Wednesday, June 25, 2014

Ranking Fidelity Select ETFs

Yesterday I read a news article on Bloomberg stating that Fidelity Sector ETFs have reached over a billion dollars.  Assets in these exchange-traded funds have tripled from the start of 2014. 

Relative strength is an important and often misunderstood investment thesis. In 1998 UCLA professors Narisimhan Jegadeesh and Sheridan Titman did some tests utilizing price changes (relative strength) over several different time frames. They found a direct statistically significant correlation between relative strength and later price performance up to 12 months later. The most consistent period for defining the initial relative strength was six months.

Relative strength and ranking are also the cornerstones of legendary investors such as James O'Shaughnessy, Bill O'Neal, and Charles Kirkpatrick, CMT.  Here are the top 10 ETF's by relative strength over four different time frames; 3, 6, 9, and 12 months. These are the top 10 out of our list of 1,165 ETF's that have been trading at least one year.

Not enough time has elapsed for the 9 or 12 month time frames. Below are the relative strength ranks over 3 and 6 months.

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