BTS Zones — Industry Sectors Backtest

BTS Zones — Industry Sectors is a long-only tactical allocation strategy built to pursue targeted equity participation from the premise that recurring calendar windows can identify favorable periods for sector exposure, using 14 published BTS Strength Zones and a portfolio-level VIX 50/35 admission regime across nine sector ETFs, with SPY or SHY used when no zone is entered.

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Strategy summary

BTS Zones — Industry Sectors is a long-only, event-driven tactical equity allocation model. The BTS Sectors heat map supplies 14 published BTS Strength Zone windows across nine sector ETFs, while a portfolio-level VIX 50/35 regime determines whether an active zone may enter.

The strategy uses recurring calendar windows to seek targeted equity exposure. The VIX regime controls admission, scheduled zone endings control exits, and a blocked zone may enter later if the regime returns to ON while the zone remains active.

The traded set combines nine offensive sector ETFs with two fallback ETFs:

• Communication Services: VOX
• Consumer Discretionary / Consumer Staples: XLY / XLP
• Energy / Industrials / Materials: XLE / XLI / XLB
• Health Care / Technology / Utilities: XLV / XLK / XLU
• Fallback assets: SPY / SHY

Once admitted, each ETF remains held through its scheduled BTS Strength Zone and exits at the Close of its final trading day. At target-decision events, all entered BTS Strength Zone ETFs are equal-weighted.

The portfolio remains long-only and targets full investment whenever its allocation is set. Entered BTS Strength Zone ETFs receive the full allocation; with zero entered zones, SPY carries the ON state and SHY carries the OFF state. The backtest evaluates whether combining published sector BTS Strength Zones with VIX-gated admission adds value relative to passive SPY ownership.

What this strategy is not

• Not a VIX exit strategy: a later OFF signal does not terminate or resize a BTS Strength Zone that has already entered.
• Not a sector-ranking model: the strategy does not select only the highest-ranked sector ETF or rotate into a single winner.
• Not a fixed nine-sector basket or daily equal-weight portfolio: only entered zones receive weight, and routine market drift does not trigger rebalancing.
• Instead: it is an event-driven sector-allocation model that admits published BTS Strength Zones while the portfolio-level VIX regime is ON, holds admitted zones to their scheduled ending, and uses SPY or SHY when no zone is entered.

Report summary

Benchmark summary

The primary benchmark is buy-and-hold SPY. It preserves broad U.S. equity-market exposure through continuous passive ownership of SPY.

The strategy adds published sector BTS Strength Zone timing, VIX-gated admission, equal allocation across entered zones, and an SPY/SHY fallback when zero zones are entered.

The comparison therefore tests whether the strategy’s sector-zone and admission decisions added value relative to passive SPY ownership.

For the benchmark-selection framework, see How to Choose the Right Benchmark.

• Primary Benchmark: buy-and-hold SPY.
• Preserves: broad U.S. equity-market exposure through continuous passive SPY ownership.
• Removes: published sector BTS Strength Zone timing, VIX-gated admission, equal allocation across entered zones, and the SPY/SHY fallback.
• Excludes: other tactical allocation, ranking, and market-timing rules that are not part of this strategy.

Key metrics: 2021–2025 free preview

• The free preview is a recent-window orientation tool, not the complete evidence set.
• A five-year free-preview window can be useful, but it can also overstate or understate the full historical tradeoff.
• The full report expands the scorecard across the complete report window and adds the path-level interpretation behind the headline numbers.

The recent window was exceptionally strong. BTS Zones — Industry Sectors produced 34.7% CAGR and $44,187 of ending capital versus 14.7% and $19,791 for buy-and-hold SPY. Strategy volatility was higher at 18.6% versus 17.1% for SPY, but its -22.6% maximum drawdown was modestly smaller and its risk-adjusted ratios were materially stronger.

Further research

• BTS Methodology
• What Makes a Backtest Reliable?
• Why a Standardized Methodology Matters in Backtesting
• How to Choose the Right Benchmark
• Strategy Library