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Sector Rotation Strategy

This document describes a sector rotation portfolio strategy that aims to outperform the S&P 500 index by rotating between the top 2 performing ETFs from a small selection of 7 ETFs representing different market sectors each month. Backtesting shows the strategy achieved an average annual return of 9.14% compared to 2.42% for the S&P 500 over a 13-year period, though past performance does not guarantee future results. The strategy only requires checking performance and making trades over a few minutes each month. However, the author claims their own 10-minute per night system achieves even higher average monthly returns of 5.7%.

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jlb99999
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349 views3 pages

Sector Rotation Strategy

This document describes a sector rotation portfolio strategy that aims to outperform the S&P 500 index by rotating between the top 2 performing ETFs from a small selection of 7 ETFs representing different market sectors each month. Backtesting shows the strategy achieved an average annual return of 9.14% compared to 2.42% for the S&P 500 over a 13-year period, though past performance does not guarantee future results. The strategy only requires checking performance and making trades over a few minutes each month. However, the author claims their own 10-minute per night system achieves even higher average monthly returns of 5.7%.

Uploaded by

jlb99999
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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Sector Rotation Portfolio

How would you like to be able to create a portfolio that outperformed the S & P 500 index by 6-7% per year, and you could manage it in a few minutes each month? Well it is possible and I am going to show you how to do it in this report. By using the power of ETF's it is possible to outperform the S & P 500 year after year. If you were a Mutual Fund manager and could deliver results like this you would be hailed as a superstar and be in constant demand to give your opinions in the financial media. People would line up to invest with you. But this strategy would not work for a Mutual fund, the fund could not easily enter and exit the trades like we can as an individual investor. This is a really simple strategy. We will look at a small selection of ETF's and choose to buy and hold the 2 (only 2 of the small list below) that have the highest current annual performance. We will check that annual performance at the beginning of each month. If there is a change we will sell the ETF that leaves the top 2 and buy the ETF that enters the top 2. Some months nothing changes, some months only one changes out and some months both change out. The ETF's that we will use in our strategy are, IVE, QQQ, SPY, MDY, IJS, IJT, and IWM. Yup, only 7 ETFs. I told you it was simple. These represent a variety of market sectors. At the beginning of each month we check the 1 year annual performance and own the top 2. That is it. There are many websites that will allow you to do this, here is a link to one:
http://finance.yahoo.com/etf/browser/mkt?k=8

The following page shows the results of using this strategy compared to owning the S & P 500 over a 13 year period.

Percentage Returns

Year 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Average return

ETF Strategy 41.80 61.73 -2.25 -3.09 -14.09 43.43 12.08 -1.89 13.28 6.77 -41.00 21.29 16.97 7.97 9.14

S & P 500 Index 26.67 19.53 -10.14 -13.04 -23.37 26.38 8.99 3.00 13.62 3.53 -38.49 23.45 12.78 5.94 (through 4/01/2011) 2.42

This is a theoretical back test and we did not make all these trades. The returns do not include the costs of commissions. You would have averaged 10 trades per year and had an average holding time of 70 days. This past performance does not guarantee future results. This two minute per month strategy tops the S&P, but my 10 minute per night system averages 5.7% per month (with compounding), sure its a little more work than two minutes per month, but worth it to most. Helping you retire on time,

Big A 800-743-0385 info@etftrendtrading.com

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