“Rotating into the Consumer Discretionary, Industrials and Materials sectors from November through April, rather than back into the market, beat the S&P 500 by 640 basis points per year, and resulted in an even lower standard deviation of 13.7,” said Stovall. [Comparison of Major Sector ETFs]
And for those that want to be prepared for sell in May and go away next year, a couple of highly popular ETFs will help: The Consumer Staples Select SPDR (NYSEArca: XLP) and the Health Care Select Sector SPDR (NYSEArca: XLV).
“History shows that from May through October since 1990, the S&P 500 Consumer Staples and Health Care sectors rose by 4.6% and 4.7%, respectively, versus 1.4% for the S&P 500, beating the market during this six-month stretch at least 65% of the time,” according to Stovall.
Check out the chart below to see just how rewarding the semi-annual sector rotation strategy has been.
Chart courtesy: Sam Stovall, S&P Capital IQ