Perspectives Blog

New taxes require strategies to maximize after-tax return

Abram Claude, Vice President, Columbia Management Learning Center | March 18, 2014

ount of net investment income to the 3.8% surtax by pushing more or all of NII above the threshold. This surtax is in addition to any other tax obligation incurred, whether it is derived by the standard tax calculation or the alternative minimum tax (AMT) calculation. Managing the 3.8% surtax on taxable investments How does asset location address net investment income tax? Investments in tax-deferred accounts are not subject to any taxation whi…

Holding multiple investments does not ensure better diversification

Columbia Management, Investment Team | April 23, 2014

The degree of risk reduction benefit in diversification depends directly upon the correlation of the portfolio’s assets. Adding just one zero-correlated asset to a portfolio reduces risk 29.5%, while adding a thousand 66%-correlated assets reduces risk by only 19%. Well-designed absolute return products can be meaningful additions to traditional allocations, substantially enhancing diversification. By Todd White, Head of Alternative Investment…

Compelling opportunity in municipal bonds

Catherine Stienstra, Senior Portfolio Manager | November 7, 2013

…xes may be applicable and can further reduce the after-tax returns of some municipal bond investments (depending on the state of residence). Income from certain tax-exempt securities may be subject to the federal and/or state alternative minimum tax for some investors. In addition, federal and state income tax rules will apply to any capital gain distributions and capital gains or losses on sales. When investing in municipal securities, investors…

Opportunities in global infrastructure

Peter Santoro, Senior Portfolio Manager | February 3, 2014

Infrastructure investments may offer stable cash flows and diversification from more cyclical investments Infrastructure investments span the emerging and developed markets across many industries Today’s current market environment offers unprecedented opportunities for well-resourced investors Infrastructure represents the foundation for our day-to-day lives—the societal staples we rely on. And the stable fundamental demand drivers of infrastr…

What’s the outlook for muni bonds?

James Dearborn, Head of Municipal Bonds | June 19, 2014

…hem outperform Treasuries. These supports include a dearth of new supply, with issuance down more than 25%; a resurgent demand bred of investor appetite for attractive taxable-equivalent yields, compared to other fixed-income alternatives; and a grudging acceptance by retail investors that municipal credit quality is improving. Given the year-to-date outperformance of tax-exempt bonds, should investors look for greener investment pastures elsewhe…

Are municipal bond rating agencies shifting the goalposts (again)?

Columbia Management Municipal Investment Team, | September 30, 2013

…are subject to market risk regardless of their rating. Income from tax-exempt municipal bonds or municipal bond funds may be subject to state and local taxes, and a portion of income may be subject to the federal and/or state alternative minimum tax for certain investors. Federal income tax rules will apply to any capital gains. There are risks associated with an investment in bond investments, including the impact of interest rates, credit and i…