Heretofore the Bethe has been classified as a Relative Strength portfolio. With the addition of several closed end funds, it is now more of a blend between Relative Strength and Income or Buy & Hold. The last six securities (brown background) in the Investment Quiver listed below are income generating funds and as such will not be sold out of the portfolio. At least that is the current plan. Securities above those with the brown background are made up of Asset Allocation and Market Factor ETFs. There are more likely to be moved in and out of the portfolio depending on the recommendations.
Below are the recommendations for this November review. Only two ETFs are recommended for purchase when the VTI Target Filter is turned on. They are: VTI and QLCN. The Bethe currently holds 10 shares of VTI, but zero shares of QCLN.
Since the plan is to continue to hold shares in securities FGB through FMO, fewer dollars are available to meet all the recommendations for VTI and QCLN. MTUM, VOE, and VBR are U.S. Equities as is VTI so I will not be selling these ETFs outright but will establish TSLOs for each.
When January rolls around and fourth quarter dividends are in, I’ll check on the closed end funds to see if they are still priced below their Net Asset Value (NAV). In addition, I want to make sure the yield is around 8% or higher. If neither is the case, then it may be time to sell laggards out of the portfolio and replace with fresh closed end funds.
One of the reasons for making management changes a year ago was related to the performance of the Bethe. The performance of Bethe continues to lag many of the other ITA portfolios. With an IRR of 16.67% the Bethe is barely ahead of its VTHRX benchmark. In addition, it is beating VTTVX and AOR.
The extreme drops in both the Treynor and Jensen is primarily due to adding more securities which in turn lifted the portfolio beta to 0.775. Increasing beta caused a drop in both risk ratios. The slope over the past year is still positive for both so keep a close eye on the slope of the Jensen Performance Index curve.
The Bethe now goes into neglect mode until December.