Perspectives Blog

Special report – 2014 mid-year review and outlook

Columbia Management, Investment Team | June 16, 2014

Key investment professionals review the first half of 2014 and share their insights into what may be ahead for the second half of the year. Interest rates Zach Pandl, Portfolio manager and strategist Review: Government bond yields declined in early 2014, both in the U.S. and in other developed market economies. This surprising change in course after increases in 2013 caught many investors off guard. In our view, declining interest rates reflect…

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

…ests of investors? Contrary to popular opinion, we believe that a strong investment case can be made for investing in longer bonds, even in today’s uncertain environment when many are anticipating higher interest rates in the year ahead. Two of the most compelling arguments in support of long bonds are: 1) the current appealing level of tax-exempt income and 2) the total return opportunity they represent for long-term investors. Come April 15, mi…

ECB asset purchases — Bazooka or damp squib?

Martin Harvey, Fund Manager, Threadneedle International Ltd | September 22, 2014

…announced measures, and will be keeping a close eye on favored measures. We believe that we would need to see a further significant deterioration in growth and inflation expectations to kick the ECB into further action before year end. The recent policy announcement by the European Central Bank (ECB) was warmly received by financial markets as Mario Draghi reaffirmed his commitment to meeting the medium-term inflation target. However, inflation…

What’s the outlook for muni bonds?

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

…considering the impact of taxes on non-exempt securities. As we reach the halfway point of 2014, it’s a good opportunity to review our full-year outlook for the municipal bond market and consider what the second half of the year may have in store. While we anticipated that municipal bonds would post positive returns in 2014, year-to-date performance is already better than we imagined was achievable for the entire year. Through the end of May, m…

More light, less tunnel

Marie M. Schofield, CFA, Chief Economist and Senior Portfolio Manager | October 31, 2013

After a data vacuum of almost three weeks, government agencies have started to gear up again with key reports; unfortunately, they present a picture of economic activity in the third quarter that ended on a soft note. While the third quarter is typically the weakest in a given year, the current trend in employment is disappointing. It appears the elusive turn in capital spending will await 2014 and then see only a modest build at some point nex…

Q2 fixed income outlook – Hitting for the cycle

Gene Tannuzzo, CFA, Senior Portfolio Manager | March 31, 2014

We have started to reduce exposure to high-quality bonds with limited upside potential and high-yield bonds in which credit risk appears too aggressive. Following weakness last year, emerging market debt has posted gains this year, and we expect further strength ahead as volatility subsides. While we expect a flatter yield curve over the next few months as investors focus on the timing and pace of rate increases, we don’t think they should avoi…

Does it still pay to hold municipal bonds?

Anders Myhran, Municipal Portfolio Manager | July 29, 2014

…out of the way of higher rates may have been even greater. Again, the next 12 months saw the same broad market index tack on another 3+%, while the short-term index added just under 0.4%. Being on the sidelines for those two years would have cost an investor over 5% in excess cumulative returns. It’s worth noting that during each of these 12-month periods, prices in the muni market actually declined slightly due to yields moving higher. It was t…