Reorienting Model Portfolios after Active Week, Earnings Season

After equity markets made major moves last week and in response to the results of 3Q22 earnings season, Solyco Wealth made several key changes to its four model portfolios. Notably, we:

• Brought our 9% Energy over-weight down to an equal-weight 5.3%,
• Increased the Consumer Staples weighting to 6.1% from 3.5%, bringing it from under-weight to equal-weight,
• Added 1.1% to Technology, which resulted in a move to 21.1% from 20.0%, but left it effectively in a modest under-weight position.

As always, we remain agile and look to adjust our asset allocations to capture the best investing opportunities for our clients on a risk-adjusted basis.

In order to enact these asset allocation changes within our model portfolios, Solyco Wealth over the past few weeks removed Energy companies Schlumberger (SLB) and Marathon Petroleum (MPC) from model portfolios. We retain producers Total (TTE), Pioneer (PXD), and Earthstone (ESTE), in our portfolios with an obvious preference for the time being for producers versus oilfield services companies and/or refiners.

We added Anheuser-Busch (BUD) and Boston Beer (SAM) to gain the aforementioned increased exposure to the Consumer Staples sector. While transitions in consumer tastes from seltzer to hard liquor and/or beer, increased input costs, and vastly higher transportation expenses severely hampered brewers’ performances over the past year, we see these headwinds moderating in the near future. We also hold Wal-Mart and Performance Food Group from the Staples space in our model portfolios.

Additional recent changes made to our model portfolios include booking gains from Vertex Pharmaceuticals (VRTX) and Deere & Co. (DE). In the equal-weight Health Care sector we chose to replace VRTX with shares of vaccine-oriented biotech company BioNTech (BNTX). Replacing DE in the Industrials space, we chose to jump onboard with the increase in air travel and to add shares of airliner Delta (DAL). In the Financials space we rolled out of BlackRock (BLK), replacing it with investment banker Goldman Sachs (GS).

Solyco Wealth runs four risk-aware model portfolios – Conservative, Moderate, Moderately Aggressive, and Aggressive – for the benefit of its client. Upon request, we remain happy to share the composition of these portfolios; please email ctrimble@solycowealth.com for a copy of the model portfolios’ holdings and percentage allocations.