Perspectives Blog

Corporate governance – The next catalyst for Japanese equities

Daisuke Nomoto, Senior Portfolio Manager | August 4, 2014

Overhauling corporate governance to harness the power of private enterprise is critical to Japan’s growth strategy. Better engagement between corporate management and shareholders should ultimately lead to higher returns for holders of Japanese equities. We are focused on companies that can generate sustainable free cash flow, earn returns well above their cost of capital and regularly conduct shareholder friendly capital management. A critica…

Inversions and the growing scrutiny of corporate tax avoidance

Walter Colsman, Senior Equity Analyst | September 29, 2014

…e of inversions has rapidly increased in the last few years. We believe the debate over tax policy and perceived corporate tax avoidance will only grow from here. Investors should be cautious about companies that have taken aggressive tax stances. U.S. corporate tax rates are among the world’s highest (Exhibit 1) and current tax code calls for the taxation of all profits earned by U.S. companies, including those earned overseas. U.S. multination…

From tactical to core – The case for emerging market debt

Columbia Management, Investment Team | June 2, 2014

…ving into credit in search of additional returns and into asset classes with perceived levels of low volatility. Corporate credit spreads have tightened steadily, in part due to this demand, resulting in a steady return profile for the asset class. The stresses in the corporate credit markets that were readily apparent during and immediately after the financial crisis have all but disappeared. However, investors now need to look beyond corporate

Finding the sweet spots in corporate spending

Robert McConnaughey, Director of Global Research | February 24, 2014

Investors could find opportunity in capital expenditures. Strategic positioning in these areas is key to opportunity. Shale gas and automation are leading the charge in innovation. Cash balances at U.S. non-financials corporations have exploded in the post-crisis era, up 75% since the end of 2007. This is despite a rising return of cash to shareholders in the form of dividends and share repurchases. However, capital expenditures and reinvestme…

Are financial markets priced for secular stagnation?

Columbia Management, Investment Team | December 15, 2014

The idea that Western economies may have entered a period of secular stagnation has been attracting an increasing amount of attention. If this thesis proves correct, we would expect investment grade credit to produce decent excess and total returns as discount rates fell further in such an environment. Equity valuations look consistent with some probability of secular stagnation, and could therefore still deliver generous returns if global grow…

Second quarter U.S. corporate earnings wrap-up

Tom West, Director of Equity Research | August 18, 2014

Non-cyclical sectors slightly out performed cyclical sectors during the quarter. In technology, the U.S. is improving, Europe is still not strong and developing markets lag. The healthcare sector improved, but it is still a question mark for the second half of the year. As the economic recovery matures, we have seen a fairly consistent pattern in quarterly earnings: estimates come down during the course of the quarter, and then beat the “lower…

Global market mid-year outlook

Mark Burgess, Chief Investment Officer, Threadneedle Investments | June 16, 2014

…the normalization of policy in the U.S.?  What will happen in emerging markets as policy is normalized?  Will corporate profits drive equity markets higher? Bond markets in recent months have presented us with a conundrum — indeed we held an ad-hoc meeting in mid-May to discuss the meaningful decline in core government yields. In the U.S., our expectation is that gross domestic product (GDP) growth will be in the order of 2.5% this year and t…