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XRO

Sector rotation techniques have been around for decades, a relatively simple strategy often used by investors seeking to capitalize on short-term mispricings in order to generate alpha. In its most basic form, sector rotation involves segmenting the equity universe by industry, and moving into and out of various sectors depending on relative attractiveness from a valuation perspective. The idea is to overweight the sectors that are attractively priced, and underweight those that are deemed to be overvalued. Those who are able to identify overbought and oversold sectors–or even broader trends that may favor high beta or low beta stocks–can beat the market by regularly shifting exposure [see also Nine Twists On Sector ETF Investing].

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Under The Microscope: Sector Rotation ETF (XRO)

by Eric Dutram on April 9, 2010

During the Great Recovery of the last 12 months, every sector of the U.S. and global economies have gained ground. But some industries have performed better than others, resulting in big performance gaps between various sector-specific ETFs. According to ETF Guide, the Vanguard Total Stock Market ETF (VTI) rose 28.8% but the technology sector SPDR (XLK) jumped 51.0%  and the materials sector SPDR (XLB) soared by 48.5%. This shows that while picking the right asset class is crucial, picking the correct sector can have just as big an impact on total returns. For investors seeking help in choosing sectors that could outperform the general market, Claymore/Zachs Sector Rotation ETF (XRO) offers an interesting choice. [click to continue…]

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Beyond SPY: Five Outperforming Large Cap ETFs

by Michael Johnston on December 10, 2009

At the core of many investor portfolios is an allocation to large cap, U.S.-listed equities. With market capitalizations usually exceeding $10 billion, large cap stocks generally have long operating histories, stable operations, and large amounts of cash on hand, making them less risky investments than small and mid cap firms. Moreover, although domestic large caps [...]

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Special Report: Alpha ETFs Come Of Age

by Michael Johnston on September 1, 2009

In the summer of 1992, Eugene Fama and Kenneth French published “The Cross-Section of Expected Stock Returns” in The Journal of Finance, a groundbreaking analysis that prompted financial presses to run headlines declaring “beta is dead.” While the death sentence may have been a bit severe, it struck a significant blow to a widely-accepted and [...]

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