Posts by: Steve Zisman

Sector Rotation Strategy

I. Introduction

Sector Rotation is an asset allocation strategy which posits that certain sectors outperform others in different stages of the business cycle, and that the market can be outperformed by rotating a portfolio’s sector allocation based on the current phase of the business cycle. The sector rotation model has been around for decades, but bear market investing strategies are as relevant ever with the current volatility and uncertainty in the financial markets. While there have been many positive analyses performed on sector rotation, there have also been studies that fail to find statistically significant differences in sector performance over the business cycle, such as this 2009 study.

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