In technology, we like AT&T, which has agreements with Apple on their new products, and also Research in Motion. AT&T has partnered with the right firms, and their positioning within wireless is very strong.
A financial services company we like is Citigroup, another turnaround. We've lowered our weightings in financial services, but expect the financial crisis to burn out soon, and think this is an opportune time to be looking. Overall, we have a preference for companies that don't take on balance sheet risk and are more service oriented, like Citigroup, which serves retail customers.
About 85 percent of the fund's assets are in exchange-traded funds. How do ETFs fit in with your strategy?
We get broad exposure to countries and sectors through ETFs and then invest in individual stocks for sniper-shot situations where we think there's a good longer-term story. Hologic is an example. This company has women's healthcare covered: They have a product line that spans girls to women and includes things like digital mammography and osteoporosis assessment. We like it as sort of a niche situation. We use ETFs to get exposure to things like emerging markets and growth stocks. To play on Japan's stock market, for example, we use an ETF that invests in small Japanese companies.
How might the industries you focus on be swayed by the presidential election?
In healthcare, there are three major issues: access, quality, and cost. These are important because we're on the cusp of a demographic explosion, as healthcare demand and cost rise with age. Both political parties want to address these issues, but in different manners. Major change will be more likely if Barack Obama wins, given the Democratic control of Congress. Renewable energy is a big issue on the technology front, and the boomers tend to be more environmentally active as a carryover from their youthful days in the 1960s.
As for financial services, we expect more onerous regulation of investment banks under the Democrats, which will curtail proprietary risk taking. But financials could benefit from a surge in restructuring. In addition, we believe there are two important trends developing: for private businesses to sell out to other ownership before capital gains tax rates increase and for European companies to buy U.S. companies while the dollar is cheap.
Corrected on 7/08/08: An earlier version of this article incorrectly reported the assets of the Generation Wave Growth fund. The fund has $35 million in assets.