Perspectives Blog

Credit alternatives in government-backed debt

Columbia Management, Investment Team | June 23, 2014

One way investors may boost yields without taking on undue credit risk is through U.S. government agency debt. While many investors associate U.S. agency debt with very low yields, other types of agency debt can offer significant spreads to Treasuries with a modest decline in liquidity. We have been increasing our allocation to the agency market in core portfolios as a way to reduce credit risk while maintaining competitive yields. By Carl W….

The coming divide in state credit quality

Ty Schoback, Senior Municipal Analyst | June 3, 2014

We expect an increased divergence in state credit quality in the coming years, compared with what has been seen over the past two decades. While the overall state sector remains robust, we believe notable credit distinctions are beginning to materialize among several weaker states. Investors should be aware of this divergence and seek to be appropriately compensated for investing in states of varied creditworthiness. State tax revenues typical…

From tactical to core – The case for emerging market debt

Columbia Management, Investment Team | June 2, 2014

…Client Portfolio Manager, Fixed Income A dominant theme over the past few years has been the search for yield, particularly when accompanied by low volatility. Given the meager return on cash, investors have been moving 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 th…

What’s the outlook for muni bonds?

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

…ith 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 elsewhere? We don’t think so. While opportunities for additional price appreciatio…

The perils and pitfalls of buying individual municipal bonds

James Dearborn, Head of Municipal Bonds | February 27, 2014

…par. While these may be valid reasons to choose an individual security over a mutual fund, the environment for purchasing individual bonds has become much less friendly for retail investors. The combination of reduced supply, credit uncertainty, rating agency volatility and a pricing structure that favors large institutional investors has put the retail investor at a disadvantage. Supply — Anemic new issue supply leaves investors starved for bond…

The case for active muni management

Kimberly Campbell, Senior Portfolio Manager | April 21, 2014

…cially in today’s unpredictable investment environment. Actively managed portfolios provide investors with the opportunity to outperform their benchmarks by relying on the investment expertise of a team of portfolio managers, credit analysts and traders. The investment team provides clients vital investment expertise, critical issuer selection and risk oversight to avoid credit minefields. On the security selection level, portfolio managers analy…

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…