red? Don't be scared off

As you can see from the table, almost all of these companies across these sectors have seen their share price fall to start the year.

For new investors, it can be daunting to see a share price in the red.

However, it's important to remember this can mean it's simply an opportunity to buy a quality holding at a discounted price.

The Motley Fool Australia's Chief Investment Officer Scott Phillips shared earlier this week the history of share market volatility. It's worth reading for investors looking for reassurance about long-term ASX returns.

Despite a rocky start to 2025 for the ASX, history tells us that the S&P/ASX 200 Index (ASX: XJO) has compounded at more than 9% per annum over the last 10 years.