What is the name of the strategy when a portfolio manager moves client funds from one industry to another during certain market periods?

The strategy of moving client funds from one industry to another during specific market periods is referred to as sector rotation. This approach is based on the idea that different sectors of the economy perform differently at various stages of the business cycle. For instance, during economic expansions, certain sectors like technology and consumer discretionary may outperform, while during downturns, defensive sectors like utilities or consumer staples might be more resilient.

Sector rotation allows portfolio managers to capitalize on expected sector performance by actively shifting investments. This strategy necessitates a keen understanding of economic indicators and market trends, as well as the ability to predict which sectors are likely to perform well or poorly in the immediate future.

Market timing, on the other hand, involves attempting to predict future market movements to buy or sell assets at advantageous times but does not specifically involve the color of sectors. Diversification is a risk management strategy that involves spreading investments across various assets to reduce exposure to any single asset or risk. Asset allocation refers to the long-term investment strategy that determines how investments will be divided among various asset categories such as stocks, bonds, and cash. While these strategies can play a role in a portfolio’s overall management, sector rotation specifically targets movements between industries based on market conditions.