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Fidelity Rotational System Performance

Fidelity Sector Rotational System Surges Ahead of $SPY Benchmark

I must start this post with my sincere thanks for the comments you all left me on my semi-retirement post. I was treuly moved by your comments.

Because when one semi-retires from something, no one wants to hear that the semi-retiree has been doing nothing. That would represent pure laziness and sloth. Why would one semi-retire if he was going to do nothing? Indeud, I have been enjoying semi-retirement, having recently purchased a beautiful piece of property on the Cacapon River, West Virginia’s cleanest river.

Fishing the Cacapon

I caught a nice smallmouth shortly after this picture was taken.

So life is good. Which is a nice segue to the reason I am posting this, which is that my Fidelity Sector Fund Rotational System killed it in July, and surged ahead of its $SPY benchmark.

The system rocketed up 7.5% in July, once again outperforming $SPY, which gained only 5.2%. The system is also outperforming $SPY in August, but the month is not even half-finished.

Year-to-date, the system has logged gains of 20.8%, and that is net of fees, commissions, etc. $SPY has gained 19.1% YTD.

The top five ranked Fidelity Sector Funds are as follows:

  1. FSAVX (Automotive)
  2. FSRPX (Retailing)
  3. FBSOX (IT Services)
  4. FSRBX (Banking)
  5. FSPHX (Healthcare)

The system rotated into some new funds last week. It is currently holding FSAVX, FSRBX, and FSRPX.

I’ll leave you with a little chart porn. Below is the equity curve and monthly performance for the system, starting in 2012. I use 2012 because that is when I started trading the system in real-time. Click on the graphic to make it larger.

Fidelity Rotational System Performance August

Best to everyone!

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Fidelity Sector Rotational System 66% in Cash

This system goes to cash anytime the S&P 500 is trading beneath its 50 day simple moving average. However, since the Fidelity sector funds must be held for 30 days lest a .75% penalty be incurred, the system doesn’t always go to cash exactly on the day that the S&P 500 closes beneath its 50 day average. This is indeed the current state of affairs. One of the funds held by the system was purchased on June 19th, and is thus still being held. The other two funds were sold on the close of June 21st, which is the day after the close beneath the 50 day average. The system takes end-of-day signals and acts on them at the next close.

Year-to-Date Results

Fidelity Sector Funds Rotational System: 9.9%

$SPY Buy and Hold: 11.3%

If the market continues to correct, it is possible that the system’s underperformance will be mitigated, and the system may even catch up or get ahead of the S&P, since it is 66% in cash. If the S&P takes off from here and re-takes its 50 day average, the system will be even farther behind.

The max drawdown year-to-date for the system is at 5.25% while the $SPY max drawdown year-to-date is 6%.

Top Ranked Fidelity Sector Funds

The top five funds, as ranked by the system, are as follows:

  1. FSPHX (Healthcare)
  2. FSPCX (Insurance)
  3. FBIOX (Biotechnology)
  4. FPHAX (Pharmaceuticals)
  5. FSDAX (Defense and Aerospace)

My Gut Feeling

Of course I am biased as I trade the system in a Fidelity 401K, but I believe the S&P goes lower which will give the system a chance to catch up. The wild card may be a squeaker close above the 50 day average before a reversal lower. If this happens, the system will once again be 100% long and will catch any downside while having missed the previous move back up to the 50 day average. That is the worst-case scenario.


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Fidelity Sector Funds Rotational System Update

Year-to-date the system is up 13.5% vs. the $SPY gain of 15.5%. This does not include any dividends paid out on from the Fidelity Funds or from $SPY. It also does not include any commissions incurred on the $SPY purchase. There are no fees or commissions incurred when trading the Fidelity Sector Funds, as long as the funds are held for 30 days before selling.

The system is down 2.02% from its recent equity high while $SPY is down 1.63%. It appears that the system may be in the process of catching back up with $SPY.

The top 5 Fidelity Sector Funds, as currently ranked by the system:

  1. FPHAX (Pharmaceuticals)
  2. FSPHX  (Health Care)
  3. FSPCX  (Insurcance)
  4. FSDAX  (Defense and Aerospace)
  5. FBIOX  (Biotechnology)

It is worth mentioning that FSDAX has moved into the top 5 for the first time this year. It closed today at a new all-time high. I’m not sure what that says about Syria, or the sequestration, etc., but I believe it is worth thinking about.

The system is currently long FSPHX, FPHAX, and FDFAX. Unless FDFAX can surge back into the top 3, it will be sold in the next few days.

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Fidelity Sector Fund Rotational System April Results

In April the system returned 0.5% vs. a $SPY return of 1.9%. The system was 33% in cash for one day and missed part of the bounce from the 50 day average. Also, the defensive funds have been increasingly moving up in the ranks. These do not tend to move as much as the non-defensive funds.

Year-to-date the system is up 13% vs. a $SPY return of 12.1%.

The system is currently long FSUTX (Utilities), FBMPX (Multimedia), and FBIOX (Biotechnology).

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Top 5 Fidelity Sector Funds Still More Defensive

The top 5 ranked Fidelity Sector Funds continues to get more and more defensive.

As of Friday’s close, Air Transportation has dropped out of the top 5 and landed in the 7th position. Pharmaceuticals has been rising and now occupies the top 5, and Utilities and Telecom now occupy the top 2 spots.

  1. FSUTX (Utilities)
  2. FIUIX  (Telecom and Utilities)
  3. FBIOX (Biotechnology Portfolio)
  4. FBMPX (Multimedia)
  5. FPHAX (Pharmaceuticals)

Biotechnology is very very close to getting bumped out of the 3 spot by Multimedia, but that is due to Biotechnology being volatile, which gets a fund punished in the rankings.

The Fidelity Sector Fund Rotational System is up 12.8% for the year vs. a buy and hold $SPY return of 11.1%.

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Fidelity Sector Funds Rankings Now Even More Defensive

Below are the top 5 ranked Fidelity Sector Funds.

  1. FSUTX (Utilties)
  2. FSAIX  (Air Transportation)
  3. FBMPX (Multimedia)
  4. FIUIX (Telecom and Utilities)
  5. FBIOX (Biotechnology)

We now have 2 defensive funds in the top 5, and I guess one could make the argument that Biotechnology is a somewhat defensive play. I’m not sure how to characterize Multimedia.

The ranking method is proprietary. Holding the top three funds for a minimum of 30 days and then selling them if they have moved out of the top 3 and replacing them with the new top funds has generated a return of 11.6% YTD against the $SPY return of 10.5%.

Since 2007, the system has generated a compound annual growth rate of 16.41% with a maximum drawdown of -12.42% against the $SPY return of 1.62% with a maximum drawdown of -56.47%.

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Fidelity Sector Fund Rotational System is Having a Banner Month

I know tomorrow is technically the last day of the month, but barring catastrophe, the Fidelity Sector Fund Rotational System is set to beat the S&P for the month and the year.

I designed the system in early 2010, and watched the out-of-sample performance until February 2012, when I began trading it live.

Here are the results since inception:

FSFRS Results Since Inception

These results do not include commissions or slippage for either the Fidelity trades or $SPY. There is no commission or slippage incurred when trading these Fidelity sector funds. There would be an initial commission for the $SPY purchase. Dividends for $SPY and the Fidelity funds are also not included.

For the month the system is up 4.5% while $SPY is up 3%.

The system is currently long the following three funds:

FSAIX (Air Transportation)

FSRFX (Transportation)

FSUTX (Utilities)

The top 5 ranked Fidelity Sector Funds are as follows:

  1. FSAIX (Air Transportation)
  2. FSUTX (Utilities)
  3. FSRFX (Transportation)
  4. FBMPX (Multimedia)
  5. FSPCX (Insurance)

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