Which sector combination strategies work best?

Source ETF research

Sector strategies are notoriously tricky to get right, writes Andras Vig, director and multi-asset strategist at Source ETF.

All investors are susceptible to their own biases and it is easy to follow a strategy that sounds intuitive. To work out what, if any, significant conclusions can be drawn about investing in sectors, the team at Source conducted a comprehensive analysis of sector strategies from the simplest to the more complex - including different rebalancing frequencies - in the 25-year period between 1991 and 2016. Surprisingly, perhaps, the conclusion was clear: overweighting sectors with the lowest volatility is the best strategy. However, the key is to not just focus on controlling volatilit...