Fidelity Funds Portfolio
 Tactical Diversification Model Portfolio

There's a Better Way to Select Funds

Tactical Diversification was specifically developed to improve portfolio performance during both bull and bear markets. While we must endure punctuated events that shock the market unpredictably, punctuated events do lead to new trends that can be profitably employed. It is Tactical Diversification's sequential application of three distinct types of diversification that produce the superb performance of this model portfolio. Tactical Diversification overcomes the inherent shortcomings of Modern Portfolio Theory (MPT), Dynamic Asset Allocation (DAA) and Tactical Asset Allocation (TAA), all of which utilize simple diversification to reduce risk, but at the expense of producing only near average returns. To achieve a different result requires a different approach. 

What is Tactical Diversification?
Tactical Diversification is the sequential application of three distinct types of diversification:

• Funds: Equity diversification: owning multiple stocks or bonds to reduce risks associated with individual equities.

• Strategy: Serial diversification: owning multiple funds, but only one at a time — the one designated as trend leader.

• Portfolio: Asset class diversification: owning multiple funds, each selected by a different asset class strategy.

While equity diversification and asset class diversification are well known concepts under Modern Portfolio Theory, they are further augmented in a portfolio by serial diversification to (a) improve returns by selecting only the trend leader from among multiple well-diversified candidate funds, and (b) reduce risk of loss by inherently avoiding trend laggards altogether.  We use the terms True Sector Rotation and StormGuard to refer to our serial diversification algorithms that correspondingly select trend leaders and determine when to exit safely to cash as bear markets approach.  

Serial diversification's performance is determined by trend signal quality. Thus, SectorSurfer was designed to optimally extract trend signals from noisy market data utilizing the cross-disciplinary mathematics of electronic signal processing and matched filter theory, the same mathematics that enables Ethernet, Wi-Fi, and smart phones to perform so well.  

Portfolio Construction
The Fidelity Funds Portfolio (top chart) holds four diversified asset class Strategies, rebalanced quarterly to their assigned allocation weights. Each Strategy selects the one, and only one, best-of-breed fund in its class to represent the Strategy in the overall Portfolio. The Portfolio holds only those four funds.
     Asset Class #1 — Fidelity Sector Rotation — 45%
     Asset Class #2 — Fidelity Focused Sectors — 20%
     Asset Class #3 — Fidelity U.S. Diversified     —20% 
     Asset Class #4 — Fidelity High Income-Bond — 15%

Underlying Asset Class Strategies
Each of the four underlying asset class strategies is configured with a set of up to 12 funds, each representing a different slice of the asset class or fund management style. SectorSurfer's algorithms determine which fund is designated best-of-breed based on its trend leadership. The yellow line on each chart plots the performance of the strategy, which owns only the designated best-of-breed fund at any given time. This is True Sector Rotation (or serial diversification) and is a powerful investment ally best appreciated through its performance.

Click a chart or:
for Fidelity Sector Rotation
for Fidelity Focused Sectors
for Fidelity U.S. Diversified 
for Fidelity High Income-Bond

SectorSurfer Strategies typically produce only about four trades per year, and Forward-Walk-Progressive-Tuning, the industry gold standard for backtesting, may optionally be incorporated.

Portfolio Performance
The Fidelity Funds Portfolio chart (top) plots the performance of each of the contributing strategies with the portfolio's net performance in yellow and the S&P500's performance in white.

The overall benefit of Tactical Diversification for this portfolio, relative to the S&P500, includes: (a) 17% higher annualized return, (b) 3.8 times better Sharpe ratio, and (c) only 1/4 the maximum drawdown.
   for Portfolio

SectorSurfer Makes it Simple
This set of Strategies is easily imported into your own account where you can use them directly or edit them to better fit your needs. If you're interested in other fund families or ETFs, start with our Strategy Hall of Fame to view powerful Strategies built by our users. Additional background material can be found in the resource links at the bottom of this page, on the Sector Rotation Theory page, and on the Advanced Topics page .

There's a Better Way to Select Funds
SectorSurfer can put Tactical Diversification to work for you.

Our servers will do the hard work ...
                         ... while you go have a life.

Tactical Diversification Pillars

Overall Portfolio Holding Four Fidelity Strategies

Fidelity Funds Portfolio w/ Tactical Diversification

Asset Class #1 — Fidelity Sector Rotation — 45% Weight

Fidelity Strategy Sector Rotation

Asset Class #2 — Fidelity Focused Sectors — 20% Weight

Fidelity Focused Sectors Strategy

Asset Class #3 — Fidelity U.S. Diversified — 20% Weight

Fidelity U.S. Diversified  Strategy

Asset Class #4 — Fidelity High Income-Bond — 15% Weight

Fidelity High Income-Bond Strategy

635186408399630000-140-4-61917  •  Fidelity Sector Rotation
635186408399630000-140-3-61916  •  Fidelity Focused Sectors
635186408399630000-140-2-61910  •  Fidelity US Diversified
635186408399630000-140-1-182       •  Fidelity High Income-Bond

( See: How to add this Strategy to your list. )
( See: How to Make SectorSurfer Portfolios.)

Note: SumGrowth Strategies, LLC , its SectorSurfer service, and its Strategies are not associated with or sponsored by Fidelity Investments nor any of its affiliates. SumGrowth Strategies
is a privately held company with a mission to help individuals improve their retirement plan prospects by providing state-of-the-art automated investment portfolio analysis and advice.

How to Become a SectorSurfer

How We Work

How We Work

We'll do the Hard Work ...           
         ... While You go Have a Life!

How We Work




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Getting Started

Getting Started

• Study:  Returns, Safety,
Simplicity, Control, Examples

Review: Subscriptions,
Free vs Premium Strategies

• Ready? It Costs Nothing to Start - Let's Get Surfing!

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Specific Quick-Start Instructions
Follow these steps to quickly set up your SectorSurfer account to use this Strategy  ...  (click to read more)

Click to Signup for a SectorSurfer account. It costs nothing to get started.1. Click the Signup Wizard button on the right to create your account. It costs nothing to open an account and experiment with custom strategies or make use our totally Free Strategies.  See Member Plans Page for details about Free and Premium Memberships.

    a) On the Create an Account screen specify your username, password, full name, and email address.
         Then click

    b) Next is the Account Information Screen. Complete the below steps and then click
      -  Section A: Optionally add a backup email address or cell text number for your Trade Alerts. Click the button.
      -  Section A: Optionally enter your Referrer's name to give them credit. Review the Referral-Name you'll give others.
      -  Section B: Review the subscription options and click checkbox to acknowledge having read it.
      -  Section C: Optionally order a subscription (required to receive Trade Alerts for this Strategy). Acknowledge the checkbox.

    c) Next is the Application Settings Screen to determine how you would like your Trade Alerts handled and then click
 You're Now Are a SectorSurfer! 

2. The My Strategies Page will automatically be your next destination. This is your definition list of personal Strategies.

    a) Please watch the short video demo. It will save you time and frustration. Click its icon in the upper left of the page.

    b) Note the other help resources in the upper left and bottom of the page.

Experiment with the Example Strategies provided. Mouse-over the icons and ticker symbols. Click things to see what they do.

    d) To import the above Strategy into your My Strategies execute the following steps:
       - Click the  icon in the 2nd row to get the Select a Strategy popup screen.
       - Scroll down until you see the Strategy name matching the above Strategy, then click its line to highlight it.
       - Then click the button near the bottom to import this Strategy into your personal list.
   Now You're Really SectorSurfing!