Montgomery is referring to the Sector Rotation
Portfolio, which was 60% in bonds and 40% in stocks (evenly spread across information technology, health care, consumer staples and energy) on July 1, 2008, when the S&P 500 was at 1,285.
According to the SEC, they selectively touted the past performance of the Sector Rotation
Fund (NAVFX) and specific securities recommendations they made to clients, cherry-picking highlights and omitting less favorable recommendations and other data that would have made the facts complete.
But gains have come in volatile trading in the past year, characterized by frequent sector rotations
Such sector rotation
will hit the rating of defensive earnings as risk appetite rises and as defensives are sold to buy recovery situations.
They show that aggregate portfolio rebalancing across equity sectors is consistent with sector rotation
, an investment strategy that exploits perceived differences in the relative performance of sectors at different stages of the business cycle.
Kennedy was informally using sector rotation
, an approach many professional investors employ to gain an edge.
"There's no mileage in chasing anything in this market, because sector rotation
is so rapid," he said.
That said, there are a number of potential triggers--ranging from a rise in longer-term bond yields, a contraction in occupiers' demand for space to sector rotation
as income-hungry capital moves away from real estate on to another asset class.
They are also ideal for use with sophisticated portfolio management techniques--e.g., tactical asset allocation, sector rotation
strategies, hedging strategies, cash equitization, portfolio completion, account transitioning and more.
These positive indicators, coupled with a "sector rotation
" by investors into defensive sectors like health and medical care stocks as the bear market took hold, helped give J & J's stock a double-digit boost in both 2000 and 2001--and allowed Larsen in 2002 to turn over the CEO reins with his head held high.
In addition, weakening global GDP growth, waning consumer demand, doubts about US and EU manufacturing strength and possible future interest rate rises all suggest scope for some sector rotation
in favour of defensives generally.
The profitability of various sector rotation
strategies was also examined in this study.