Bethe Portfolio Review: 26 February 2024

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The Bethe Portfolio: An Analytical Approach to Sector Investing for Retirement

“With retirement planning in mind, the Bethe Portfolio takes an analytical approach to sector investing. By strategically allocating investments across various sectors, this portfolio aims to maximize returns while minimizing risk. It offers a diversified mix of assets specifically tailored to meet long-term retirement goals. Invest in the Bethe Portfolio today for a secure and prosperous retirement future.”

The following Bethe review will illustrate the most recent revision to the Sector BPI model.  If you missed the blog posted earlier this morning, go back and pick up that critical information.

Bethe Security Holdings

Below is the current investment quiver and holdings for the Bethe.  The adjustment to meet the new version requirement is to sell ESGV and use the cash to increase the percentage first in VOO and then VTI.  A TSLO is in place to liquidate ESGV and a limit order to purchase VOO is priced just below the sell price for ESGV.  The idea is to exchange ESGV for VOO as VOO closely tracks SPY, the benchmark we are attempting to match or exceed.

Since no sectors are in the oversold zone we concentrate on beefing up VOO and VTI.

Bethe Manual Risk Adjustments

While there is available cash the sale of ESGV needs to go through before we can complete the additional shares for VTI and VOO.  The eventual realignment of holdings looks like the plan outlined in the Manual Risk Adjustments worksheet.  Check out the Shares to Hold column.

Bethe Performance Data

Over the past two years the Bethe lags the SPY benchmark by one percentage point when annualized.  Other than the SPY benchmark the Bethe is outperforming the other five references.

Bethe Risk Ratios

The Jensen Alpha is still negative, but it did manage to improve slightly on the January value.  The goal for this new model is to push or pull the Jensen Performance Index back into plus territory.

Once we clear February the slope of the Jensen has a chance to turn positive.

Bethe Sector Portfolio Report

The following portfolio report is the best way I have to evaluate the Sector BPI model.  Bethe began using the Sector BPI model in May of 2023 so we are coming up on the first anniversary.  Over this period the Bethe gained 34.7% while the SPY benchmark generated a 22.0% return.

If you check the IRR for ESGV, VOO, and VTI, none of these three exceed the portfolio average return.  It is the sector ETFs that are boosting the portfolio performance.  This information is very encouraging for the Sector BPI investing model.

The Sector BPI model needs to experience one or more Buy/Sell cycles before we can think of this approach as more than a hypothetical approach to investing.  Thus far I’m very encouraged.

Questions and comments are always welcome.  Post them in the Comment section provided with each blog post.