“The reason for that seems to be that rates tend to rise when the economy is healthy, and a healthy economy is generally good for the market. So, historically at least, increasing interest rates do not by themselves indicate weakness in the stock market,” Chisholm said.
Furthermore, many corporations remain relatively early in their profit cycle, which may continue to strengthen cyclical sectors.
Chisholm has signed out four sectors that have fundamental drivers that historically have been associated with strong relative returns, including Financials for the potential loan growth, Technology as leading indicators suggest expanding margins, Industrials for the likely increases in investment spending, and Consumer Discretionary due to tax cuts.
ETF investors interested in gaining exposure to individual sectors or execute a sector rotation strategy also have a number of options available. For instance, Fidelity’s sector ETFs include:
- Fidelity MSCI Consumer Discretionary Index (NYSEArca: FDIS)
- Fidelity MSCI Consumer Staples Index ETF (NYSEArca: FSTA)
- Fidelity MSCI Energy Index ETF (NYSEArca: FENY)
- Fidelity MSCI Financials Index ETF (NYSEArca: FNCL)
- Fidelity MSCI Health Care Index ETF (NYSEArca: FHLC)
- Fidelity MSCI Industrials Index ETF (NYSEArca: FIDU)
- Fidelity MSCI Information Technology Index ETF (NYSEArca: FTEC)
- Fidelity MSCI Materials Index ETF (NYSEArca: FMAT)
- Fidelity MSCI Telecommunication Services Index ETF (NYSEArca: FCOM)
- Fidelity MSCI Utilities Index ETF (NYSEArca: FUTY)
- Fidelity MSCI Real Estate Index ETF (NYSEArca: FREL)
For more information on the markets, visit our current affairs category.