Sector rotation, the act of moving in and out of various based on economic climate or market setting, is undeniably made easier with sector exchange traded funds. “For investors looking to take a more active approach to stock diversification—that is, beyond a broad-based index fund—a so-called sector rotation strategy is one way to go,” according to Charles Schwab research. “With this approach, you overweight or underweight various sectors in your portfolio against a benchmark weighting—say, the S&P 500 ® Index—based on their expected performance.”