Perspectives Blog

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…

Holding multiple investments does not ensure better diversification

Columbia Management, Investment Team | April 23, 2014

The degree of risk reduction benefit in diversification depends directly upon the correlation of the portfolio’s assets. Adding just one zero-correlated asset to a portfolio reduces risk 29.5%, while adding a thousand 66%-correlated assets reduces risk by only 19%. Well-designed absolute return products can be meaningful additions to traditional allocations, substantially enhancing diversification. By Todd White, Head of Alternative Investment…

Predicting new drug sales is more art than science

Harlan Sonderling, CFA, Senior Healthcare Analyst | April 14, 2014

…keting and sales infrastructure to support the product as it nears approval. Potential competitors make similar forecasts to guide their responses. Investment analysts forecast sales of drugs in development and newly launched products for their own obvious reasons. Forecasters are often highly educated and have broad backgrounds across the pharmaceutical and investment industries. Furthermore, they don’t operate in a vacuum. A drug’s therapeutic…

Lifting the U.S. oil export ban – Who wins?

Jonathan Mogil, Portfolio Manager and Senior Analyst | March 24, 2014

…asily be curtailed to offset lost foreign supplies. The most politically sensitive issue in this debate surrounds the impact of rising oil exports on U.S. refined product prices such as gasoline and diesel. Prices for refined products in the U.S. are set by global markets and, unlike crude oil, refined products can be exported under current U.S. law. Allowing U.S. producers to export oil would lead toward a convergence of U.S. and international c…

Finding the sweet spots in corporate spending

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

…l that positioning more strategically in certain areas that can offer one or more of the following value propositions to the corporate spender: 1. Areas experiencing a super-normal growth surge due to disruptive innovation 2. Products/services that offer clear productivity enhancement 3. Products that significantly enhance the customer experience leading to share gains In the first category, we cite a couple of prominent examples. One would be th…

Income inequality, disinflation and profit growth – the role of globalization

March 10, 2014

Income inequality has tended to rise in both developed and EM. Companies look across the globe to determine where they can manufacture their products at the lowest risk-adjusted cost. We believe that the global unit labor cost arbitrage is likely to continue for many decades. By Marie Schofield, Chief Economist and Toby Nangle, Head of Multi Asset Allocation Last week we discussed rising income inequality in developed markets and the degree to…