Investment Management

Core Portfolios

Global Growth Portfolio

Core’s most opportunistic portfolio seeks long-term capital appreciation available from the global equity and fixed-income markets. The portfolio holds a mix of foreign and domestic equities and bonds, and may include investments in commodities and other assets. For tactical purposes and in response to changes in economic, business, and credit cycles, the Global Growth Portfolio holds cash reserves from time to time. The goal is to invest fully in undervalued sectors of the world’s equity markets that show opportunity for substantial gains. In recent years, this portfolio has held significant investments in foreign markets to take advantage of the positive investment returns from globalization. See the "Principles and Practices" memorandum for a full discussion of conditions that inform this and Core’s other portfolios.

Conservative Growth and Income Portfolio

This portfolio employs the tactical approaches as the Global Growth Portfolio, and expresses the same views of investment opportunities. It differs by holding fixed-income investments in almost all market conditions and generally takes smaller positions in equities than in Global Growth Portfolios. As a result, the level of investment risk in these portfolios is lower than in Global Growth Portfolio. Core’s fixed-income investments are global and may include inflation-linked bonds. Since 2002, these portfolios have held short- and long-term bonds denominated in foreign currencies, to take advantage of the depreciation of the U.S. dollar. This portfolio generally offers less quarter-to quarter volatility and current income. It appeals to more conservative investors.

Risk Averse Portfolio

This portfolio is intended for investors with an aversion to risk and volatility. It is made up primarily of fixed-income investments; equities and other assets are held in relatively small proportions. As with Global Growth and Conservative Growth and Income Portfolios, the bonds in this portfolio usually include bonds or cash reserves denominated in foreign currencies. These foreign currency bonds pay interest and gain in value as the dollar continues to weaken. The small proportion of equities and other assets in this portfolio is invested in a manner consistent with the themes and investment ideas in the Global Growth Portfolio. This portfolio provides current income and stability and has limited exposure to stock market swings.

Capital Preservation Portfolio

Core’s Capital Preservation portfolio seeks consistent levels of current income and preservation of principal. The portfolio holds bonds of short, intermediate and long duration, usually in a mix of government bonds, investment grade corporate issues, and mortgage-backed securities. The Capital Preservation portfolio holds bonds issued by the US government and by American domestic corporations, as well as bonds issued by foreign governments and corporations. The investments include dollar-denominated bonds and non dollar-denominated issues and foreign currencies. Core employs a tactical approach to its investments in foreign currencies and non-dollar denominated bonds, increasing such investments during periods of sustained weakness in the US dollar and decreasing these during periods when the US dollar’s exchange rate is strong.

Core sometimes holds bonds of corporate issuers with relatively low credit ratings, and may hedge these high-yield bonds. Core makes small investments in precious metals to hedge against currency depreciation. Core generally makes its investments in bonds, currencies, precious metals and other hedging instruments through exchange-traded funds, exchange-traded notes and closed-end funds; these are advantageous ways to make such investments because of their low cost and liquidity.

 

For a fuller discussion of Core’s portfolio management practices, kindly see the memorandum entitled "Principles and Practices in Core’s Portfolio Management Practices".