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What Equity Sectors Are You Considering Overweighting in 2016?

edited December 2015 in Fund Discussions
I have been reviewing my portfolio's sector weightings as 2015 is coming to a close. Each year I like to pick three sectors that I think might do well in the coming year and that I should strive to overweight within my portfolio by selecting some mutual funds that are overweight these selected sectors. To do this I study what I own and what adjustments might be necessary to achmploish this by using Moringstar's Instant Xray analysis. For the coming year I have chosen to overweight financials, technology and energy.

For me, I have the sectors in the S&P 500 Index divided into seven major and four minor sectors. The minor sectors would be materials, real estate, communication services and utilities. The major sectors would be consumer cyclical, financial, energy, industrials, technology, consumer defensive, and healthcare. I strive to maintain a weighting in the minor sectors of at least five percent each and the major sectors of nine percent each. This leaves about seventeen percent that can be moved around from these base weightings to overweight sectors of my choice and to also allow for some movement from these base weightings.

In addition, form a style cap orientation perspective, I favor about a sixty five percent weighting to large caps, 25% to mid caps and 10% to small caps; and, from a world region perspective, I favor about 60% to the Americas, 25% Greater Europe and 15% to Greater Asia.

With this, I am wondering what others might be thinking of doing within their own portfolio(s) for 2016?


  • edited December 2015
    I don't do sector funds as a rule. However materials/gold/energy weighting is where I would look when trying to follow my "when vs what" mantra.

    I think tech, financial, healthcare takes care of itself. One thing that might need extra attention is investing in company that makes orange toupe', the way things are going.

    I think mid cap blend/value might be the sweet spot in to and out of next correction. I am staying away from Emerging markets until Peter Schiff successfully bribes all of the nations leaders to collectively collapse the dollar.

    I do want to warn everyone, my crystal ball was not manufactured in the USA, but China like everything else.
  • edited December 2015
    Continuing to focus on a number themes, such as water (Ecolab, Danaher).
  • @Old_Skeet
    Consumer Discretionary Stocks Still Shine As Energy Stays Weak
    By James Picerno | Dec 9, 2015 at 06:58 am EST The Capital Spectator

    From Ted's post today
    Davis also suggests rebalancing toward unloved sectors, such as emerging markets.
    Prudent investors are slightly contrarian at the margins, he said. "A value-based, long-term approach tends to go against short-term market momentum," he added.
  • edited December 2015
    Hi @TPS Transfer,

    Yes, energy is currrently taking it on the chin and would be a contrarian move. I will not start to change much of anything until I begin to see some positive upward movement in the markets. Fourth Quarter 2015 reporting will, I believe, set the stage for much of 2016.

    Currently, my current overweights are financials (+3%), communication services (+3%), Industrials (+1%), technology (+1%), consumer staples (+3%), healthcare (+3%) and utilities (+3%). Keep in mind my target weightings for the four minor sectors of materials, real estate, communication services and utilities is 5% each and my target weighting for the majority sectors of consumer cyclical, financial services, energy, industrials, technology, consumer defensive, and healthcare is 9% each. This leaves 17% that can be moved around, to overweight, from my target weightings.
  • The only active bets I'm making right now in any asset class/sector (other than the ones the managers I've hired are doing for me) are short commodity energy equity and high yield corporate FI, zero commodities, and overweight FI non-agency mortgages and BBB-BB municipals. Yield is coming from a fairly broad swath of FI cef's and those non-agency mortgages and slightly junky munis. I'm agnostic on equity sectors other than the commodity-related ones.
  • I've done well in financials lately...hopefully, it will continue into 2016.
  • @MFO Members: Here is the Linkster's pecking order for the various S&P Sectors for 2016 !
    1. XLV
    2. XLY
    3. XLK
    4. XLP
    5. S&P 500 (SPY)
    6. XLI
    7. XLF
    9. XLB
  • Thanks Ted. I'm going to to listen to you a little closer next year.
  • I came across this "Big Issues" presentation which might add "food for thought" with regard to investing themes:
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