HEDGED SECTOR ROTATION cx.

Hedge Sector Rotation Strategies

SECTOR ROTATION


CONCEPT

HEDGED SECTOR ROTATION cx is an innovative relative strength momentum strategy that uses hedging to protect your account during market downturns.  The system capitalizes on the fact that the different sectors have different personalities - they do not move up and down in tandem.

Sectors will go in and out of favor during different phases of the economic cycle, and certain sectors will tend to respond to particular geopolitical events. The system runs its ranking algorithm at the end of each month to keep you invested in sectors with the strongest momentum. During market downturns the sector allocations will be scaled down and hedging will be scaled in.

The chart below illustrates how our proprietary momentum factor evolves through time.  Shown below are the monthly rankings of the Fidelity Select sector funds over a 10 year period. Green indicates strongest momentum and red indicates weakest momentum:

SectorHeatMap

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