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

Predicting sales of new medicines is highly inaccurate and subject to significant and often costly errors. While investment analysts can draw on research tools and experience, history suggests new drug forecasting will remain more art than science. Despite the high level of uncertainty and variability in new drug forecasts, the innovative medicine industry is alive and well. Predicting sales of new medicines is highly inaccurate and subject to…

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

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

…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 crude prices, but there is no evidence that refined product prices would increase as a result, and, in theory, cou…

Profit margin watch

Tom West, Director of Equity Research | October 13, 2014

Corporate profit margins can come under pronounced pressure from various forms of disruption. Firms need to invest in technology and distribution systems to support customer preferences and stay competitive. The key question is whether a company has adequately invested in next generation products, distribution or true advances in productivity. A mainstay of stock market appreciation over the last several years has been the ability of corporati…

Finding the sweet spots in corporate spending

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

…ions 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 the downstream impacts of the U.S. shale gas revolution. The dramatically advantaged cost structure of U.S. natural…

India’s new government fires investor enthusiasm

Natasha Ebtehadj, Fund Manager, Threadneedle International Limited | September 8, 2014

…businesses, which are benefitting from the strong growth in the U.S. generics market by launching niche, generic products when established products go off patent. The main risks to India’s positive outlook Governments are generally quick to promise change but can be slow to follow through. Given that India’s equity markets have already risen sharply on the promise to renew the economy, they could react just as swiftly to any setbacks to the refor…