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I am an independent investor writing at Scott's Investments (http://www.scottsinvestments.com). My site is dedicated to discussing and publicly tracking historically successful investments strategies and sharing free investment resources. I emphasize empirical, historical, and quantitative... More
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Scott's Investments / Stock Loon LLC
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Scott's Investments
  • Sector ETF Portfolio for June...Rotating... 0 comments
    Jun 3, 2011 10:51 AM | about stocks: IXC, IXG, IXJ, IXN, IXP, JXI, KXI, MXI, RXI, XLB, XLE, XLF, XLI, XLK, XLP, XLU, XLV, XLY
    Please see the right hand side of Scott's Investments for the June update to the US and Global Sector ETF portfolios. I track the performance of each month's portfolio as well as previous months' performance. A summary of the data is listed below, including the percent each ETF is above/below the 200 day moving average.


    US Sector
    Last month the top 3 US sector performers based on the sum of the quarterly, half year, and annual returns were  XLB (materials), XLE (energy), and XLI (industrial).  This month all of the sector ETFs are above their 200 day moving average which was also the case last month. The top 3 based on momentum this month are XLB, XLE, and XLV (Health Care Select Sector SPDR).  The US Sector model is a little slow to rotate into health care, which has recently been performing very well.  XLV is the top performing ETF over the past quarter.  Since the strategy updates monthly, it may not always catch the beginning of a move but it is a long-term strategy.  

    I have improved the way the performance of the sector momentum strategies are tracked.  The strategies are tracked as a hypothetical portfolio with a starting balance of $10,000. Year to date the US Sector portfolio is up 5.09%, including dividends.


    Global Sector

    Last month the top 3 Global sector performers based on the sum of the quarterly, half year, and annual returns were  EXI (industrials), IXC (energy), and MXI (materials).  This month all of the sector ETFs are above their 200 day moving average which was also the case last month. The top 3 based on momentum this month are IXJ (healthcare), KXI (consumer staples), and IXC.
     
    As stated above the strategies are tracked as a hypothetical portfolio with a starting balance of $10,000. Year to date the Global Sector portfolio is up 1.81%.


    Potential strategies an investor could employ would be the following:
        • Buy the top 3-6-12 or 6 month performers and hold for one month. Or, buy the top performer based on the 6 month performance.
        • Buy the top performers only if they are also above the 200 day moving average.
        • Buy any ETF which is above the 200 day moving average, sell if it drops below the 200 day average. Update once per month
        • Trade the top 3 momentum performers using a more detailed trading plan such as one I detailed here.
      The strategy used for the US and Global Sector ETF portfolios is to buy the top 3 ETFs based on the average of their 3, 6, and 12 month returns. The top 3 momentum ETFs must also be above their 200 day simple moving average. The portfolio is updated once per month, at the end of the month.


      For some additional background on the strategy please click here and/or check out Mebane Faber's The Ivy Portfolio: How to Invest Like the Top Endowments and Avoid Bear Markets.


      The data source for the information below is Finviz.

      No positions

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      US Sector




      Ticker Company Performance (Quarter) Half Year Year Average Return 200-Day SMA
      XLB Materials Select Sector SPDR 3.62% 14.32% 38.45% 18.80% 8.65%
      XLE Energy Select Sector SPDR 0.39% 23.49% 55.21% 26.36% 14.69%
      XLF Financial Select Sector SPDR -3.71% 9.62% 11.39% 5.77% 2.07%
      XLI Industrial Select Sector SPDR 4.35% 16.21% 32.59% 17.72% 9.54%
      XLK Technology Select Sector SPDR 1.93% 10.16% 25.22% 12.44% 6.85%
      XLP Consumer Staples Select Sector SPDR 10.20% 15.23% 26.46% 17.30% 11.49%
      XLU Utilities Select Sector SPDR 7.59% 12.38% 25.82% 15.26% 7.98%
      XLV Health Care Select Sector SPDR 11.93% 19.37% 29.01% 20.10% 13.64%
      XLY Consumer Discret Select Sector SPDR 4.96% 12.65% 28.87% 15.49% 10.28%




      Global Sector




      Ticker Company Perfor-mance (Quarter) Half Year Year Average Return 200-Day SMA
      EXI iShares S&P Global Industrials 2.60% 15.43% 34.92% 17.65% 8.78%
      IXC iShares S&P Global Energy -0.35% 21.11% 45.06% 21.94% 11.68%
      IXG iShares S&P Global Financials -1.78% 11.64% 21.02% 10.29% 3.70%
      IXJ iShares S&P Global Healthcare 12.29% 20.15% 33.18% 21.87% 14.14%
      IXN iShares S&P Global Technology -0.66% 8.52% 20.95% 9.60% 5.28%
      IXP iShares S&P Global Telecommunications 4.68% 12.36% 36.18% 17.74% 7.13%
      JXI iShares S&P Global Utilities 0.99% 8.35% 19.94% 9.76% 3.42%
      KXI iShares S&P Global Consumer Staples 10.84% 15.04% 29.94% 18.61% 11.61%
      MXI iShares S&P Global Materials 1.29% 12.28% 40.56% 18.04% 7.20%
      RXI iShares S&P Global Cons Discretionary 3.45% 11.13% 32.28% 15.62% 8.98%
      Stocks: IXC, IXG, IXJ, IXN, IXP, JXI, KXI, MXI, RXI, XLB, XLE, XLF, XLI, XLK, XLP, XLU, XLV, XLY
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