How to Build a Cyclicals ETF

I write a lot about cyclical stocks and the Morgan Stanley Cyclical Index (^CYC). The market has richly rewarded this sector over the last several months.

There is not, to my knowledge, an ETF that tracks the CYC. Fortunately, dear reader, you have me. And fortunately for me, I have Excel’s LINEST function.

Here’s a quick-and-dirty way to build your own Cyclical ETF. All you need to do is buy four different sector ETF’s in these ratios:

4.07 shares of Materials Sector (XLB)
9.30 shares of Industrials Sector (XLI)
7.33 shares of Consumer Discretionary Sector (XLY)
3.93 shares of Energy Sector (XLE)

The model isn’t a perfect match, but it’s not too bad.

Posted by on January 5th, 2011 at 11:28 am


The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.