Question-and-Answer Session
Operator
(Operator instructions.) Your first question comes from the line of Michael Kim.
Michael Kim – Sandler, O'Neill & Partners, LLP
Hey guys, good morning. Maybe just to start off with a couple of questions for Hank and Mike. Can you just give us an update in terms of the makeup for the Asset Strategy Fund, in terms of sector weightings, and/or kind of the percentage of the portfolio currently in cash, and then more broadly, are you still positioning the portfolio kind of more defensively as it relates to equities in general?
Michael L. Avery
Sure, this is Mike Avery. If you look at the portfolio, the Asset Strategy Fund today, we are right about 40% cash. Our net exposure to gold bullion is right about 10% because we have hedged a small portion of it. Our exposure to bonds in about 10% of the fund, and the remainder is in equities. We do have a hedge on our equities so that our net exposure is 25%.
In terms of our sector weightings, we have changed quite a bit over the years. If you look at the fund today, what you will see is a predominance of large cap dollar denominated global brand companies where the emphasis is on dividend yield and free cash flow yield.
Michael Kim – Sandler, O'Neill & Partners, LLP
Okay, and then on prior calls I guess you had kind of talked about still being bullish long-term on energy. Any change in that thinking, or if you could just kind of give us an update on how you are thinking about kind of broader macro trends?
Michael L. Avery
Well, my comments on energy would have been in the broader context of thinking about the world going forward from the perspective of a large group of people entering middle class for the first time, and I think that is still true. There is approximately, you know, 70 million people that come into emerging middle class globally, and I do not think that has changed. The pace at which they are entering may have slowed down here, but I do not – I think the underlying secular trend around the world is still in place. If that is true, then a move of a large group of people enjoying rising prosperity is not only very energy intensive but it is also very resource intensive, and I do not that that has changed long-term.
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