Portfolio Breakdown as of 12/31/2015

Equity Assets
U.S. Large Cap 18.4%
U.S. Small/Mid Cap 30.0%
Intl Equity 21.0%
% of Total Assets 69.4%
Fixed Income Assets
Investment Grade 5.2%
High Yield 22.4%
Convertibles 0.5%
Other and Cash 2.6%
% of Total Assets 28.1%

Portfolio Positioning as of 12/31/2015

  • We reduced the portfolio’s exposure to relatively risky asset classes during the fourth quarter. A longstanding overweight in high yield bonds was cut, and U.S. equity allocations were slightly reduced. We also reduced the portfolio’s exposure to foreign currencies during the period.
  • A sharp October rally in U.S. stocks drove the equity risk premium (a measure of the relative attractiveness of stocks versus bonds) back to multi-year lows. Consistent with our investment process, we subsequently reduced the portfolio’s position in domestic equities. In contrast, we increased the portfolio’s exposure to non-U.S. stocks, mostly though allocations to the Japanese market. 
  • In fixed income, we have been net sellers of high yield bonds over the past twelve months as investors have continued to exit the market due to rising defaults, which fueled concerns about excessive leverage in highly cyclical industries. Proceeds from sales of high yield bonds have primarily been directed to short-term, investment grade credits. Short-term corporate bonds offer attractive yields, limited duration and have historically generated positive total return during periods of rising rates. 
  • In the coming year, we expect monetary policy divergences to be most significant between the U.S. and other developed markets. Meanwhile, emerging market currencies offer much higher yields and appear fundamentally undervalued. As a result, the portfolio remained modestly long the U.S. dollar through a combination of short exposures against major developed market currencies, particularly the Euro, and long exposures to emerging market currencies.

Equity Sector Allocation as of 12/31/2015

Financials
Consumer Discretionary
Utilities
Industrials
Information Technology
Energy
Health Care
Consumer Staples
Telecommunication Services
Materials
Ten Largest Equity Holdings Assets
Fidelity National Information Services, Inc. 0.8%
XL Capital Ltd. 0.8%
Fifth Third Bank 0.8%
Invesco Ltd. 0.8%
Whirlpool Corp. 0.8%
M&T Bank Corp. 0.8%
PPL Corp. 0.7%
Hartford Financial Services Group, Inc. 0.7%
Edison International 0.6%
Orbital ATK, Inc. 0.6%
Ten Largest Fixed Income Issues Assets
Neptune Finco Corp. 0.4%
U.S. Treasury Note/Bond 0.3%
Banco Popular Espanol SA 0.3%
U.S. Treasury Note/Bond 0.3%
U.S. Treasury Note/Bond 0.2%
T-Mobile USA, Inc. 0.2%
WhiteWave Foods Co. 0.2%
DISH DBS Corp. 0.2%
Frontier Communications Corp. 0.2%
AMC Networks, Inc. 0.2%
Holdings Assets
High Yield Fund 22.9%
International Dividend Income Fund 21.1%
Calibrated Mid Cap Value Fund 17.1%
Mid Cap Stock Fund 17.0%
Calibrated Large Cap Value Fund 10.6%
Affiliated Fund 3.5%
Core Fixed Income Fund 3.2%
Short Duration Income Fund 3.0%
Fund Dividends & Cap Gains next tab

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