Sector Rotation Model

Target the world’s strongest market sectors with a dynamic ETF strategy

The Sector Rotation Model (SRM) is designed for investors who want to capture the power of global equity trends while keeping risk under control.

It dynamically reallocates among 10 global equity sectors, investing only in those showing the strongest performance at any given time.

This disciplined, data-driven approach helps you stay invested where momentum is strongest , and reduce exposure when markets turn uncertain.

1️⃣ Concept: follow global sector leadership

Financial markets move in cycles.

At different points in the cycle, some sectors outperform (like Technology or Industrials), while others lag (like Utilities or Real Estate).

The SRM identifies these cycles by analyzing each sector’s recent strength and relative momentum versus the rest of the market.

Every month, it rebalances toward the top-performing sectors and away from the weakest , ensuring your capital stays aligned with the prevailing trends.

Goal: ride the market’s strongest waves, while avoiding underperforming areas.

2️⃣ How it works

The SRM universe includes 10 of major GICS global sectors, each represented by a broad ETF:

Sector

Energy : World Energy ETF

Materials : World Materials ETF

Industrials : World Industrials ETF

Consumer Discretionary : World Consumer Discretionary ETF

Consumer Staples : World Consumer Staples ETF

Health Care : World Health Care ETF

Financials : World Financials ETF

Information Technology : World Information Technology ETF

Communication Services : World Telecom ETF

Utilities : World Utilities ETF

Each month, the model ranks these ETFs based on their performance and momentum.

It then invests in the top 1–2 sectors, adjusting allocations as trends evolve.

When overall market signals turn negative, the model can shift to money market ETFs or cash to preserve capital.

3️⃣ Why it works

The SRM leverages one of the most consistent forces in financial markets , sector rotation.

Throughout history, leadership among sectors has rotated as economic conditions changed.

Technology and Consumer sectors often lead during expansions, while Utilities and Health Care tend to hold up in slowdowns.

By systematically following these shifts, the SRM aims to:

✅ Capture upside potential early in emerging trends.

✅ Avoid lagging sectors before losses deepen.

✅ Deliver a smoother long-term performance curve.

4️⃣ Performance

Tracked since 2014, the SRM has consistently outperformed the MSCI World Index (Gross) while experiencing smaller drawdowns.

• Average annual return : higher than the MSCI World benchmark.

• Rebalancing frequency : 3 – 4 adjustments per year.

• Trading cost impact : minimal due to low turnover.

Past performance is not indicative of future results.

Highlights:

• Captures global growth across the world’s leading industries.

• Provides flexibility and protection during changing markets.

• Suitable for long-term investors seeking tactical diversification.

5️⃣ Key advantages

• Active diversification : exposure to global sectors rather than single markets.

• Simple to follow : only 1 – 2 ETFs at a time.

• Adaptive : reallocates monthly based on momentum signals.

• Defensive : can move to cash or money markets in downturns.

• Evidence-based : founded on robust academic and empirical research.

6️⃣ For whom is SRM ideal?

The SRM is best suited for investors who:

• Seek a more dynamic strategy with potential for higher returns.

• Understand short-term fluctuations but focus on medium-to-long-term growth.

• Want to diversify beyond traditional regional allocations.

If you prefer a more stable, low-maintenance approach, consider the Asset Allocation Model (AAM).

Many investors combine both models for broader diversification and risk balance.

7️⃣ Get started

Follow the market’s leaders , not the laggards.

Join investors who use myETFmodel’s Sector Rotation Model to stay ahead of global trends.

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