End of quarter. Time to take a peek at the Sector Fund being managed by Gold Coast Advisors LLC.
The current return, year to date, on the Sector Fund is 11.32%.
The model it is based on shows an ideal return of 11.72%.
That’s a reasonable margin for error, and well above both the market and the benchmark (from the average return rate in the 15 year backtest).
The Sector Model is based on the observation that sectors take turns outperforming each other. The sector rotation metrics are proprietary, but the logic is rather basic: breadth, volume, and price go together more often than not. When they don’t, the model looks for the greatest disagreement between the three and invests in the sector most likely to mean revert.
On occasion it will whipsaw, but the average holding period is a month.
The Sector Fund follows the model in a timing window that allows for free trades, so whipsaws don’t cost investors anything in the exchange.
This offers small investors two advantages normally reserved for large institutional investors:
1) Since there is no trading cost, a 300 dollar investment will get the same return rate as a 300,000 dollar investment.
2) Since the model is defensive, it offers greater outperformance in bearish times than in bullish times, which serves as a kind of hedge.
I’m quite pleased that Gold Coast has found a way to give the same value to the little guy as to the big guy, and they’re off to a good start.