Smith said he recently eliminated his investment-grade and high-yield corporate positions, which had previously totaled roughly 35%. High-yield names are too expensive, he notes, adding he will not be looking to add corporates this year, unless there is significant widening. Any addition would likely occur to high-grade securities, although he did not specify by how much.
The portfolio also has a 12% allocation in Swedish sovereign debt, 10% in Canada, 6% in Poland, 6% in Norway and 5% in the U.K. Smith recently allocated 2% of the portfolio to Brazilian paper, using new cash. The duration of the portfolio is 2.5 years, compared to that of its benchmark, the Citigroup Global Bond Index at 5.7 years.