New York (HedgeCoVest.Com) As investment managers continue the debate over which is better, active or passive management, during the first 100 trading days of 2015, timing has been critical. In the first 50 trading days, the S&P 500 was down 0.27% and looking at the ten select sector SPDR ETFs, five outperformed the index and five underperformed the index. The Healthcare Select Sector SPDR (NYSE: XLV) and the Consumer Discretionary Select Sector SPDR (NYSE: XLY) were the top performing sectors with gains of 5.02% and 4.17%, respectively. The bottom performing sectors were the Utilities sector and the Energy sector with losses of -7.92% and -5.72%.

Over the next 50 days, the fortunes of some sectors have completely reversed with the Energy sector going from the worst performing sector to the best performing sector with a gain of 5.06%. Technology did very well during the second 50 days as well, gaining 2.78%.

If you are wondering how important the timing can be, let’s look at the Healthcare Select Sector SPDR. It is the best performing sector through the first 100 days of 2015, but if you timed your entry in to the XLV wrong, you could be sitting on a loss right now. While the ETF is up 8.84% YTD, since March 20, it is down 0.9%.

Conversely, the Utilities Select Sector SPDR (NYSE: XLU) is the worst performing of the sector SPDRs so far this year with a loss of 5.47%. However, if you invested in the XLU at the right time (March 11), you would be up 3.55% at this time.
Yes it is almost impossible to time things perfectly with your entry and exit points, but catching the bulk of trends can make a huge difference in your performance. That is why we believe in active management and in the ability of the managers to time the market, because it can make such a big difference.

Rick Pendergraft
Research Analyst
HedgeCoVest