<p><strong>Sector Rotation</strong> is an investment strategy involving the movement of assets between different sectors of the market, typically aligned with the phases of the economic cycle. It aims to capitalize on the varying performance of sectors at different stages of the cycle.</p>
<p>Sector rotation matters as it can enhance portfolio performance by overweighting sectors expected to outperform and underweighting those likely to lag. For instance, during an economic recovery, investors might rotate into cyclical sectors like industrials and financials, while defensive sectors like utilities and consumer staples may lead during an economic downturn.</p>