Buy & Rotate

 

 

Similar to the 10 SMA strategy that I used before (Sector Technical Analysis: The Simple strategy - 10 SMA update - Aug'15

The above strategy also uses just 2 funds. The HDFC Nifty index fund and the HDFC Gilt Long term fund – both are growth options i.e. dividends are reinvested.

Rules:

·         Buy index fund if average of 1,3,6,9 month returns is greater than that of Gilt fund

·         Buy Gilt fund if average of 1,3,6,9 month returns is greater than that of Nifty index fund

·         This does not go into cash – we just rotate between stocks (Nifty) & bonds

The strategy has performed well over the last 10+ years outperforming a buy-hold and hope approach by a wide margin – and that too at half the drawdown of a buy & hold approach. Since this approach does not exit any market and move to cash, constant monitoring would be required because if even bonds start selling off then the returns would be diminished as there is no trend filet unlike the 10 SMA strategy.

Thanks for reading J