Sector rotation is the movement or rotation of capital from one asset type to another in order to take advantage of current market conditions. Sector rotation occurs in shorter corrections as well as longer Bull/Bear cycles that correlate with the business cycle.

Sector rotation.

Sector rotation is driven by the Federal Reserve’s interest rate policy as shown at the center of the wheel above. Events move clockwise around the ring.

Source: Sector rotation ring graphic by Investors RouteMap

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