We have to make sure that we don't overdo the selling in any particular industry. The downside of a SPDR is that index mutual funds typically have better performance. In addition, the performance of SPDRs tends to lag low-cost indexed mutual funds. The outperformance of indexed mutual funds is rather small over short periods but quite significant over longer periods. Market-timers run up transaction costs for the fund, which impairs the fund's ability to match its benchmark, and they bring no advantages to the fund.
All investors share the pain a timer brings.
We've found that our policy works. Our index funds have lower turnover than other indexed funds that employ different measures to deter market-timing. In the international markets, market-timing is an even bigger problem because we're behind the eight ball already. Typically, the international markets are closed for the day when we need to respond to cash flows. For example, if an investor were to call at 2 p.m. Eastern time to invest a large sum in one of our international index funds, we'd have no way to adjust our portfolio for that event because the foreign markets would already have closed.