Better Trading Results Using ETF Rotation

Exchange Traded Funds (ETFs) now cover almost every possible market sector - from industrial sectors to country and regional sectors. Such breadth of choice allows for the creation of ETF rotation strategies that should allow an investor to get greater return by moving to the “hot” sectors no matter what the current market conditions are.

Broad Index ETFs

Index ETFs were introduced about 20 years ago to track the broader stock market indexes such as the famous Dow Industrials and the index tracking etf, SPY which tracks the S&P 500 Index. These exchange traded funds generally follow the major indexes and are fairly less volatile (move less in each direction) than other more specific sector and country ETFs.

Exchange Traded Funds that Track More Specific Sectors of the Market

Such ETFs as OIL (oil), GLD (gold) and SHY (short term bonds), allow a system to be developed that seeks to find which narrow market segment is likely to outperform in the near term and to move the assets in the system into such narrow segment until a better candidate is found. These ETFs provide some of the benefits of diversification that ETFs generally enjoy, while allowing some of the volatility that investing in narrow segments can enjoy also. These ETFs are specific enough to ensure that at least some of the market segments will move up no matter what phase of the economic cycle the economy is in. Thus, sector rotation strategies that can give great returns are now possible without investing in individual stocks.

ETF rotation strategies must be nimble to move into the correct sector at the right time.

ETFs that Cover Specific Countries or Regions

The last type of ETF that is useful for creating sector rotation strategies are the country or region specific ETFs. These country specific ETFs allow the investor to devise a rotation strategy that moves into the “hot” region and then out again when another region is poised to outperform.

Exchange Traded Fund Timing and Rotation Strategies - provide vast opportunities for great return for the aggressive investor.

ETFs are available for just about every sector of the markets - aggressive traders and investors have a whole world of opportunities (literally) to profit from.

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