Recommended number of holdings: 3
| Market/Sector | ETF | ETF Ticker | Rank | Sum |
|---|---|---|---|---|
| Consumer Discretionary | Vanguard Consumer Discret ETF | VCR | 1 | 52.81 |
| Information Technology | Vanguard Information Tech ETF | VGT | 2 | 51.64 |
| Industrials | Vanguard Industrials ETF | VIS | 3 | 45.39 |
| Health Care | Vanguard Health Care ETF | VHT | 4 | 44.76 |
| Consumer Staples | Vanguard Consumer Staples ETF | VDC | 5 | 34.97 |
| Materials | Vanguard Materials ETF | VAW | 6 | 33.15 |
| Financials | Vanguard Financials ETF | VFH | 7 | 31.19 |
| Energy | Vanguard Energy ETF | VDE | 8 | 29.29 |
| Utilities | Vanguard Utilities ETF | VPU | 9 | 26.25 |
| Telecommunications | Vanguard Telecommun Serv ETF | VOX | 10 | 18.24 |
As of: 02/18/12
This sector rotation model ranks sectors by momentum. Momentum has been studied extensively and has been found to produce excess returns across many asset classes.
While the top sectors are likely to outperform the market, the rankings can change a bit from month to month. To avoid this, either several of the top sectors should be owned, or the top sector should only be sold once its ranking drops below 2. The sector rotation strategy can also be used in combination with a stock selection strategy such as our stock rating system. By buying stocks in the sectors near the top of these rankings, it may be possible to capture some additional alpha.
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