iQ ETF Sector Rotation Model 


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Sector Rotation trading strategies are popular because they can improve risk-adjusted returns and automate the investing process. Momentum investing, which is at the heart of the sector rotation strategy, seeks to invest in sectors showing the strongest performance over a specific timeframe.

Sector Rotation - with a hedge…

The ETF Sector Rotation Model selects the top 5 sectors from the following starting universe:

  1. SHORT S&P 500

  2. Consumer Staples

  3. Consumer Discretionary

  4. Energy

  5. Financials

  6. Healthcare

  7. Industrials

  8. Materials

  9. Real Estate

  10. Utilities

  11. Technology

  12. Telecommunications

*Notice we placed an inverse ETF (S&P 500 Short) as a potential hedge against down markets.

The Process:

  1. Start with 11 sector ETFs and the inverse S&P 500 ETF.

  2. Kick out any constituent of the starting universe that is below its 9-month simple moving average

  3. Rank by long-term price momentum and select the top 5 ETFs

    1. If five ETFs do not make the cut, the remaining spots are filled by a Treasury Bill ETF