Perspectives Blog

Credit alternatives in government-backed debt

Columbia Management, Investment Team | June 23, 2014

…backed by the U.S. government. Many investors associate U.S. agency debt with very low yields; indeed, the U.S. agency sector in the Barclays Aggregate Index — made up largely of Fannie Mae, Freddie Mac and Federal Home Loan Banks debt — only out-yields Treasuries by 12 basis points. However, there are other types of agency debt that can offer significant spreads to Treasuries with a modest decline in liquidity. At Columbia Management, we have b…

Gut check: The outlook on fixed income

Colin J. Lundgren, CFA, Head of U.S. Fixed Income | February 24, 2014

…e we still concerned about rising interest rates? Yes. Looking at the big picture, we are still in the early stages of the Federal Reserve’s (the Fed) exit process. Tapering, or the reduction in asset purchases by the central bank, will likely continue at a steady pace over the course of the year, unless the economy experiences a dramatic shift from its current path. Tapering was the story of 2013 and largely explains the significant rise in inte…

Is Europe heading for Japanese-style deflation?

Martin Harvey, Fund Manager, Threadneedle International Ltd | August 4, 2014

Although there are many differences that should ensure that the eurozone does not follow Japan‘s fate, policymakers will need to act forcefully if the risk of deflation intensifies. While the euro area appears to be on track to avert deflation in the short term, many euro countries are “one crisis away from deflation.” The European Central Bank (ECB) claims to be ahead of the game, but policy needs to be more pro-active. The following is an ex…

Quality milestone in the European recovery story

March 17, 2014

Business, economic and political news all point to a strengthening recovery in Europe. We foresee a period of low inflation and low interest rates in Europe. We favor domestic European plays over internationally-exposed stocks, with an overweight stance in banking and telecoms. By Paul Doyle, Head of Europe ex. UK equities and Frederic Jeanmaire, Fund Manager, Threadneedle Investments After 18 consecutive negative months, the flow of eurozone…

How bad is China’s credit crisis?

Weili Jasmine Huang, Senior Portfolio Manager | February 3, 2014

We look at the scope and impact of China’s credit crisis We believe the possibility of a financial meltdown is low We discuss how resolution of the crisis may unfold News of a trust product on the brink of default has deepened the concerns of increasing instability of China’s financial system. The risk of defaults on trust and wealth management products will likely continue to impact markets. We believe that the shadow banking issue will…

Could a 529 plan help you pay less for college?

Columbia Management, Investment Team | May 22, 2014

College savings plans offer an important tool for managing the cost of higher education. Saving in advance could offer a significant cost savings compared to taking loans during college. Use our 529 Savings vs. Loans Calculator to run your own personalized estimate. Saving for college early on can greatly benefit you in the long run. By saving in an investment vehicle such as a 529 college savings plan, you may be able to avoid relying on loan…

Missing links and multipliers

Marie M. Schofield, CFA, Chief Economist and Senior Portfolio Manager | June 9, 2014

…-to-Repay Rule), which had the effect of tightening mortgage financing conditions and eroding the pool of eligible homebuyers. This was evident in the Federal Reserve’s Senior Loan Officer Survey released in April which noted banks were beginning to tighten credit for homebuyers and see weaker demand as a result (Exhibit 1). This policy-induced re-regulation requires higher down payments and FICO scores together with stricter income-to-debt ratio…