Sector rotation

The action of a mutual fund or portfolio manager shifting investment assets from one sector of the economy to another.

Investopedia Says:
Not all sectors of the economy perform well at the same time. Sector rotation is a portfolio manager's attempt to profit through timing a particular economic cycle.

Related Links:
We look at how the market signals impending economic cycles and sector performance during each stage. Sector Rotation: The Essentials
Understanding the business cycle and your own investment style can help you cope with an economic decline. Recession: What Does It Mean To Investors?
This strategy can be profitable but requires careful timing and analysis of various factors. Find out what they are. The Ups And Downs Of Investing In Cyclical Stocks
Look at the big picture when choosing a company - what you see may really be a stage in its industry's growth. The Stages Of Industry Growth
The past century was marked by furious economic change. What can it tell us about what lies ahead? The Stock Market: A Look Back
You can use these securities for more than just indexing. Explore the spectrum of possible strategies here. Active Vs Passive Investing In ETFs

Stock investment strategy in which money is moved from one Industrial Sector to another in an effort to catch respective upcycles and thus outperform the overall market. Also called Group Rotation.

Sector rotation is a term normally applied to stock market trading patterns. In this context, a sector is understood to mean a group of stocks representing companies in similar lines of business.

For example, an investor or trader may describe the current market movements as favoring basic material stocks over semiconductor stocks by calling the environment a sector rotation from semiconductors to basic materials.

Sector Rotation Models exist primarily to help investors identify and participate in new trending sectors of the stock market. A sector rotation investment strategy is not a passive investment strategy like indexing, and requires periodic review and adjustment of sector holdings. Tactical asset allocation and sector rotation strategies require patience and discipline, but have the potential to outperform passive indexing investment strategies.

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