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Sam Subramanian

Sector ETFs: Invest in the Best Sector ETF

Sam Subramanian PhD, MBA

Sector ETFs are among the most potent investment vehicles that allow individual investors to exploit advantages previously available only to large institutions.

You can beat the market by investing in the right sector ETF at the right time. In fact, you can actually make money even when the overall market is tanking.

However all too often, investors use sector ETFs inappropriately and get their fingers burnt.

Sector ETFs: System for Sector ETF Selection and Sector Rotation

AlphaProfit reliably selects winning sector ETFs by combining fundamental and technical evaluation factors

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The trick to benefiting from sector ETFs is to capture the rewards they provide while mitigating the risks they carry.

Here is how AlphaProfit helps you do just that ... make money by investing in the right sector ETFs at the right time.

Select the Right Sector or Industry

All too often, investors make the mistake of selecting sectors or industries based on one factor ... trend. Such selection methods are prone to high failure rates.

To help you consistently invest in the right sectors and time entries & exits, AlphaProfit analyzes sectors using a combination of fundamental and technical factors within the context of the business cycle.

By using a combination of criteria such as valuation, momentum, and news quality to holistically analyze sectors, AlphaProfit minimizes negative surprises.

Pick the Best Sector ETF in the Selected Sector or Industry

Several ETFs are often available within each top ranked sector or industry. The sector ETFs use different types of weighting strategies or may invest in specific market segments as defined by company size or geography.

AlphaProfit blends top-down and bottom-up analyses within the sector to ascertain the best sector ETF. Analysis of the overall market environment both in the U. S. and across the globe is complemented with analysis of the ETF's top holdings.

AlphaProfit analyzes a host of factors such as ETF’s asset size, expense ratio, trading volume, bid-ask spreads, and tracking error to select the best ETF in a sector.

Diversify across Top Sector ETFs

Snapshot of Diversity in
Energy Sector ETFs

Energy Select Sector SPDR ETF (XLE)

Market cap weighted ETF investing in S&P 500 energy companies

iShares DJ US Oil Equipment & Services ETF (IEZ)

Market cap weighted ETF investing in DJ US energy service companies

Rydex S&P 500 Equal Weight Energy ETF (RYE)

Equal weighted ETF investing in S&P 500 energy companies

PowerShares Dynamic Energy (PXI)

Fundamentally weighted ETF investing in U. S. energy companies

PowerShares S&P SmallCap Energy (PSCE)

Market cap weighted ETF investing in small-cap U. S. energy companies

iShares S&P Global Energy (IXC)

ETF investing in energy subset of S&P Global 1200 index

Global X China Energy (CHIE)

ETF Investing in large–cap energy companies in China

Despite the rigor of the evaluation and selection process, there can be occasions where investment in a sector ETF may not pan out exactly as expected. The performance of specific sector ETFs can at times be affected by exogenous events like the earthquake in Japan or unanticipated industry changes.

To mitigate your risks, AlphaProfit brings together best ETFs from top sectors to construct sector ETF-based portfolios for different investment objectives. AlphaProfit provides weightings for the individual sector ETFs with a view to minimize portfolio volatility.

Ensure Top Sector ETFs Selections at all Times through Timely Sector Rotation

ETFs in different sectors tend to perform better in different stages of the business and interest rate cycles. Consumer discretionary ETFs like Vanguard Consumer Discretionary ETF (VCR) tend to perform well as interest rates fall and the economy starts to recover from a recession while tech sector ETFs like Vanguard Information Technology ETF (VGT) tend to perform well during expansion phases.

AlphaProfit uses its time-tested sector rotation strategy to ensure sector ETFs with outstanding return potential are included in the model portfolios at all times. By the same token, the sector rotation strategy works to weed out sector ETFs with unappealing return potential in a timely manner.

Beat the Market with Best Sector ETFs

AlphaProfit's proven ETF selection process enables thousands of investors to thrive in turbulent markets.

ETF Model Portfolio Investment Process Selection - User Quotes

A dollar invested in the AlphaProfit's Aggressive Growth (ETF-Focus) and Capital Appreciation (ETF-Core) model portfolios is worth $70.84 and $32.97, respectively. This implies annualized returns of 18.7% and 15.1%, respectively.

Performance of ETF model portfolio driven by disciplined investment process
Performance of ETF model portfolio driven by disciplined investment process

Performance of ETF model portfolios as of September 30, 2018.

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Comparable investments in the Dow Jones Wilshire 5000 and S&P 500 benchmarks are worth $10.16 and $10.14, respectively implying annualized returns of 9.8% and 9.8%, respectively.

The ETF model portfolios use AlphaProfit's proven ValuM investment process for selecting investments. This process has enabled AlphaProfit model portfolios to bag Hulbert Financial's #1 rank numerous times.

Here are just a few examples of actual returns earned by subscribers from individual ETF selections:

  • 106.1% gain from SPDR S&P Retail Sector ETF (XRT)
  • 57.3% gain from Consumer Discretionary Select Sector SPDR ETF (XLY)
  • 30.2% gain from SPDR S&P Oil & Gas Equipment & Services ETF (XES)

Learn 5 Smart Ways of Using Sector ETFs

Sign up for AlphaProfit's Free ETF Newsletter MoneyMatters and get two special reports: Five Smart Ways of Using Sector ETFs and Avoid Three Common Mistakes ETF Investors Make.

The chart above shows the actual performance of the ETF model portfolios since their launch in 2007. The performance shown before 2007 is the performance of AlphaProfit's ValuM investment process selections.


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About AlphaProfit MoneyMatters and AlphaProfit
AlphaProfit MoneyMatters is a free e-letter distributed to registered users of AlphaProfit's website. The e-letter analyzes the economy, markets, and sectors and provides money-making insights on stocks, exchange-traded funds, and mutual funds. AlphaProfit MoneyMatters is edited by Dr. Sam Subramanian acclaimed for his financial acumen and analytical skills.

AlphaProfit Investments, LLC is an independent investment research firm based in Sugar Land, TX. AlphaProfit publishes the AlphaProfit Sector Investor's Newsletter, edited by Dr. Sam Subramanian. Leveraging sector funds, the Newsletter provides high-performance model portfolios with Fidelity funds and exchange-traded funds. It also includes actionable stock recommendations. This newsletter features among MarketWatch's top 10 investment newsletters and has won the coveted #1 rank from Hulbert Financial several times.

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