In addition to pumpkin-infused drinks at your local coffeehouses, volatility has been in season thus far, which supports the case for the Pacer CFRA-Stovall Equal Weight Seasonal Rotation ETF (NYSEArca: SZNE).
A decade-long bull run that saw growth fueled by FANG stocks and the technology sector in general dwindle was paired with copious amounts of volatility. However, a move back into tech is par for course per SZNE’s market strategy for November through April.
Rotation to Get Diversification
Diversification is an obvious benefit of ETFs as opposed to concentrating investment capital into a single stock, but SZNE offers the same diversification via the ETF wrapper. SZNE tracks certain sectors found within the S&P 500 Equal Weight Index, but with a twist–getting diversified at the right time at the right season.
From November through April, the fund will offer equal weight exposure to companies in the consumer discretionary, industrial, information technology and material sectors. From May through October, the ETF will be exposed to companies in the defensive sectors of consumer staples and health care.
SZNE serves as a prime alternative for the large-cap investor seeking exposure to various sectors, but only during the times of the year when they are thriving.
“The ideal investor for SZNE is core Large Cap long-term investor,” said Sean O’Hara, president of Pacer ETFs. “The premise for the ETF is based on the old Wall St. adage of ‘sell in May and go away.’ There have been patterns that are long standing that show that different sectors do better than others historically during certain months during the year.”
Getting Defensive at the Right Time
Pacer ETFs have been able to identify which sectors perform the best during which season–the premise for SZNE’s strategy. As more volatility rains down on U.S. equities, investors can opt for a defensive play like SZNE.