ETF Watch: Sector Rotation Fund Planned

A sector rotation fund is planned based on a Dorsey Wright index.
Reviewed by: Staff
Edited by: Staff

ALPS Advisors has recently filed for an ETF that will implement a sector rotation strategy designed by Dorsey, Wright & Associates. The ALPS/Dorsey Wright Sector Momentum ETF will list on the NYSE Arca.

The fund will track the Dorsey Wright US Sector Momentum Index, which draws its components from the NASDAQ US Large Cap Index and NASDAQ US Mid Cap Index and is reconstituted on a quarterly basis. Stocks eligible for inclusion are ranked based on momentum scores derived from their relative strength metrics and broken out into their respective Global Industry Classification System groups, which are also ranked based on their relative strength, the prospectus said. Real estate securities are excluded from consideration.

The methodology then selects the top ten stocks in terms of momentum score from each of the top three highest-momentum GICS groups. From there it additionally selects the top five stocks from the next four highest-momentum groups to achieve a total component number of 50 securities, which are equally weighted within the index, according to the prospectus.

The filing did not include an expense ratio or ticker.

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