Global Sector ETF Rotation Portfolio

by: Scott's Investments

I gave an example earlier this week of a US sector rotation system using ETFs. This portfolio strategy uses the same rules, only with the iShares Global Sector ETFs. The momentum strategy that an investor could implement would be to purchase the best returning Global sector ETF(s) over the trailing 3, 6, and 12 months. This strategy has been written about extensively by Mebane Faber, author of The Ivy Portfolio.

I decided to use the results as of today's close, rather then June 30th like my previous post. The top 3 Global Sectors in order are IXN, RXI, and KXI. The full results are below:

As of July 16th Close
3 Month Return 6 Month Return 12 month Return Sum
Consumer Discretionary Sector RXI 9.83% 24.44% -14.73% 19.54%
Consumer Staples Sector KXI 14.54% 12.10% -9.87% 16.77%
Energy Sector IXC 11.24% 11.93% -30.56% -7.39%
Financial Sector IXG 18.54% 28.27% -31.83% 14.98%
Health Care Sector IXJ 11.63% 3.37% -15.77% -0.77%
Industrial Sector EXI 10.59% 15.19% -29.71% -3.93%
Materials Sector MXI 15.76% 34.47% -35.76% 14.47%
Technology Sector IXN 13.16% 32.82% -16.08% 29.90%
Telecommunications Sector IXP 6.12% 5.82% -21.83% -9.89%
Utilities Sector JXI 12.82% 2.85% -28.22% -12.55%

Data Source: FINVIZ
Click to enlarge

An indivdual investor wishing to use an ETF rotation strategy for Global sectors could purchase the top performing ETFs and rebalance monthly. The fewer the 'top' ETFs purchased, the more volatility one could expect.

Going forward I will be updating these results monthly on Scott's Investments.

Disclosure: None