Are Cyclical ETFs Worth the Boom and Bust?
Just like the weather, the markets change, and just like meteorologists, investors try to predict those changes.
Some industries, however, go through regular boom-and-bust cycles. Cyclical industries, encapsulating everything from airlines to raw materials, tend to track the wider economy, with expansions and contractions happening at regular intervals based on the broader market. ETFs tracking cyclicals can offer bullish investors high returns in times of prosperity, but experts said even periodic sectors can be unpredictable. “At a certain point, you’re really making bets on a single stock, or a few stocks, that are really going to be the driver of the returns,” said Dan Sotiroff, research analyst at Morningstar. “That’s…
