Sector Rotation Portfolios

What is the objective of these portfolio?
These portfolios aim to capitalize on the cyclical nature of different sectors by dynamically adjusting their allocations based on recent sector performance. By rotating investments into the top-performing sectors, they seek to optimize returns and reduce risk over time.

What qualifies as a Sector Rotation Portfolio?
Sector Rotation Portfolios are defined by their methodology of shifting investments between sectors based on factors like relative strength, momentum, or recent performance. They follow a tactical approach, where the portfolio composition is adjusted periodically to reflect the sectors that are showing the strongest returns, often based on short- to medium-term performance metrics.

Why is this family of portfolios rebalanced and tracked each month?
The Sector Rotation Portfolio family was developed to provide investors with a strategy that responds to the changing economic environment and market conditions. By tracking sector performance and adjusting allocations accordingly, these portfolios aim to capture growth in sectors that are currently outperforming, while minimizing exposure to underperforming sectors.

What portfolio recipes are included in the Sector Rotation Portfolios family?
RecipeInvesting tracks the following Portfolio Recipes in the category of Sector Rotation Portfolios:

• Quartile Sector Rotation Portfolio (t.srqr): ranks a set of over 100 sector funds based on a blended total return, then buys the top ranked asset, and continues to hold the asset as long as it remains in the top quartile.
• Rel Strength Sector Rotation Portfolio (t.srrs): evaluates 9 sector ETFs and buys each asset whose 10-month total return is above its 10-month simple moving average total return. This Portfolio Recipe can also invest in cash if some ETFs are below their 10-month simple moving average (SMA).
• Top 3 Sector Rotation Portfolio (t.srt3): ranks sector funds based on total return. then buys the top 3 funds. This Portfolio Recipe can also invest in cash if SPY is below its 10-month simple moving average.
• Top 5 Sector Rotation Portfolio (t.srt5): ranks sector funds based on total return, then buys the top 5 funds in equal amounts. This Portfolio Recipe can also invest in cash if a Top-5 asset has a negative 12-month return.

What do Sector Rotation Portfolios have in common?
All of the Portfolio Recipes in the Sector Rotation Portfolios Family share the following characteristics:

• Tactical / Dynamic approach
• Rebalance frequency
• Invests in ETFs

How do Sector Rotation Portfolios differ?
Despite their similarities, Portfolio Recipes in the Sector Rotation Portfolios Family can differ based on these attributes:

• Number of ETFs used at a time
• Number of days for their lookback period

Comparison of Sector Rotation Portfolios