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.

In terms of themes, we are focused on several areas where we believe there are significant opportunities. Foremost amongst these is pharmaceuticals, which despite their strong performance in 2014 continue to offer a nice combination of value and growth in a rapidly aging world. Like a number of the securities we own, they are defensive and offer attractive dividend flows. In contrast we are slightly overweight tech where the US has a strong capability and valuations are at a discount to historic averages. We believe financials, particularly in the US, are attractively priced, with many of them still trading under book value. They will also be amongst the few beneficiaries of higher interest rates. American media related firms are consistent leaders in terms of content, and with easier access and more leisure time available globally, we believe growth in demand for companies like Disney and Time Warner will grow rapidly.

I am pleased to note that the view of Europe expressed in our previous note is becoming more mainstream as consumer spending continues to burgeon, though political risk remains. However, with a rapidly weakening currency and continued monetary stimulation, we believe the trend will remain intact for some time. Exporters will be amongst the main beneficiaries of this, especially those selling into the US, as their products become cheaper in dollar terms, and they benefit from repatriated profits in Euro terms.

We continue to be overweight in North Asia where the combination of low sensitivity to a strengthening dollar and the success of export oriented, technology companies will provide leadership. While emerging markets remain cheap, there is reason for caution especially in the commodity exporting countries, though we continue to believe that oil will see a substantial rebound in 2016. In the interim, a number of Asian countries (including Japan and India) will benefit from cheaper energy prices. The strong growth of middle class consumer spending will also be a powerful theme, propelling corporate earnings and profitability throughout the emerging markets, but especially in China and India.

Finally, as noted above, in an effort to provide some stability in what could be a choppy market, we are substantially overweight cash and cautious on bonds. Alternatives also represent a substantial weighting in our model and frankly could be more if we are able to identify attractive opportunities going forward.

I hope the above will be of interest and as always would be delighted to try to answer any questions you might have.