Diversified Timing on Country ETFs

 This strategy invests equally amount in each country stock ETF and uses moving average for each country for downside protection. 

 This strategy was originally proposed by XTF.  XTF web site no longer maintains such a strategy. For historical reason, we still name this after XTF. However, this strategy is just a simple moving average strategy on each asset in the portfolio. Even though XTF originally called this as 'country rotation', a more proper name would be 'country timing'.  The following is an excerpt from the original XTF description on the strategy.             

The rotation portfolios employ a binary strategy. The portfolio is either completely in or out of a sector/country depending on whether the model has a bullish or bearish view on the sector/country. If XTF believes that a sector or country will underperform intermediate-term U.S. Treasuries (UST) it will move completely out of that sector or country and into an intermediate-term UST. Conversely, if the sector or country is expected to outperform the intermediate-term UST, XTF will invest in the sector or country ETF. Sectors/countries are equally weighted. 

Country ETFs in the strategy:

• The Netherlands (EWN)
• Germany (EWG)
• France (EWQ)
• Switzerland (EWL)
• Italy (EWI)
• United Kingdom (EWU)
• Belgium (EWK)
• Austria (EWO)
• Singapore (EWS)
• Hong Kong (EWH)
• Japan (EWJ)
• Canada (EWC)
• South Africa (EZA)

Users could add or delete ETFs. A good example would be adding some emerging market ETFs (with proper weights to account for the risk). 

Similar Funds

• Rydex Sector Rotation (RYSRX)
• ETF Market Opportunity (ETFOX)
• PowerShares Valueline Industry Rotation (PYH)
• Industry Leaders Fund (ILFIX): it uses a patented process to identify industry sector and individual securities weights.
• Claymore/Zacks Sector Rotation (XRO)

Similar Strategies

• Strategy XTF Sector Timing uses the same moving averages on S&P sectors. 
• Strategy Momentum Based on FundX Scoring: a FundX style scoring for momentum calculation.

See Also

• XTF web site: unfortunately, it no longer maintains this strategy.
  
• Faber, Mebane T.  "Lazy ETF Portfolios Inspired by Gurus". www.seekingalpha.com. Feb. 27, 2007.