Are We Seeing A Sector Rotation Away From Financials And Into Healthcare?

Sector rotation is very common in the stock market, as investors allocate investment dollars from an underperforming sector to an outperforming sector, or a sector that has the potential to offer superior returns.

"There's always rotation going on in these markets from one sector to another," Joel Elconin, co-host of Benzinga's daily PreMarket Prep explained during Wednesday's edition. "There are a lot of different places people can place their money."

Related Link: A Bullish Call On A Favorite Healthcare ETF

JJ Kinahan, TDAmeritrade's chief strategist was a guest on the segment and offered his expert opinion on sector rotation. He said that it was perhaps a bit surprising to see a sector rotation outside of financials, despite the fact that there has been no interest rate increase.

He added that many major financial firms touted that the exposure of their retail and corporate clients "seem to be going really well" – a fact that makes a sector rotation outside of financials even more surprising.

Kinahan continued that the healthcare segment is showing some good earnings results and he expects investors to rotate back into the space. However, he cautioned that in an election year, the healthcare sector is the most vulnerable out of every sector to rule and law changes.

A Few Relevant ETFs

• iShares Dow Jones US Healthcare (ETF) (NYSE: IYH) is currently down 4.4 percent year-to-date, but up 7.95 percent over the last three months.
• Guggenheim S&P 500 Equal Weight Healthcare ETF (NYSE: RYH) is down 4.08 percent year-to-date, but up 7.66 percent over the last three months.
• iShares S&P Global Healthcare Sect.(ETF) (NYSE: IXJ) is down 4.31 percent year-to-date, but up 6.42 percent over the past three months.
• ProShares Ultra Financials (ETF) (NYSE: UYG) is up 17.26 percent over the last three months and down 5.94 percent year-to-date.
• Vanguard Financials ETF (NYSE: VFH) is up 10.62 percent over the past three months and down 2.17 percent year-to-date.
• iShares Dow Jones US Financial (ETF) (NYSE: IYF) is up 10.28 percent over the three months, but down 2.29 percent year-to-date.
• Guggenheim S&P 500 Equal Weight Financials ETF (NYSE: RYF) is down 1.46 percent year-to-date, but up 9.77 percent over the three-month period.
• Fidelity MSCI Financials Index ETF (NYSE: FNCL) is down 2.76 percent year-to-date, but up 9.82 percent over the past three months.