ETFs & Sector Rotation: Large Cap, Small Cap, Or International?
June 06, 2011 at 10:00 AM EDT
Sector rotation techniques have been around for decades, a relatively simple strategy often used by investors seeking to capitalize on short-term mispricings in order to generate alpha. In its most basic form, sector rotation involves segmenting the equity universe by industry, and moving into and out of various sectors depending on relative attractiveness from a valuation perspective. The idea is to overweight the sectors that are attractively priced, and underweight those that are deemed to be overvalued. Those who are able to identify overbought and oversold sectors–or even broader trends that may favor high beta or low beta stocks–can beat the market by regularly shifting exposure [see also Nine Twists On Sector ETF Investing]. More recently, ETFs have become popular tools for investors implementing sector rotation strategies; instead of requiring investors to identify individual stocks with promising outlooks, a high level approach can be employed to achieve broad exposure to [...] Click here to read the original article on ETFdb.com. Related Posts: July ETF Roundup: Launches and Filings iShares Rolls Out Nine Ex-U.S. Sector ETFs Sector ETFs During The Correction: XLE Slides, XLP Holds Ground All Better Now? Many ETFs Climb Back Near Pre-Recession Levels Who Else Wants Ex-Sector ETFs?