Sector rotation, timing and leverage as a regime case study

What the archive compared

The archive frames sector-fund investing as a way to concentrate on one industry slice of the market, rather than only slicing holdings by company size or by growth versus value.

It compares several ways to hold sector funds. Those approaches range from untimed buy-and-hold through market timing, relative-strength selection, and combinations that add leverage.

Buy-and-hold results across a broad set of industry-aligned sector funds are used as a baseline risk-return map before any timing or rotation is applied.

Premises for sector rotation

Three premises are given for sector rotation. Some sectors can outperform even when the broad market is weak. Stronger sectors can be identified by relative strength. Those leadership stretches can last long enough to act on.

Timing first, then leverage

A moving average of fund closing prices is presented as a simple timing filter. Stay invested when price is above the average, and step aside when price falls below it.

The archive treats built-in fund leverage as a magnifier of both gain and loss, not as a substitute for the timing or rotation rules. Leverage control, in this case, is the decision to allow or withhold that magnifier after the rotation and timing rules are already set.