What is Sector Rotation?
Shifting investments between sectors based on the economic cycle.
In Depth
Different sectors lead at different stages of the economic cycle. Cyclicals (consumer discretionary, industrials) outperform in expansion; defensives (utilities, consumer staples, health care) outperform in slowdown. Sector rotation strategies attempt to position ahead of these shifts.
Example
Moving from technology to utilities as recession risk rises is a defensive rotation.