Franklin Sector BPI Portfolio Review: 20 August 2024

Bison – Yellowstone National Park

Before updating the Franklin I checked the Bullish Percent Indicator (BPI) data to see if any sectors moved into the overbought zone as a result of the recent market performance.  The two sectors in the overbought zone are Utilities and Real Estate.  I don’t hold securities in either sector so no changes are required at this point.

Franklin Security Holdings

In the table below readers will find the investment quiver and current holdings for the Franklin portfolio.  VCR, VDE, and VGT are recent additions.  All are up since their purchase a week or so ago.

Franklin Manual Risk Adjustments

The following risk adjustment worksheet comes out of the Kipling spreadsheet.  If you check the current sector holdings VDE and VGT are over subscribed, likely due to current strong performance.  VDC at -0.5% is on the bottom edge.  When a sector is first purchased we want it to be within +/- 0.5%.  Once the ETF is in the portfolio there is a high probability it will move out of the “uncertainty” zone due to price changes.

Since no sectors are currently in the oversold zone, I have limit orders in place to pick up a few shares of VOO and VTI.  Since the recommendation for these ETFs is Sell, the limit order prices are well below the current prices so I doubt the orders will be struck.

Franklin Performance Data

Since 12/31/2021 the Franklin is edging out the SPY ETF when it comes to performance.  The margin is much larger when compared to possible benchmarks such as AOA and AOR.

Franklin Risk Ratios

How is the Franklin performing when risk enters the equation.  Jensen Alpha or Jensen Performance Index is our best measurement.  Over the past year the slope is positive (0.18) and the current value is a respectable 0.89.

Sector BPI portfolios are not all that risky as we have downside protection built into the investing model.

Franklin Sector Portfolio Report

I launched the Sector BPI model with the Franklin in November of 2022.  Over the past 21 to 22 months the Franklin returned 66.4% while the SPY returned 45.5%.  Both are very high percentage returns.

Based on this data from the Investment Account Manager, the Sector BPI model is working quite well for the Franklin portfolio.

With the recent market surge, to sell in May and go away was misguided advise.  Presidential years tend to be strong and that is what we are seeing this summer.