Rotation

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Rotation

An active asset management strategy that tactically overweighted and underweighted certain sectors, depending on expected performance. Sometimes called sector rotation.

Sector Rotation

An investment strategy in which a portfolio overweights or underweights certain sectors in accordance with expected performance. Sector rotation is a form of active investment management; the portfolio manager observes market trends and alters the composition of the portfolio in order to earn the highest possible return. Sector rotation is fairly high risk, as a portfolio's systematic overweighting and underweighting means that is not efficiently diversified. See also: Markowitz portfolio theory.