HEDGED SECTOR ROTATION cx.

Hedge Sector Rotation Strategies

SECTOR ROTATION

  • INSTRUMENTS TRADED: Mutual Funds Families such as Fidelity, Rydex and Profunds. Only no load funds are used.
  • TRADING FREQUENCY: Monthly. Signals are generated prior to last day of the month and you trade at the close of the last day of the month.

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

IMPLEMENTING THE TRADING SYSTEM

This system is a low maintenance strategy since it is traded once a month. We run the system after the close prior to the last day of each month and you will receive an email with a link to log-in to our site which will give you the target portfolio which you will rebalance to. The target portfolio lists each required ticker symbol and the corresponding weights within the portfolio.

If you are unable to trade the system yourself due to time limitations or lack of comfort level, it can be auto-traded in your own account by a professional money manager. For details please visit our Auto-Trading page for details.

→subscribe to our market timing signals