Franklin Portfolio Review: 31 July 2023

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The original Dual Momentum™ Franklin portfolio was converted over to the Sector BPI Plus model several months ago.  Since the conversion the return/risk ratio improved.  Whether this is due to the new investing model or the upward trend of the market will be determined over the next few months.  Using the slope of the Jensen as one measurement it appears as if the Sector BPI Plus model is working as anticipated based on the original hypothesis.

The following analysis walks Platinum and Lifetime members through the Sector BPI investing model.

Franklin Investment Quiver and Holdings

Below is the current investment quiver and holdings as of 7/28/2023.  VPU was recently sold out of the portfolio as the 3% TSLO was struck after the BPI data called for a sell.

The cash from the sale of VPU will be used to purchase shares in one of the non-sector equity ETFs.  More on this later.  I’ll point out that Sector ETFs such as VDE, VAW, and VOX are oversubscribed or holding a higher percentage than recommended since I’ve set up a new Strategic or Max AA percentage for the Sector ETFs.  What I’ve done is to set up a sector coefficient in the Main Menu worksheet so the percentage of the eleven sector ETFs add up to approximately 100%.  This way, if all eleven are recommended at the same time there will be cash to spread out over all eleven sector ETFs.  I expect this to be a rare event.

Franklin Security Recommendations

The following BHS Recommendation worksheet (comes from the Kipling spreadsheet) is used to order or rank the non-sector ETFs.  For example, VOO with a Rank of #2 is the highest ranking non-sector ETF.  VGT holds to #1 position, but it is a sector ETF.  ESGV is ranked next followed by VTI and SPY.

Franklin Manual Risk Adjustments

Now we come to using risk concepts to manage the Franklin.  As usual I adjusted the SD Multiplier to 1.38 so the Stop Loss percentage for VTI would register 8.0%.  8.0% is an optional setting.  Use it as a guideline depending on how much risk you wish to take with your portfolio.

Since no sector ETFs are in the oversold zone we use available cash to purchase shares of non-sector ETFs.  Remember the fill order is VOO, ESGV, VTI, and SPY.  If you check below, three (3) shares of VOO are recommended and we already hold 5 in the Franklin.  So we move on to ESGV.  ESGV already holds 17 when only 15 are recommended so we move on to VTI as it ranks next.  The recommendation is to hold six (6) and we hold none.  There is only sufficient cash to purchase four (4) shares so I have a limit order in place to purchase four shares of VTI.

Since I started writing this blog those four (4) shares of VTI were purchased.

Franklin Performance Data

Over the past 19 months the Franklin has bested the SPY benchmark by over 1.5% points annualized.  The Franklin is also outperforming all benchmarks I track using the Investment Account Manager software.

Franklin Risk Ratios

With exception of the Omega Ratio all risk measurements are higher than they were a month ago.  Particularly noteworthy is the positive slope (0.94) of the Jensen.

Buying Guidelines For BPI Model Portfolios: 9 December 2022

Tweaking Sector BPI Plus Model: 20 May 2023

One new “tweak” I’ve added to the Sector BPI Plus investing model is that once shares are purchased for any of the non-sector ETFs, I place a TSLO under those shares.  For example, since I began this blog, four (4) shares of VTI were purchased for the Franklin.  I went back in and immediately placed an 8% TSLO on those four shares.  This move is designed to protect capital.

If there are question or comments related to the Sector BPI investing model, place them in the Comment section below.  I’m trying to make this investment model as clear as possible.