Kepler Asset Allocation Portfolio Review: 30 April 2026

“The Kepler Asset Allocation Portfolio Review as of April 30, 2026, highlights the ongoing impacts of financial repression on investment strategies. In this environment, traditional asset classes exhibit altered risk-return profiles, necessitating a reevaluation of portfolio allocations. As we navigate these challenges, a strategic focus on diversifying assets becomes imperative to optimize performance. Continuous analysis and adaptation will be essential to mitigate risks associated with prevailing economic conditions.” – AI generated.

Kepler is the last portfolio to be reviewed in April.  Readers take note of the additions to the former asset allocation.  These additions are designed to counter the changes the prospective new FED Chairman is likely to make to get the U.S. out from under the huge debt the country added over the past 25 years.  We can expect an aggressive Financial Repression similar to what happened after WWII and again in the late 1960s and 1970s.  Wars are expensive and tragic to many.

As with the Gauss portfolio a decision needs to be made.  Does one hold a large percentage of the portfolio in short-term treasuries (SHV) or sell shares of SHV and rebuild the portfolio according to the stated target percentages?  Follow along to see the answer to this question.

Kepler Security Holdings

Below is the new asset allocation model for the Kepler.  Several sector ETFs such as VDC, VHT, and VPU were added as these are areas of the total market that consumers will need regardless of a market correction or recession.  Note that I am not holding long-term treasuries (TLT) or bonds such as BND.  I am not holding CDs as instruments with fixed rates are positions at risk when the math model of Financial Repression is set in motion.

There are four ways to reduce the national debt.

1. Increase taxes.  There is little will in Congress to do anything in this area.  In fact the opposite happen under the Trump Administration and that was to give the wealthiest individuals a tax break. Not the brightest move by a so called conservative party.  Even if we were to move back to the tax structure of 1960, this would not solve the debt problem.
2. Decrease spending:  Again, it is extremely difficult to cut medicare, social security, and defense.  The fast growing section of the debt is interest.  The only way to reduce the interest on the debt is to lower interest rates and that is what the new FED Chairman intends to do if confirmed.
3. Grow the economy.  Currently the debt is growing faster than the economy and that is the big problem.  The Buffett Indicator is at an all-time high.  This is why Berkshire is holding billions in cash or just waiting for better buying opportunities.  We can learn from Buffett and his colleagues.
4. Financial Repression.  Since the first three are going to fail, the fourth option is the solution.  Penalize bond holders and savers.  Create a situation where the country will inflate out of the debt crisis.  Watch this space and keep informed.

Kepler Rebalancing Recommendations

I anticipate better buying opportunities sometime this summer or early fall.  Therefore, I am keeping “powder dry” in the form of a large percentage of the portfolio in SHV.  This low volatile ETF is keeping the portfolio beta to a very low value of 0.124.  Should the market continue to rise, the Kepler will not perform well, as has been the history of this portfolio.

I do have a number of limit orders in place to use the available $4,600 held in a money market.

An aside comment.  If your bank is not paying interest or the rate is well below the inflation rate, keep the level of cash as low as is comfortable as that cash is losing purchasing power.

Kepler Performance Data

Since 12/31/2026 the Kepler has been a dog of a performer.  Part of this poor performance can be attributed to withdrawals for educational purposes at times when the market was surging upward.  Consider these dollars to be a future investment so a poor IRR is somewhat acceptable.  There may be future educational withdrawals, but these too will finally come to an end as the owner should not need too many more “educational dollars.”

Kepler Risk Ratios

Based on the Sortino Ratio, the portfolio is gaining ground.  However, when examining both the Jensen Alpha and Information Ratio we note the Kepler is not keeping pace with the AOR benchmark.  If we see any type of correction (10% drop) this portfolio will gain ground on the benchmark.  There is risk in holding so high a percentage in SHY.  The hope is that this decision will pay off sometime over the next year.