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The Divergence Between the Best and Worst Performing Sectors is 45% a Year the Last Decade, and a 20 Year High Thumbnail

The Divergence Between the Best and Worst Performing Sectors is 45% a Year the Last Decade, and a 20 Year High

Divergence between price trends offers active investment strategies the opportunity to capture the trends with momentum and avoid downtrends.

It isn't as easy as it sounds, but the dispersion between sector trends performance can be a major source of alpha for systematic trend following, relative strength, and momentum. 

Sector price trends offer dispersion: over the last 10 years, the average difference between the best-performing and worst-performing sectors has been 45% per year. In fact, the divergence between the best- and worst-performing S&P sectors is at a 20-year high.

The table is the percentage returns annually with each sector ranked. 

Data Source: Bloomberg as of June 30, 2023. The NYSE® Equal Sector Weight Index™ consists of a strategy that holds all active Select Sector® SPDR® ETFs in an equal-weighted portfolio. The ETFs are rebalanced to an equal weighting quarterly during the months of March, June, September, and December. Past performance does not guarantee future results. Returns are based on the Net Asset Value of the Select Sector SPDRs. XLC 2018 performance is annualized from inception, 6/18/18.

Mike Shell is the founder, President, and Chief Investment Officer of Shell Capital Management, LLC, and the portfolio manager of Asymmetry® Managed Portfolios.  Shell Capital Management, LLC is a registered investment advisor focused on asymmetric risk-reward and absolute return strategies. Shell Capital provides investment advice and portfolio management to clients with separate accounts at Goldman Sachs Advisor Solutions with an investment management agreement. The observations shared on this website are for general information only and should not be construed as investment advice to buy or sell any security. This information does not suggest in any way that any graph, chart, or formula offered can solely guide an investor as to which securities to buy or sell, or when to buy or sell them. Securities reflected are not intended to represent any client holdings or recommendations made by the firm. In the event any past specific recommendations are referred to inadvertently, a list of all recommendations made by the company within at least the prior one-year period may be furnished upon request. It should not be assumed that recommendations made in the future will be profitable or will equal the performance of the securities on the list. Any opinions expressed may change as subsequent conditions change. Please do not make any investment decisions based on such information, as it is not individualized advice and is subject to change without notice. Investing involves risk, including the potential loss of principal an investor must be willing to bear. Past performance is no guarantee of future results. All information and data are deemed reliable but are not guaranteed and should be independently verified. The presence of this website on the Internet shall in no direct or indirect way raise an implication that Shell Capital Management, LLC is offering to sell or soliciting to sell advisory services to residents of any state in which the firm is not registered as an investment advisor. If this website contains information regarding Options Trading, please read the Characteristics & Risks of Standardized Options, also known as the options disclosure document (ODD). Options involve risk and are not suitable for all investors. The views and opinions expressed in Asymmetry® Observations and Asymmetric Investment Returns are those of the authors and do not necessarily reflect the position of Shell Capital Management, LLC. The use of this website is subject to its terms and conditions.