The S&P/ASX 200 Index (ASX: XJO) put in a strong showing last week, closing up 2.1%. That leaves the ASX 200 down around 2% in 2022 so far.
But not all ASX 200 shares are created equal.
Commodity and energy shares have tended to outperform this year amid soaring prices. Meanwhile, many formerly high-flying ASX 200 shares in the tech space have been pummelled as investors mull a future with significantly higher interest rates.
This trend has seen the S&P/ASX 200 Energy Index (ASX: XEJ) soar 17.4% year-to-date, while the S&P/ASX All Technology Index (ASX: XTX) has tanked 19.0%.
So, is it time to reduce exposure to commodity and energy stocks and buy the dip in ASX 200 tech shares?
Not according to Australian market strategist at Saxo Markets Jessica Amir.
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Fundies likely to rebalance exposures to ASX 200 shares
"Portfolio rebalancing from now to the end of quarter is likely to take place," Amir said.
Portfolio rebalancing is when fund managers bring their asset allocations back into alignment with their fund's investment strategies.
Why is that important if you're investing in ASX 200 shares?
Amir explained:
Commodity darlings that have gone up the most this year, are likely to see some profit taking/selling. And some managers could also be forced to top up (buy) downward facing tech stocks.
Indeed, fintech company Zip Co Ltd (ASX: Z1P), down 63.1% year-to-date, gained 9.5% in last week's trading.
So, what does this mean for the outlook for sector specific ASX 200 shares?
According to Amir:
Be mindful of end of quarter disillusioned gains, [which are] likely to be short lived. Remember earnings growth drives share price growth. So you should consider companies in growth industries, that are growing their market share and earnings.
If you see profit taking/selling in commodity stocks, you could have your chance to buy companies like Whitehaven Coal Ltd (ASX: WHC) and Woodside Petroleum Ltd (ASX: WPL). Both are trading up 50% this quarter, and operate on low price to earnings (P/E) ratios, meaning they are 'cheaper' to buy in comparison to how much 'earnings' they make/pay.
Amir concluded, "You could pick up some low hanging fruit end of quarter."
How have these energy shares been tracking?
The Woodside share price has been charging higher for most of the New Year, up more than 41% on the back of soaring crude oil and gas prices.
Our other leading ASX 200 share, Whitehaven Coal, has done even better. Whitehaven's share price has rocketed 52% this year as thermal coal hit all-time highs.
And, according to Amir, it will be worth keeping an eye on both these ASX 200 shares to watch for any profit taking in the weeks ahead.
