The SPDR Sector Momentum Map provides investors with a quantitative approach for identifying how sectors are trending relative to their US, European and World benchmarks and sector peers. The Map serves to complement the fundamental and flows data featured in our quarterly Sector & Equity Compass.
Introduction to the Sector Momentum Map
The Sector Momentum Map (‘Map’) is powered by RRG® Research (as seen on Bloomberg Terminals). We are now in our second year of partnership with RRG to provide this sector rotation visualisation tool to SPDR clients.
The Map features relative strength and price momentum, which can indicate emerging opportunities and risks among sectors. Spotting the rotation of sectors in and out of favour can enable investors to anticipate money flowing from one sector to another and adjust portfolios accordingly. The benefit with this tool is seeing combinations across all sectors, neatly presented in one chart.
What the Map shows
The Map is built on two relative strength metrics:
The JdK RS-Ratio measures trends in relative performance. This algorithm tries to find trends in the relative performance of each sector, comparing against the trends in relative performance of the other sectors in the universe. The comparison of relative trends across a universe is not always possible with traditional relative strength metrics.
The JdK RS-Momentum measures the momentum of the relative trends detected by the RS-Ratio, again in a way that allows for comparison across a universe. Because rate of change is a leading indicator, it can serve as an early warning system for potential trend changes.
How to interpret the Map
The sectors generally rotate in a clockwise fashion around the centre (the market benchmark). Sectors in the top-right, or LEADING, quadrant are in a relative uptrend against the benchmark and that uptrend is being pushed higher by strong positive momentum. These sectors can be expected to outperform and could be relatively attractive for investors.
When a trend starts to deteriorate, this will be indicated by a loss of momentum, which will usually cause the sector to rotate into the WEAKENING quadrant. These sectors are still in a relative uptrend but their trends are losing momentum. This can be viewed by investors as a risk.
If that weakness continues, the sector will continue its rotation into the LAGGING quadrant. These sectors are in a relative downtrend against the benchmark and that downtrend is being pushed lower by negative momentum. These sectors can be expected to underperform the benchmark. The move that will signal change is an improvement in momentum, turning from negative to positive. That will cause the sector to rotate into IMPROVING. These sectors are still in a relative downtrend but are picking up positive momentum. Investors can interpret this as a relatively attractive opportunity.
If that improvement in momentum continues, the sector will usually rotate back into the LEADING quadrant.
Whereas the general pattern, as described, is a clockwise rotation, in strong up or down trends a rotation can complete on one side of the chart. Thus in the case of a very strong (and reliable) uptrend, rotations from LEADING into WEAKENING and then back into LEADING are possible. Conversely, strong (and reliable) downtrend rotations are possible from LAGGING into IMPROVING and then back into LAGGING.
Toggle the settings
Investors have several options for customising what they want to see on the Map:
Universe: a choice of three regions is available – Europe, US, World/Developed Markets. SPDR offers sector ETFs in all three regions. A new “Overlay” option has been added, allowing the regional Maps to be viewed together.
Frequency: the chosen timeframe can affect the RS-Ratio and result in different conclusions – a weekly setting captures the long-term trend, while daily captures a shorter trend.
Securities: it is possible to view all or a selected number of sectors together to aid comparison of trends or to limit the scope for a clearer image.
Settings: switching on Tails can allow the Map user to see where the security has moved.
A history of up to 12 months is available, which can be accessed by dragging the dark green bar toward the left.
Example: Snapshot of European sectors across all 4 quadrants
Figure 1 shows sectors on the move on a day-to-day basis, with the Tails indicating the direction of travel over the previous 2 weeks. In this case, Technology is in an attractive position with improving relative strength and positive momentum, placing it in the LEADING quadrant, whereas Utilities is showing the opposite trend within the LAGGING quadrant.
Figure 1: Snapshot of European Sectors on Daily Basis over Two Weeks
Source: RRG, as of 24 March 2022. The chart is for illustrative purposes.
Example: Rotation of European Financials
Figure 2 shows the path of European Financials over a whole year from late March 2021, set on a weekly basis. This chart depicts a full rotation.
In April 2021, the sector moved into the WEAKENING quadrant during a period of relative strength but falling momentum. This downtrend may have acted as a warning signal for some investors. Relative strength weakened week by week through to August, at which point the sector was entrenched in the LAGGING quadrant. Thereafter, there was a turnaround in momentum from negative to positive, and relative strength improved, taking Financials into the IMPROVING quadrant in September.
A month later it rotated into the LEADING quadrant as relative strength picked up, usually taken as a comforting signal. The trend within the LEADING quadrant was not smooth, with a short downtrend through December 2021, and then again in March 2022, after a loss of momentum for several weeks, although the relative strength was still apparent.
Figure 2: Snapshot of MSCI Europe Financials on Weekly Basis over One Year
Source: RRG, as of 24 March 2022. The chart is for illustrative purposes.
To use the Sector Momentum Map, please click here.
To learn more about our broader sector ETF capabilities, please click here.
For up-to-date comments on sector positioning on the Map and how that fits with our fundamental views, please request to join the mailing list for Sector Talk by contacting your local sales representative.
Marketing communication. General access. For professional investor use only.
France: State Street Global Advisors Ireland Limited, Paris branch is a branch of State Street Global Advisors Ireland Limited, registered in Ireland with company number 145221, authorised and regulated by the Central Bank of Ireland, and whose registered office is at 78 Sir John Rogerson’s Quay, Dublin 2. State Street Global Advisors Ireland Limited, Paris Branch, is registered in France with company number RCS Nanterre 832 734 602 and whose office is at Immeuble Défense Plaza, 23-25 rue Delarivière-Lefoullon, 92064 Paris La Défense Cedex, France. T: (+33) 1 44 45 40 00. F: (+33) 1 44 45 41 92.
Germany: State Street Global Advisors GmbH, Brienner Strasse 59, D-80333 Munich. Authorised and regulated by the Bundesanstalt für Finanzdienstleistungsaufsicht (“BaFin”). Registered with the Register of Commerce Munich HRB 121381. T: +49 (0)89-55878-400. F: +49 (0)89-55878-440.
Israel: No action has been taken or will be taken in Israel that would permit a public offering of the Securities or distribution of this sales brochure to the public in Israel. This sales brochure has not been approved by the Israel Securities Authority (the ‘ISA’). Accordingly, the Securities shall only be sold in Israel to an investor of the type listed in the First Schedule to the Israeli Securities Law, 1978, which has confirmed in writing that it falls within one of the categories listed therein (accompanied by external confirmation where this is required under ISA guidelines), that it is aware of the implications of being considered such an investor and consents thereto, and further that the Securities are being purchased for its own account and not for the purpose of re-sale or distribution. This sales brochure may not be reproduced or used for any other purpose, nor be furnished to any other person other than those to whom copies have been sent. Nothing in this sales brochure should be considered investment advice or investment marketing as defined in the Regulation of Investment Advice, Investment Marketing and Portfolio Management Law, 1995 (“the Investment Advice Law”). Investors are encouraged to seek competent investment advice from a locally licensed investment advisor prior to making any investment. State Street is not licensed under the Investment Advice Law, nor does it carry the insurance as required of a licensee thereunder. This sales brochure does not constitute an offer to sell or solicitation of an offer to buy any securities other than the Securities offered hereby, nor does it constitute an offer to sell to or solicitation of an offer to buy from any person or persons in any state or other jurisdiction in which such offer or solicitation would be unlawful, or in which the person making such offer or solicitation is not qualified to do so, or to a person or persons to whom it is unlawful to make such offer or solicitation. Investing involves risk including the risk of loss of principal. The whole or any part of this work may not be reproduced, copied or transmitted or any of its contents disclosed to third parties without SSGA’s express written consent. The trademarks and service marks referenced herein are the property of their respective owners. Third party data providers make no warranties or representations of any kind relating to the accuracy, completeness or timeliness of the data and have no liability for damages of any kind relating to the use of such data.
Ireland: State Street Global Advisors Ireland Limited is regulated by the Central Bank of Ireland. Registered office address 78 Sir John Rogerson’s Quay, Dublin 2. Registered Number: 145221. T: +353 (0)1 776 3000. F: +353 (0)1 776 3300.
Italy: State Street Global Advisors Ireland Limited, Milan Branch (Sede Secondaria di Milano) is a branch of State Street Global Advisors Ireland Limited, registered in Ireland with company number 145221, authorised and regulated by the Central Bank of Ireland, and whose registered office is at 78 Sir John Rogerson’s Quay, Dublin 2. State Street Global Advisors Ireland Limited, Milan Branch (Sede Secondaria di Milano), is registered in Italy with company number 10495250960 - R.E.A. 2535585 and VAT number 10495250960 and whose office is at Via Ferrante Aporti, 10 - 20125 Milano, Italy. Telephone: +39 02 32066 100. Facsimile: +39 02 32066 155.
Netherlands: State Street Global Advisors Netherlands, Apollo Building, 7th floor Herikerbergweg 29 1101 CN Amsterdam, Netherlands. Telephone: 31 20 7181701. SSGA Netherlands is a branch office of State Street Global Advisors Ireland Limited, registered in Ireland with company number 145221, authorised and regulated by the Central Bank of Ireland, and whose registered office is at 78 Sir John Rogerson’s Quay, Dublin 2.
Switzerland: State Street Global Advisors AG, Beethovenstr. 19, CH-8027 Zurich. Authorised and regulated by the Eidgenössische Finanzmarktaufsicht (“FINMA”). Registered with the Register of Commerce Zurich CHE-105.078.458. T: +41 (0)44 245 70 00. F: +41 (0)44 245 70 16.
United Kingdom: State Street Global Advisors Limited. Authorised and regulated by the Financial Conduct Authority. Registered in England. Registered No. 2509928. VAT No. 5776591 81. Registered office: 20 Churchill Place, Canary Wharf, London, E14 5HJ. T: 020 3395 6000. F: 020 3395 6350.
Standard & Poor’s, S&P and SPDR are registered trademarks of Standard & Poor’s Financial Services LLC (S&P); Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC (Dow Jones); and these trademarks have been licensed for use by S&P Dow Jones Indices LLC (SPDJI) and sublicensed for certain purposes by State Street Corporation. State Street Corporation’s financial products are not sponsored, endorsed, sold or promoted by SPDJI, Dow Jones, S&P, their respective affiliates and third party licensors and none of such parties make any representation regarding the advisability of investing in such product(s) nor do they have any liability in relation thereto, including for any errors, omissions, or interruptions of any index.
All forms of investments carry risks, including the risk of losing all of the invested amount. Such activities may not be suitable for everyone.
The information provided does not constitute investment advice and it should not be relied on as such. It should not be considered a solicitation to buy or an offer to sell a security. It does not take into account any investor’s particular investment objectives, strategies, tax status or investment horizon. You should consult your tax and financial advisor.
This document contains certain statements that may be deemed forward looking statements. Please note that any such statements are not guarantees of any future performance and actual results or developments may differ materially from those projected.
Issuing Office: This document has been issued by State Street Global Advisors Ireland (“SSGA”), regulated by the Central Bank of Ireland. Registered office address 78 Sir John Rogerson’s Quay, Dublin 2. Registered number 145221. T: +353 (0)1 776 3000. Fax: +353 (0)1 776 3300. Web: ssga.com.
ETFs trade like stocks, are subject to investment risk and will fluctuate in market value. The investment return and principal value of an investment will fluctuate in value, so that when shares are sold or redeemed, they may be worth more or less than when they were purchased. Although shares may be bought or sold on an exchange through any brokerage account, shares are not individually redeemable from the fund. Investors may acquire shares and tender them for redemption through the fund in large aggregations known as “creation units.” Please see the fund’s prospectus for more details.
Past Performance is not a guarantee of future results.
SPDR ETFs is the exchange traded funds (“ETF”) platform of State Street Global Advisors and is comprised of funds that have been authorised by Central Bank of Ireland as open-ended UCITS investment companies.
The information contained in this communication is not a research recommendation or ‘investment research’ and is classified as a ‘Marketing Communication’ in accordance with the Markets in Financial Instruments Directive (2014/65/EU). This means that this marketing communication (a) has not been prepared in accordance with legal requirements designed to promote the independence of investment research (b) is not subject to any prohibition on dealing ahead of the dissemination of investment research.
La plateforme SPDR ETF est l'outil développé par State Street Global Advisors pour traiter les «exchange traded funds» (ci après «ETFs»; elle se compose de fonds autorisés par les Autorités de Surveillance européennes comme sociétés d'investissement OPCVM ouverts. Il est possible que les SPDR ETFs ne soient pas disponibles ou ne vous conviennent pas.
Les ETFs sont négociés comme des actions; ils sont exposés aux risques de placement, fluctuent selon les conditions du marché et peuvent être traités à des cours supérieurs ou inférieurs à leur valeur nette d'inventaire. Les commissions de courtage et les coûts inhérents aux ETF impliquent une réduction des rendements.
Les fluctuations des taux de change peuvent avoir un effet défavorable sur la valeur, le cours ou les revenus d'un fonds. Rien ne permet en outre de garantir qu'un ETF réalisera son objectif de placement.
LES ACTIONS DES COMPARTIMENTS DE LA SICAV SPDR® ETF, SSGA SPDR ETFS EUROPE I PLC ET SSGA SPDR ETFS EUROPE II PLC POURRAIENT CONSTITUTER UN INVESTISSEMENT NON DISPONIBLE POUR VOUS ET/OU NON ADAPTE A VOTRE SITUATION. LES INFORMATIONS CONTENUES SUR CE SITE NE SAURAIENT CONSTITUER UN CONSEIL EN INVESTISSEMENT. EN CAS DE DOUTE, L'AVIS D'UN CONSEIL INDEPENDANT DOIT ETRE RECHERCHE PAR L'UTILISATEUR. AUCUNE INFORMATION ET AUCUNE OPINION FIGURANT SUR CE SITE NE SAURAIT CONSTITUER UNE OFFRE, UNE SOLLICITATION OU UN DEMARCHAGE EN VUE DE LA SOUSCRIPTION, DE L'ACHAT OU DE LA VENTE DES ACTIONS DES FONDS OU DE TOUT AUTRE INSTRUMENT FINANCIER.
Standard & Poor's®, S&P® et SPDR® sont des marques déposées de Standard & Poor's Financial Services LLC (S&P) ; Dow Jones est une marque déposée de Dow Jones Trademark Holdings LLC (Dow Jones), et ces marques ont été concédées sous licence d'utilisation à S&P Dow Jones Indices LLC (SPDJI) et pour octroi de sous-licences à certaines fins par State Street Corporation. Les produits financiers de State Street Corporation ne sauraient être financés, vendus ou promus par SPDJI, Dow Jones, S&P, leurs sociétés affiliées respectives et, et nulle desdites parties ne saurait faire valoir l'opportunité d'investir dans le ou lesdits produits, ni ne saurait engager une quelconque responsabilité à cet égard, en ce compris les erreurs, omissions ou interruptions rattachées à quelque indice que ce soit.
Les SPDR ETFs ne peuvent être offerts et vendus que dans les juridictions où cela est autorisé conformément aux dispositions légales en vigueur.
Informations relatives au Mexique
Les informations figurant dans ce document ne constituent en aucun cas une offre de titres financiers et ne sauraient être considérées comme telles. Les Fonds mentionnés dans ce document ne sont et ne seront pas agréés en vertu de la Mexican Securities Market Law (Ley del Mercado de Valores). Ils ne peuvent faire l’objet d’aucune offre publique, pas plus qu’ils ne peuvent être vendus sur le territoire des États-Unis d’Amérique. Il est interdit de distribuer publiquement les documents informatifs liés aux fonds susmentionnés sur le territoire du Mexique, tout comme il est interdit d’y échanger des parts des Fonds.
Avant tout investissement, vous devriez vous procurer et lire le prospectus et le DICI traitant des SPDR ETFs. Les personnes résidant dans les pays où les SPDR ETFs sont autorisés à la vente trouveront en outre de plus amples informations ainsi que le prospectus/DICI comportant des détails sur les caractéristiques, les coûts et les risques des SPDR ETFs à l'adresse vendita sul sito SPDRs et auprès de l'agence SSGA locale.