Rydex Fund Allocation Suggestions

Discussion in 'Strategy Development' started by Robert Yanks, Dec 26, 2008.

  1. I would appreciate suggestions on how I might allocate a portion of my 401-retirement account into the 6 Rydex Funds: 1) Large Cap Growth, 2) Large Cap Value, 3) Mid Cap Growth, 4) Mid Cap Value, 5) Small Cap Growth and 6) Small Cap Value.

    I have run relative strength calculations comparing Large Cap to Mid Cap, Large Cap to Small Cap and Mid Cap to Small Cap.

    Currently, Large Cap is outperforming both Mid Cap and Small Cap and Small Cap is outperforming Mid Cap. So, I’ll want to overweight LC over both SC and MC and overweight SC over MC.

    Additionally on a relative strength basis, growth ETF’s are outperforming value ETF’s in the Large, Mid and Small Cap categories.

    I guess an easy method would be to divide the LC, MC and SC into 1/3’s and end up with LC getting 56%, Mid Cap getting 11% and Small Cap getting 33%. Then, perhaps overweight the Growth funds by some percent over the value – say 60/40.

    Any other suggestions/ideas on an allocation method?

    [As an aside, I’m developing this method because my account got slammed over the last year. I’ve been woodsheding a bit and have come up with a bonehead market timing method using a combination of bullish percent indexes and stocks above their 50-day moving average. Going back some 50 years it performs a tad behind the SP-500 but it misses all the big down swings. I’m okay with that because in many instances it took many years to get back to even after strong downswings. I don’t like the idea of buying and praying so I’ll take my chips of the table when the indicators say to.]
  2. The advantage in Rydex is that you can play both the long and short side.

    For example, the best one day trade that I ever made was when I was in one of the short funds.