Systematic trading plans can be used with any asset, index or asset class. There is no “Holy Grail” in a trading plan or system. Each asset class needs to be identified as to if they trend to trend or oscillate.
Some assets only work with long term trend following systems, while others may work with a variety of plans.
The Utility Index as measured by the XLU, ETF is the focus of this article.
I have found that the XLU trades well with longer trend following indicators. A Buy and Hold strategy would have only shown about a 6% return for 11 years. A long/short trend following method would have returned over 120% for that same period.
The chart below shows the Buy and Sell signals on the lower panel of the chart. They Equity curve is the top portion. Once again, tactical management with a systematic plan can provide risk management and outperform Buy and Hold.
For more information on systematic trading plans, contact mark@seleznovcapitaladvisors.com
