In 2011, we began a Tactical Allocation portfolio that profits from sector and country rotation. This “one portfolio, three models” strategy uses our famed relative strength rotation model, but we apply the model to three different sets of ETFs and mutual funds. Using a three model program helps to alleviate the inconsistency of running an aggressive growth portfolio with just one model and very few holdings.
The Tactical Allocation portfolio has five holdings. The first model invests in Fidelity sector funds and consists of two holdings. The second model trades sector and country ETFs and has two holdings. A market timing model is applied to this model so it can go to cash in a bad market. The third model trades broad-based ETFs and includes an inverse fund. It can go short in a bear market. This model has one holding.
Our closest competitors are hedge funds. Here are our advantages: