Sector Superstars: Passive Trading Strategy

Sector Superstars: Passive Trading Strategy

Explore the potential of Sector Superstars, a portfolio-based model designed to help investors diversify their investments and generate wealth by identifying top-performing sectors and the most trending stocks within them. This innovative approach is geared towards identifying and capitalising on the most promising sectors in the market, providing investors with valuable opportunities to grow their portfolio and achieve financial success.

In this post, we'll delve into the key features and benefits of Sector Superstars, providing insights on how it can complement your existing strategies.

What is Sector Superstars?

Sector Superstars is a sector momentum strategy that uses a custom index of 15 sectors, including everything from metals to media. The algorithm identifies the top three trending sectors, picks the most trending stocks from the sector constituents, and constructs an equal-weighted portfolio of 20 stocks. The portfolio is then rebalanced monthly to capture momentum in upcoming sectors.

How does it work?

The model takes advantage of money flow moving from one sector to another based on business cycles by investing in the outperforming sector and rebalancing it monthly. This is known as the industry momentum factor and it is a robust phenomenon that is widely documented.

Is the Sector Superstars model suitable for me?

Sector Superstars is suitable for investors who would like to diversify their investments across factors and are willing to take time out once a month to rebalance their portfolio. It is ideal for long-term wealth creation.

Note: The model is based on the performance of specific sectors in the stock market and may carry a higher level of risk compared to a diversified portfolio. Since the performance of the model is subject to the performance of the specific sectors selected and any changes in the economic or political environment may negatively impact the performance of those sectors.

It is important to consult with a financial advisor before committing to this strategy and to carefully consider the suitability of this model based on your investment objectives, financial situation, and risk tolerance.

Model performance



Sharpe Ratio


Model beta


Max drawdown


Recovery time (Max drawdown)

952 days

Average holding period of winners

92 days

Average holding period of losers

58 days

Average win


Average loss


Biggest Winner symbol


Biggest Winner Gain


Biggest Loser Symbol


Biggest Loser Loss


Longest Continuous trade symbol


Longest Continuous trade Gain


Longest continuous trade duration

272 days

*Backtest period for Performance Metrics is Nov’ 2014 to Aug' 2022.

Calendar days in all day metrics; Returns include slippages.

Frequently Asked Questions:

How is Sector Superstars different from other trading models?

Sector Superstars is a portfolio-based model that identifies top-performing sectors and the most trending stocks within them. It uses a custom index of 15 sectors and is designed to capture momentum in upcoming sectors by rebalancing the portfolio monthly.

What are the chances of success with Sector Superstars?

The model is designed to work well in trending markets, especially when multiple sectors converge.

However, the model underperforms when very few stocks within a sector are trending or when mid and small caps are correcting.

What is the minimum capital requirement?

The minimum capital requirement for Sector Superstars is ₹2,00,000 per trade.

How often do I need to act on signals?

It is recommended that you act on 2 signals per month.

How long should I subscribe for?

A minimum period of 1 year is recommended for optimal results.

Final thoughts

Sector Superstars’ portfolio-based approach and monthly rebalancing strategy make it an ideal model for long-term wealth creation. If you're looking to diversify your investments across factors and are willing to take time out once a month to rebalance your portfolio, Sector Superstars may be the right fit for you.

Disclaimer: The information provided in this post is for general informational purposes only. It should not be considered as financial or investment advice. Please conduct your own research and consult with a financial advisor before making any investment decisions.

Past performance is not indicative of future results and all investments involve risk.

The authors and the company they represent do not guarantee any specific outcome or profit.