What is the Style Index Rotation Strategy?
Instead of being locked into one trading style, it is best to employ a strategy that has the flexibility to rotate to the best performing market segment. That’s what our Style Index strategy is all about.
The Style Index strategy trades securities that track various market indexes. These “style” indexes include large-cap growth, large-cap value, small-cap growth, small-cap value, and so forth. While mutual fund families like the ProFunds have funds that track these indexes, the best vehicle for trading style indexes is exchange traded funds (ETFs), the fastest growing financial product in the United States.
What does the strategy do?
The strategy utilizes a straight forward mechanical buy/sell methodology.
1) The AIQ Relative Strength-Short Term report is run on the ETFs in your database. 2) Buy the first two ETFs in the report with an equal amount of capital.
3) Two weeks later run the report again.
4) If the current holdings were rated as one of the three best in the report, then there were no trades. If a holding has fallen in the Relative Strength report to where it was no longer in the top three, then it should be sold and the highest rated ETF was purchased.