Perspectives Blog

Duration for diversification

Columbia Management, Investment Team | November 19, 2013

…d income will still be a cornerstone of any disciplined portfolio. By Zach Pandl, Senior Portfolio Manager, and Gene Tannuzzo, Senior Portfolio Manager We often hear investors say something like the following: “I own stocks for growth and bonds for income.” But in practice, of course, that is not how it really works. Investors hold portfolios for total return but invest across asset classes for diversification. Diversification is still one of th…

Outlook for U.S. and global bond markets

Gene Tannuzzo, CFA, Senior Portfolio Manager | September 22, 2014

In the following video, Gene Tannuzzo, senior portfolio manager for strategic income and multi-sector fixed income, explains his outlook for bond markets. Global bond markets have posted strong returns so far in 2014, driven by largely by factors outside of the U.S. Looking forward, we expect U.S. interest rates to rise, and so we are positioning portfolios with a shorter duration. We think it is important for investors to remain flexible to pro…

Q4 fixed income outlook — External influences

Gene Tannuzzo, CFA, Senior Portfolio Manager | September 22, 2014

While the bond market has generated strong returns so far in 2014, we are positioning portfolios with a shorter duration to protect against rising interest rates. Although we think that corporate bonds look better than their government counterparts, the most attractive bond market opportunities may be outside of the corporate market. Investors should remain flexible in order to protect themselves from some of the policy potholes that may lie ah…

Q3 fixed income outlook – The demise of volatility

Gene Tannuzzo, CFA, Senior Portfolio Manager | June 30, 2014

…ggests that this is not the case. Starting from periods of low interest rate volatility, high yield returns have generally been respectable, returning just under 7% on average (Exhibit 1). Furthermore, high yield has generated its highest Sharpe ratio (return-per-unit-of-risk) in low-vol environments. So while yields may seem low in absolute terms, they may not actually be all that low when compared to the level of volatility in the marketplace….

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…