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 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…

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…

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…

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…

Hungry for income? High yield munis could be your meal ticket

Chad Farrington, CFA, Head of Municipal Bond Credit Research and Senior Portfolio Manager | May 28, 2014

…r at some point, the impact will not be the same across all bonds. We think high yield municipal bonds, with their high yields and opportunity for price appreciation, are one segment of the market worth considering. Municipal credit trends are stable to improving, the yield exceeds most other fixed-income alternatives and the tax environment makes the tax-exempt benefit even more valuable. We believe a stronger economy is what is most likely to s…

Half-time report on the U.S. consumer

Marie M. Schofield, CFA, Chief Economist and Senior Portfolio Manager | July 28, 2014

U.S. consumers have taken a more cautious attitude toward debt and been more selective about using it for discretionary purchases. With consumers using credit cards less and using debit cards much more, the supports for higher discretionary spending are keyed off income and wages and also employment. With low debt use and income growth holding back consumption and demand, households will require stronger job growth and real wage gains to accele…