FTMDaily's Sector Rotation ETF Strategy

Our Sector Rotation ETF Strategy kept pace with the S&P 500 in the face of massive uncertainty during a highly volatile election year!

Subscribers: View Our Current Sector ETF Investments here
Not a subscriber? View our plans/pricing here
Subscribers: View Our Current Sector ETF Investments here
Not a subscriber? View our plans/pricing here

Subscribers: View Our Current Sector ETF Investments here
Not a subscriber? View our plans/pricing here

From the desk of Jerry Robinson...

A few years ago, I stumbled across an interesting white paper entitled Relative Strength Strategies for Investing written by Meb Faber of Cambria Investment Management. The paper demonstrated a powerful (but simple) investment strategy that outperformed the typical “buy-and-hold” strategy nearly 70% of the time.

Faber’s research, which was based upon 80+ years of stock market data, revealed an astoundingly simple way to beat the marketPut simply, the strategy involves buying sector-based ETFs that have recently outperformed their peers.

Instead of simply buying a plain vanilla S&P 500 index fund (like SPY),  this strategy seeks to beat the return of the benchmark index by investing in the underlying S&P 500 sectors displaying the most relative strength.

Meet the Nine Sectors of the S&P 500 Index 

Frequently Asked Questions

  • q-iconHow does FTMDaily's Sector Rotation Strategy work?

    Each quarter we present up to three of the top S&P 500 sectors based upon trailing total returns, including dividends, relative strength, and our own technical and fundamental analysis.

    If you choose to only invest in the top performing sector, then you would basically invest 100% into that sector.

    If you instead choose to invest in the two best performing sectors, then you would invest 50% into each of the top two sectors. (While investing in the two or three top sectors slightly lowers the historical return probability, it also slightly lowers your risk through wider diversification.)

    And if you choose to invest in the top three performing sectors, your investment would be divided evenly into thirds, that is 33% invested in each of the top three sectors.

  • q-iconHow has this strategy performed over the long-term?

    The tremendous benefits of sector rotation are documented in Meb Faber’s 22-page white paper here. It’s a quick read and contains some very interesting insights, especially regarding how to optimize the portfolio for the best possible returns. According to his research, his sector rotation strategy beat its underlying index 70% of the time.

    Also, you should know that Faber’s paper is based upon a different index than the S&P 500. But that’s okay, as the strategy can be applied to any multi-sector index.

    It’s a very simple investment strategy that is easy to implement — which is why we like it — and has historically beaten the market.

  • q-iconHow often do you rebalance the portfolio?

    We share up to three of the top sectors for the following quarter four times per year, each at the beginning of January, April, July, and October.

    We adjust our investments once a quarter and only when the leading sectors change. In the event that our top sectors remain the same from one quarter to the next, there would be no trading necessary.


  • q-iconWhy is this strategy better than just buying and holding a low-cost S&P 500 Index ETF?

    By focusing your investments into the top performing sectors within the S&P 500, you are more likely to own more of the leaders and less of the laggards in the stock market. This, in turn, can boost your returns over time if the current uptrend continues in your selected sector(s).

    We have personally been using this sector ETF rotation strategy for nearly two years and have been very pleased with the results. We share which sectors we are buying at the beginning of each quarter with our FTM Insiders and Pro Trader community through this new service. If you would like access, you can learn more here.


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