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March 2015 archive

March 2015

As we approach the end of the first quarter I thought it might be useful to update you on our current market views and asset allocation. We are currently underweight stocks and overweight cash, reflecting our conviction that global markets are fully valued and face a number of headwinds, especially higher rates in the US (see February 2015). The search for non-correlated alternatives to equities is especially challenging at the moment given the potential downside in fixed income markets.

Consequently, we have a high allocation to cash and are focused on using a number of non-traditional bond surrogates, which provide higher yields, but are not without risk, especially on the credit side. In general, we have sought to balance this with lower duration, as we believe that at this stage in the economic cycle that is of greater concern. Included in this group are preferreds, high yield, and floating rate notes. Similarly, on the alternatives side we are investing in REITS, both US and Global, as well as commodities and forest products. Lastly, Master Limited Partnerships (MLPs), which have been caught in the energy down draft, are good value and offer attractive current yields.

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