Canada

Why sector mix matters when comparing indexes

Two broad indexes can behave differently because they do not necessarily own the same mix of sectors or companies.

Composition matters

An index with more weight in financials or energy may respond differently to economic changes than one with more weight in technology or consumer businesses.

Concentration matters

A market can be broad by number of companies while still carrying meaningful concentration in a few sectors or large issuers.

Comparisons need context

Check sector weights, currency exposure, methodology and the period being discussed before drawing conclusions.