Bethe Sector BPI Portfolio Review: 5 July 2024

Cycle of Life

The big decision facing the Bethe is what to do with nearly half the portfolio resting in cash.  It looks like this is not a summer to “Sell in May  and go play.”

Over the last few days shares of VTI and VOO were added to the Bethe.  It goes against the grain to purchase shares when the market is this high yet I don’t want the market to just walk away to the upside.  Numerous limit orders are in place to add more shares of VOO and VTI with a preference given to VOO as this is the ETF that mirrors the S&P 500.  Keep in mind that the S&P 500 (SPY) is the benchmark for ITA portfolios.

With the Bethe holding this much cash is there any chance the Sector BPI investing model is working for this portfolio?  The Bethe has only been using the model for 14 months so we don’t have much history to arrive at a useful conclusion.  Is the direction positive?  Follow along to find the answer.

Bethe Security Holdings

Below is the investment quiver and current holdings for the Bethe Sector BPI portfolio.  As mentioned above, nearly one-half of the portfolio is held in cash and this is a drag on performance as the market moves higher.

Bethe Manual Risk Adjustments

Using the Manual Risk Adjustment worksheet the recommendation is to add 30 shares of VTI and 33 shares of VOO.  This will still leave nearly $29,000 in cash.

Numerous limit orders are in place to fill the VTI and VOO recommendations.  In fact if all orders are struck the cash value would move down closer to $2,000.

Bethe Portfolio Performance

Since 12/31/2021 the best one can say for the Bethe is that it is outperforming VT, AOA, and AOR.  Bethe has a long upward road before it will catch up with SPY, the benchmark I use for all ITA portfolios.

Bethe Risk Ratios

In addition to a less than stellar IRR performance, the Bethe is not improving in the risk department despite holding so much cash.  It may surprise readers, but holding cash does not automatically reduce risk.  The beta of Bethe is a low 0.463, yet the Jensen is a negative -2.0.

Putting cash to good use will improve the Jensen Performance Index.

Bethe Sector Portfolio Report

With the large cash holding I expected the Bethe would not hold up well when checking in on the Sector record.  It is a pleasant surprise to see the Bethe IRR for Period (shown below) is 51% while the SPY returned 33.1%.  This is quite a difference, giving a “high five” to the Sector BPI investing model.

This will be the last portfolio review for a number of days.