AlphaProfit’s sector rotation and sector selection process enables subscribers to invest in winning sectors and lock up gains.
AlphaProfit’s disciplined sector rotation strategy uses its proprietary ValuM sector selection methodology to identify leading sectors, industries, and themes. This methodology powers the ETF Core, ETF Focus, Fidelity Core, and Fidelity Focus model portfolios, helping investors rotate into the best sector ETFs and best Fidelity sector funds based on momentum, valuation, and news flow or fundamentals.
Here is a simple way to think about it: Markets rotate. Leadership changes. ValuM helps you stay aligned with what’s working — and avoid what’s not.
Why Sector Rotation Matters
Sector leadership shifts constantly as the economic cycle, interest rates, inflation, and innovation trends evolve. A static allocation leaves investors stuck in yesterday’s winners. The Sector Selection Methodology is designed to:
- Overweight leading sectors and themes with strong momentum
- Avoid lagging sectors where risk‑reward has deteriorated
- Lock in gains before leadership reverses
- Adapt to new opportunities in thematic ETFs and Fidelity funds
This approach is central to rules‑based sector investing, sector ETF investing strategy, and Fidelity sector rotation.
The ValuM Investment Process
The ValuM process evaluates sectors and themes using three pillars:
- Momentum – relative strength vs. the market and other sectors
- Valuation – attractiveness vs. historical norms and earnings power
- Fundamentals or News Flow – catalysts, earnings trends, sentiment shifts
From a CAPM perspective, ValuM seeks investments with high expected alpha after adjusting for market sensitivity (beta). This helps identify sectors with the potential to outperform on a risk‑adjusted basis.
Sector Selection Methodology
The methodology applies ValuM across both traditional sectors and industries and thematic opportunities:
Sector & Industry Exposure
AlphaProfit uses the Global Industry Classification Standard (GICS), developed by MSCI and S&P Dow Jones Indices, to provide a consistent and comprehensive framework for classifying companies based on their primary business activities. Examples include:
- Information Technology — semiconductors, software
- Industrials — aerospace & defense
- Health Care — biotechnology, medical devices
- Financials — banks, capital markets
Thematic Exposure
Thematic investing products typically focus on forward‑looking disruptive technologies such as artificial intelligence or fintech and megatrends like climate change. They take a bottom‑up, sector‑agnostic approach. Examples of thematic exposure considered for inclusion in AlphaProfit Core and Focus model portfolios include:
- Innovation themes — artificial intelligence, robotics, blockchain, digital assets
- Resource‑driven themes — uranium, nuclear energy, rare earths
- Security themes — cybersecurity, defense technology
- Healthcare themes — gene editing, medical breakthroughs
The heat map below illustrates recent sector and thematic performance trends, highlighting areas of emerging leadership and weakness.
Sector return heatmap provided courtesy of Novel Investor.The Process
- Rank sectors and themes using momentum and trend behavior
- Screen valuations to avoid overpaying for momentum
- Assess catalysts and fundamentals to confirm durability
- Choose ETFs and Fidelity funds that best express the favored sector and thematic exposures
This creates a rules‑based sector rotation strategy that adapts as leadership changes.
Application to ETF and Fidelity Model Portfolios
ETF Core Model Portfolio
A diversified, risk‑aware portfolio using sector and thematic ETFs. Designed for investors seeking a disciplined ETF sector rotation approach.
ETF Focus Model Portfolio
A concentrated portfolio targeting the highest‑conviction sector and thematic ETFs identified by ValuM. Built for investors seeking amplified upside potential.
Fidelity Core Model Portfolio
Uses Fidelity Select Funds and thematic Fidelity funds to implement the same ValuM‑driven sector rotation strategy. Ideal for investors who prefer mutual funds over ETFs or have accounts that limit investments to Fidelity funds.
Fidelity Focus Model Portfolio
A high‑conviction version of the Fidelity Core portfolio, emphasizing the best Fidelity sector funds based on ValuM rankings. Across all four portfolios, allocations are repositioned on a disciplined schedule, ensuring investors remain aligned with the strongest sectors and themes rather than static benchmarks.
Model Portfolio Performance
AlphaProfit’s sector & thematic model portfolios are built on the ValuM investment process and have delivered strong long‑term results. These portfolios rotate into leading sectors and themes using ETFs and Fidelity mutual funds. ETF portfolios have compounded at 17.4% annually. Fidelity portfolios have compounded at 17.6% annually. These results reflect disciplined sector rotation and timely repositioning based on momentum, valuation, and fundamentals.
👉 View full performance details
ETF Model Portfolio Performance
Fidelity Model Portfolio Performance
Long‑Term Perspective and History
The ValuM investment process has guided sector and thematic investing for decades, helping identify leadership in both bull and bear markets. It has been used to evaluate:
- Sector ETFs
- Fidelity Select Funds
- Thematic ETFs and mutual funds
- Sector mutual funds
- Industry‑specific opportunities
This long‑term track record reinforces the value of a disciplined, research‑based sector rotation strategy that adapts to changing market conditions.
What’s New in 2026
As we move into 2026, sector and thematic leadership is shifting in ways that create both opportunity and risk. Several powerful trends are emerging across momentum, valuation, and fundamentals — and they are already influencing how AlphaProfit positions its sector and thematic model portfolios.
1. Leadership is broadening beyond mega-cap growth
Technology and communication services remain strong, but improving momentum is now visible in industrials, select financial industries, and energy transition plays. These areas are showing early signs of sustainable leadership rotation.
2. High-conviction themes are gaining strength
Capital flows are concentrating in themes with clear earnings catalysts, including AI infrastructure, automation, defense technology, cybersecurity, grid modernization, and medical innovation. These themes are poised to shape multi-year growth cycles.
3. Valuation spreads are widening
Several previously expensive sectors have corrected to more attractive levels, while others now appear stretched. This widening dispersion creates fertile ground for disciplined sector rotation and selective opportunity capture.
4. Fundamentals are stabilizing in key cyclical areas
Earnings revisions are improving in industrials, materials, and energy services — historically a precursor to durable leadership shifts. These signals are strengthening the case for broader participation in the next market phase.
5. Market conditions favor selective, catalyst-driven positioning
Entering 2026, the environment rewards staying aligned with sectors showing durable momentum and leaning into themes supported by structural growth drivers. This backdrop sets the stage for meaningful repositioning opportunities as leadership evolves.
AlphaProfit’s ValuM process is already capturing these shifts — helping investors stay aligned with what’s working now and positioned for what’s next.
Summary
In short: AlphaProfit’s Sector Selection Methodology helps investors stay aligned with emerging sector and thematic leadership while avoiding areas where risk‑reward has deteriorated.
AlphaProfit’s Sector Selection Methodology provides a disciplined, repeatable framework for identifying leadership across sectors, industries, and themes. By combining momentum, valuation, and fundamentals through the ValuM investment process, the methodology helps investors stay aligned with what’s working — and avoid areas where risk-reward has deteriorated.
The approach adapts as market conditions evolve, capturing emerging opportunities in both traditional sectors and forward-looking themes such as AI infrastructure, defense technology, energy transition, and medical innovation. Whether implemented through ETFs or Fidelity mutual funds, the methodology offers a structured way to rotate portfolios as leadership changes, manage risk proactively, and pursue higher long-term returns.
This disciplined process is the foundation of AlphaProfit’s sector & thematic model portfolios — helping investors remain positioned for opportunity rather than anchored to outdated allocations.
Frequently Asked Questions
How often are the sector & thematic model portfolios repositioned?
The ETF Core, ETF Focus, Fidelity Core, and Fidelity Focus model portfolios are repositioned on the last trading day of each quarter — the final trading day of March, June, September, and December. Repositioning Alerts are published before noon on the scheduled date, giving subscribers time to place trades in sync with the model portfolios.
The model portfolios may also be repositioned at other times if market conditions warrant or if sector leadership change meaningfully. In all cases, AlphaProfit notifies subscribers ahead of upcoming repositioning changes.
What is the difference between the Core and Focus model portfolios?
The Core portfolios provide diversified exposure across leading sectors and themes. The Focus portfolios concentrate on the highest‑conviction opportunities identified by the ValuM process, offering greater upside potential with a more selective set of holdings. The Core portfolios tend to be less volatile and more tax efficient than the Focus portfolios.
How does the ValuM investment process select sectors and themes?
ValuM applies three sequential filters—Momentum, Valuation, and Fundamentals/News Flow—to weed out weak sectors and surface those with the strongest combination of trend strength, valuation support, and improving fundamentals. Only opportunities that pass all three filters advance to the ValuM Composite Score and the Sector & Theme Leadership Map.
What types of ETFs and Fidelity funds are used in the portfolios?
The portfolios use a mix of sector ETFs, thematic ETFs, Fidelity Select Funds, and other Fidelity sector and thematic funds. The goal is to express sector and thematic leadership using the most efficient, liquid, and cost‑effective vehicles available.
Can I follow the strategy using only ETFs or only Fidelity funds?
Yes. AlphaProfit provides ETF‑only and Fidelity‑only model portfolios. Investors can choose the version that best fits their brokerage platform, trading preferences, or tax considerations.
How does sector rotation help improve long‑term returns?
Sector leadership changes frequently as the economic cycle evolves. By rotating into sectors and themes with strong momentum, attractive valuations, and improving fundamentals, the strategy seeks to capture emerging leadership early, avoid lagging sectors, lock in gains before reversals, and reduce exposure to prolonged underperformance.
Do I need to monitor the portfolios daily?
No. AlphaProfit provides clear, timely alerts whenever a repositioning occurs. Subscribers simply follow the instructions provided—no daily monitoring, chart‑watching, or market timing required.
How do I access the model portfolios?
The sector and thematic model portfolios are available through AlphaProfit Premium. Subscribers receive repositioning alerts, portfolio updates, commentary on sector and theme leadership, and access to both ETF and Fidelity model portfolios.
Ready to see how sector leadership is shifting now? Explore the latest ETF and Fidelity model portfolios.
ETF Model Portfolio Performance
Fidelity Model Portfolio Performance
DEC. 1993 to DEC. 2023
