BTS Strength Zones — U.S. Sector ETFs Backtest Results

Brian Ernest Metzger on August 4, 2026

A long-only, unleveraged tactical allocation model using published BTS Strength Zones across nine U.S. sector ETFs produced 18.7% CAGR versus 10.6% for buy-and-hold SPY over the 2005–2025 whole-calendar-year backtest. During the 21-year period, a $10,000 starting value grew to $367,986 for the strategy versus $82,376 for SPY.

Results

BTS Strength Zones — U.S. Sector ETFs
Buy-and-hold SPY
Line chart comparing BTS Strength Zones — U.S. Sector ETFs and buy-and-hold SPY daily account growth from 2005 through 2025, both starting from a $10,000 inception anchor. The strategy finishes near $368,000 versus about $82,000 for SPY.
Figure 1. BTS Strength Zones — U.S. Sector ETFs versus buy-and-hold SPY over the 2005–2025 backtest period. Starting capital: $10,000. Inception-anchored daily account-equity path on a linear scale.

Time in Market was 98.8%, indicating near-continuous market exposure. Full-window volatility was 19.0% versus 19.1% for SPY.

Maximum drawdown was -42.4% versus -55.2% for SPY. A drawdown greater than 40% remained severe.

In SPY up years, BTS Strength Zones produced 23.0% filtered CAGR versus 16.9% for SPY. Across the three SPY down years—2008, 2018 and 2022—the strategy produced -3.8% filtered CAGR versus -21.0% for SPY. The result shows smaller compounded losses across those selected down years, not loss avoidance.

BTS Strength Zones beat SPY on CAGR in 82.5% of rolling three-year windows and 91.7% of rolling five-year windows. The strategy’s worst rolling CAGR remained positive at 3.4% over three years and 7.1% over five years.

Methodology

The model applies published BTS Strength Zones across nine U.S. sector ETFs. A portfolio-level VIX 50/35 regime controls entry. Entered ETFs are equal-weighted at target-decision events and held through the scheduled end of each BTS Strength Zone. When no BTS Strength Zone is entered, the portfolio holds SPY while the regime is ON and SHY while it is OFF.

Backtest results follow BTS Methodology.

Caveats

The published BTS Strength Zones are derived from historical data and should be understood as in-sample findings, not independent out-of-sample validation.

The 2021–2025 preview produced 34.7% CAGR versus 18.7% over the full report window. That unusually strong recent period should not be treated as representative of the entire record.

Implementation remained active at 49.5 modeled executions per year. SPY up/down-year figures are filtered-year diagnostics rather than continuous-window backtests.

Read the report

The full Strength Zones Backtest: U.S. Sector ETFs report provides complete strategy rules and mechanics, detailed performance and risk results, market-capacity analysis, return tables, rolling-window diagnostics and implementation guidance.

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