Perspectives Blog

Understanding the power of alpha

Matt Scales, CFA, Head of Product Development and Strategy | January 27, 2014

Sources of return – such as quality alpha – that are not structurally tied to the direction of markets can be a valuable tool for diversifying portfolios Market betas have a positive expected return but can be subject to long periods of poor performance Finding sources of return that do not rely on markets going up to make money is not easy, but it is worth the effort The term “alpha” (which until recently was relatively unknown) has become pa…

Monetary policy shift creates new investment challenges

Columbia Management, Investment Team | August 6, 2013

Going forward, investors should look for return opportunities that do not depend upon easy money. Diversification strategies must take into account expected high correlations and the vulnerability of “safe” assets to changes in monetary policy The repricing of many assets as the second quarter drew to a close has created an expanded set of attractive investment opportunities. For most of 2013, financial markets have been responding to a nearly…

Don’t throw the baby out with the bath water – The case for long muni bond funds

Catherine Stienstra, Senior Portfolio Manager | January 29, 2014

Why invest in long-term muni bonds? Why investors should focus on tax-free income and total return Many investors fled the muni market in 2013, as $60 billion in mutual fund redemptions attests. Particularly hard hit were longer-maturity funds, likely due to investors anticipating higher interest rates and the negative impact that would have on fixed-income investments, especially longer bonds. While such concerns appear rational, is avoiding…

The importance of taking a long-term perspective

Jeffrey Knight, CFA, Head of Global Asset Allocation | February 3, 2014

We examine the value in maintaining a long term outlook for major asset classes We review our forecast for several major asset classes over the next five years Why maintaining realistic expectations for long term asset class performance is so important For asset allocation decisions, we find great value in maintaining a long-term outlook for major asset classes. Twice a year, in fact, we conduct an extensive update of our five-year return fore…

Second quarter asset allocation positioning

Columbia Management, Investment Team | May 14, 2013

Within equities, we maintained an overweight to U.S. stocks, with emphasis on large-cap stocks and high-quality, dividend-paying equities. For fixed income, we continue to prefer investment grade corporate bonds. We believe low correlation absolute return strategies should continue to be a part of diversified portfolios. The Columbia Management Asset Allocation Team meets to review global economic investment conditions and markets. Team member…

Building wealth through dividend investing

February 18, 2014

We believe a disciplined dividend strategy that focuses on rising dividends produced by high-quality companies can help investors build wealth over time. Historically,  dividends have been an important component of total return, with the best opportunity for total return in the stocks of high-quality companies that can sustain and grow their dividend over time. Higher quality stocks act to mitigate risk and offer downside protection during time…

Should your income be fixed?

David King, CFA, Senior Portfolio Manager | December 16, 2013

Investors need to rethink the role of fixed income in building portfolios How to provide an adequate rate of return with an acceptable level of risk Benefits of a non-fixed, income-oriented strategy in today’s environment Peanut butter and jelly. Bacon and eggs. Scotch and soda. In the investment industry, the words “fixed” and “income” seem as inseparable as our favorite food and beverage combinations. Something which has served millions of p…