The Fund underperformed the Balanced Index during the third quarter of 2016.
The equity sleeve underperformed its benchmark, driven largely by our holdings in the consumer staples and health care sectors. Outperformance in the fixed income sleeve was led by our investment-grade and high-yield corporate credit positioning.
Our asset allocation remains overweight equities versus fixed income; given uncertainties in the outlook for the global economy, we have increased emphasis on companies with less potential for volatility in their earnings results. In fixed income, our corporate credit positioning remains defensive, due to concerns around tight valuations and the subdued outlook for earnings.