Franklin Sector BPI Portfolio Review: 23 March 2023

Northern Europe

The Franklin portfolio is one of four Sector BPI accounts I’m tracking here at ITA Wealth Management.  Moments ago I updated the sector section of the BPI spreadsheet and found only three sectors are currently positioned in the over-sold zone.  Those three are:  Energy (VDE), Materials (VAW), and Real Estate (VNQ).  Real Estate dropped from 33.33% bullish to 16.66% bullish a day or so ago so it is a new Buy opportunity.

Franklin Sector Investment Quiver and Holdings

Since inserting the following table into this blog post, 5 shares of VNQ were added to the portfolio.  Other limit orders are in place in an effort to build Real Estate up to 15% of the total portfolio.

Franklin Manual ETF Adjustments

I use the Manual Risk Adjustment worksheet from the Kipling spreadsheet to provide guidance as to how many shares to purchase in the over-sold sectors.  As you can see from the following data, Energy (VDE) is fully populated.  Materials (VAW) is within one percentage point of 15% so that is fine.  Limit orders are in place to bring VNQ up to the 15% level.

Franklin Performance Data

If one goes back to Franklin data in 2021 you will find this portfolio far behind benchmarks such as AOR or SPY.  Since moving from the Dual Momentum™ model over to the Sector BPI model, the Franklin performance, while still in negative territory, has brought positive changes.

The Franklin was moved from the DM model to the Sector BPI model in late November of 2022.  Since that time the Franklin has outperformed the S&P 500 by more than five percentage points when annualized.  Over the past 14.7 months the difference is less as the Franklin was operating under the DM model for much of this time.

We still need to go through several Buy/Sell cycles before any useful conclusions can be drawn regarding the Sector BPI model.  Thus far the hypothesis is working.

Franklin Risk Ratios

Check the Jensen Performance Index since last November or when the Franklin made the management shift.  While still negative, there is improvement.

The Information Ratio has also shown improvement, but it did drop a tad in March.

Buying Guidelines For BPI Model Portfolios: 9 December 2022