Perspectives Blog

Engineering a better retirement portfolio

Columbia Management, Investment Team | June 4, 2013

n be devastating. Exhibit 1 looks at two scenarios for the full decade from January 2000 to December 2009. The green line represents someone who began their retirement withdrawals from a 60/40 portfolio (i.e., 60% stocks, 40% bonds) at the beginning of the decade, and who seeks to close a $1,500 per month retirement income gap by drawing on this portfolio.* That withdrawal amount is then adjusted for inflation in subsequent months. The orange lin…

The end of “risk-on/risk-off”

Anwiti Bahuguna, Ph.D., Senior Portfolio Manager | February 3, 2014

…mplying potentially better investment opportunities for active managers. After the financial crisis, cross-asset correlations rose sharply as asset prices reacted predominantly to macro factors and less to individual stock or bond characteristics. For example, while the correlation between equities and commodities used to be negative or very low, it rose to over 80% during the crisis years (2008-2011). Correlations between equities in different r…

Navigating rising rates

Columbia Management, Investment Team | June 11, 2013

Pandl, Senior Interest Rate Strategist, and Gene Tannuzzo, Senior Portfolio Manager It’s time for investors to start thinking seriously about interest rate risk in portfolios. Over the last three decades, long-term government bonds rewarded investors with healthy real returns, relatively low volatility and good performance during economic downturns. But at current yield levels, it is hard to escape the conclusion that prospective returns look muc…

Trouble in paradise: Q&A about Puerto Rico bonds

Chad Farrington, CFA, Head of Municipal Bond Research | January 2, 2014

Why has Puerto Rico become such an issue now? Should investors be concerned with a downgrade or default? Is Puerto Rico a systemic risk for the municipal market? Historically, Puerto Rico (PR) bonds’ high yield and triple tax exemption (federal, state and local) had been a big lure for many institutional investors, such as mutual funds. PR debt exposure in municipal bond funds, namely single-state municipal bond funds, proved advantageous for sh…

The case for active muni management

Kimberly Campbell, Senior Portfolio Manager | April 21, 2014

Muni bonds represent an attractive investment opportunity Active management is a value add in these volatile markets Professional money managers can help investors navigate an ever-changing environment Where does one invest in a world of uncertainty? Rising taxes, volatile markets, low yields, economic stagnation, geopolitical unrest. We live in a world of great uncertainty — yet our investment goals remain the same: a comfortable retirement,…

Fear is not a strategy

James Dearborn, Head of Municipal Bonds | November 18, 2013

As muni bond prices fell and yields soared in recent months, fear and uncertainty kept investors away. Amidst the unprecedented fear-based sell-off, the fundamentals of the muni bond market continue to strengthen. Bypassing muni bonds may mean missing out on today’s attractive long-term buying opportunities. Tax-free income is a big reason why so many investors have included municipal bonds in their financial plans. In recent months, yie…

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…