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FA Whitepapers

 

March 2017  

The Ups and Downs of Sector Rotation

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Lack of discipline and patience has been one of the biggest challenges for investors over the years—in fact, emotional selling during periods of under-performance can really hurt long term returns. Our latest research — The Ups and Downs of Sector Rotation — provides valuable insight on how the discipline of sector rotation strategies can yield quite significant over-performance over time.

Highlights include:
  • How sector rotation strategies have performed over long time horizons and the risks involved to realize the returns, using the Ken French Data Library of 48 industry groups;
     
  • The criticality of the next 6 to 24 months once the strategy’s relative performance bottomed out; and
     
  • Annualized return of the top quintile was 14.1% versus 7.7% for the bottom quintile, and 9.5% for the market.
     

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