Portfolio Breakdown as of 12/31/2015

Equity Assets
U.S. Large Cap 2.9%
U.S. Small/Mid Cap 8.1%
Intl Equity 10.5%
% of Total Assets 21.5%
Fixed Income Assets
Investment Grade 19.9%
High Yield 37.6%
Convertibles 8.9%
Emerging Mkt Currencies 9.5%
Other and Cash 2.8%
% of Total Assets 75.9%

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

Information Technology
Consumer Discretionary
Health Care
Telecommunication Services
Consumer Staples
Ten Largest Equity Holdings Assets
National Grid plc 0.3%
Teva Pharmaceutical Industries Ltd. 0.3%
Wells Fargo & Co. 0.3%
Actavis plc 0.3%
Imperial Tobacco Group plc 0.3%
Snam SpA 0.3%
National Australia Bank Ltd. 0.2%
American Tower Corp. 0.2%
Berkeley Group Holdings plc 0.2%
ITV plc 0.2%
Ten Largest Fixed Income Issues Assets
U.S. Treasury Note/Bond 0.7%
Neptune Finco Corp. 0.6%
Intel Corp. 0.4%
Yahoo!, Inc. 0.4%
U.S. Treasury Note/Bond 0.4%
Priceline.com, Inc. 0.3%
T-Mobile USA, Inc. 0.3%
VeriSign, Inc. 0.2%
WhiteWave Foods Co. 0.2%
DISH DBS Corp. 0.2%
Holdings Assets
High Yield Fund 32.5%
Short Duration Income Fund 23.7%
International Dividend Income Fund 10.9%
Convertible Fund 10.1%
Emerging Markets Currency Fund 9.6%
Calibrated Mid Cap Value Fund 4.4%
Mid Cap Stock Fund 3.7%
Core Fixed Income Fund 3.4%
Fund Dividends & Cap Gains next tab

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