Perspectives Blog

Oil and the high yield market

Columbia Management, Investment Team | December 8, 2014

…rtfolio Manager  Size of the Energy Sector Because the energy sector is a large component of the U.S. high yield market relative to some other asset classes, the market has received increased scrutiny due to recent declines in oil prices. Prior to the recent sell off, energy accounted for more than 15% of the high yield market, making it by far the largest industry (healthcare is the second largest at approximately 8.5%). Energy accounts for appr…

2015 Outlook — Same song, slightly different arrangement

Jeffrey Knight, CFA, Global Head of Investment Solutions and Asset Allocation | December 15, 2014

…potify or Rhapsody. As I sit down to compose an outlook for 2015, it occurs to me that since 2009, the financial markets have been more like a Close ’n Play than an iPod — low expected returns from safe assets and stocks offering the best chance of any meaningful investment gains. Just like last year and the year before. What’s different in 2015? As stationary as market conditions have felt lately, circumstances are always evolving. For 2015, whi…

Interpreting the bond rally from a multi-asset perspective

Jeffrey Knight, CFA, Global Head of Investment Solutions and Asset Allocation | June 2, 2014

A framework for identifying capital market states can help set expectations for markets in the aftermath of the recent bond rally. Our framework suggests a highly bullish market state for equities although that market state would shift to bearish if conditions became more neutral. While we expect ongoing strength in equities (which should pressure bond markets and drive yields higher), the durability of strong performance in risk asset markets…

Time not timing

Columbia Management, Investment Team | November 17, 2014

…annual return drops to 4.09%. If individual days can affect performance so dramatically, then why not be in the market for the good ones and out for the bad ones? Far easier said than done. Many investors try to time the market, chasing today’s hot investment or fleeing the latest downturn. Such a short-term perspective can harm performance and jeopardize your long-term financial goals. Another common tactic during periods of market volatility a…

From tactical to core – The case for emerging market debt

Columbia Management, Investment Team | June 2, 2014

For many investors, emerging market debt could be viewed as a core-portfolio holding rather than a short-term tactical investment. 2013’s re-pricing created value in terms of higher yields, a more dedicated investor base and a better relative value argument. Flexibility across the full spectrum of EMD investment opportunities is extremely important, as emerging markets are not homogenous. By Patrick McConnell, Director, Fixed Income Product Ma…

A port in the storm — Short muni funds can offer refuge in the face of rising rates

Catherine Stienstra, Senior Portfolio Manager | October 2, 2014

…any investment surprises, perhaps none bigger than the downward move in yields across virtually all fixed-income markets. While we are surprised at the magnitude of the decline, it is worth noting that at the beginning of this year we encouraged investors to consider investing in long-maturity municipal bond mutual funds. While that recommendation was not in line with most market calls at the time, we emphasized the extra yields long funds offere…

Are financial markets priced for secular stagnation?

Columbia Management, Investment Team | December 15, 2014

…as the status of a prophesy: the case for lower potential growth over coming years is by no means proven. If the market believed that we were in a world of secular stagnation, how would we know? We could start by taking Japanese capital markets between 1989 and 2014 as a script. The Japanese script is one that features government bond markets rallying as the possibility of central bank rate rises and associated economic recovery was incrementally…