Perspectives Blog

Thoughts on navigating market volatility in today’s technology markets

Rahul Narang, Senior Portfolio Manager | April 28, 2014

…and Internet. In recent weeks there has been a dramatic shift in alpha generation from hyper growth technology stocks to more value-oriented names. We can attribute this to a number of factors: 1) improving economic data means a lower multiple for hyper growth stocks and higher multiples for value/cyclical names; 2) Fed Chair Janet Yellen’s reaffirmation of the taper; 3) geopolitical upheavals; 4) prime brokerage data suggests that hedge funds…

A less certain world favors high-quality stocks

Philip Dicken, Head of European Equities, Threadneedle International Ltd | October 6, 2014

…d the bond proxies to perform so well this year. We surmised that some of the more domestically-focused European stocks would outperform as the economic recovery became more embedded — a reasonable assumption given what has happened in other developed markets in recovery mode, such as the UK Therefore, we started 2014 with a bias towards higher-quality, domestically focused stocks in areas including financials, transport and leisure, media, and s…

Are financial markets priced for secular stagnation?

Columbia Management, Investment Team | December 15, 2014

…ld likely attract significant further allocation driving yield spreads lower. It is true that the risk-absorbing capacity of investment banks has been regulated away; so it is up for debate as to whether investors should demand a higher level of liquidity premia than in a previous era. But notwithstanding this point, we believe that corporate credit markets are not priced for a protracted period of secular stagnation. Moving to stocks we might ex…

2015 Outlook — Same song, slightly different arrangement

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

…mates. For each asset, the expected return (proxied by yield-to-maturity for bonds and by implied cost of equity capital for stocks) is plotted against the product of volatility and correlation to world equities. By incorporating correlation, we give credit to assets that offer a diversification benefit by adjusting the asset’s volatility downward as long as it has a correlation of less than one to world stocks. We believe this adjustment helps i…

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…

Global market mid-year outlook

Mark Burgess, Chief Investment Officer, Threadneedle Investments | June 16, 2014

Overall macroeconomic picture in U.S. should push bond yields higher, particularly if the Fed stops its QE program later this year. We remain positive on emerging market debt while maintaining a bias against emerging market equities. Overall equity markets have been strong and current index levels suggest that investors still have confidence in the outlook for profits. Global equities and global bonds made progress in May with the former outpa…

Is there opportunity in small-cap banks?

Jeremy Javidi, Senior Portfolio Manager | November 3, 2014

As profitability rebounded from the financial crisis and return on assets improved in 2012 and 2013, the banking industry once again began to outperform. We continue to see growth in commercial and industrial loans as a positive indication for the economy. These loans also provide the growth of assets for the banks. Given their improving profitability, discounted valuation and strong growth, we believe that small-cap banks are an increasingly a…