Perspectives Blog

A primer on preferred securities

Carl Pappo, Head of Core Fixed Income | March 10, 2014

Preferred securities can offer an attractive risk-adjusted yield in a low-yield environment. Straddling the line between fixed income and equity, preferred securities can help diversify core fixed-income portfolios. Investors equipped to analyze and trade these structures are able to find attractive relative value opportunities. Co-authored by Willow Piersol, Senior Analyst As financial institutions raise capital and reduce risk, preferred sec…

Credit alternatives in government-backed debt

Columbia Management, Investment Team | June 23, 2014

…ernment agency debt, which fills a niche in the market between high-quality spread product and low-risk Treasury securities. Through explicit or implicit guarantees, timely principal and/or interest on agency debt ultimately may be backed by the U.S. government. Many investors associate U.S. agency debt with very low yields; indeed, the U.S. agency sector in the Barclays Aggregate Index — made up largely of Fannie Mae, Freddie Mac and Federal Hom…

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

…Municipal Bond indexes produced an occasional loss. 3. Yield advantage through security selection in lower-rated securities. Money market funds are restricted to owning bonds within the highest credit quality categories, with the bulk of assets limited to top tier-rated securities. As a result of the Fed’s Zero Interest Rate Policy (ZIRP), very short, high quality securities have produced virtually no return over the last several years. Conversel…

Do you know what’s in your short-term bond fund?

Columbia Management, Investment Team | December 1, 2014

…s. We especially like bonds that couple high credit quality with attractive yields, and historically, the agency mortgage-backed securities market has provided higher than average risk-adjusted returns. Taxes matter Keep in mind that many fixed-income strategies come in taxable and tax-exempt options. Investors in higher income tax brackets may want to consider a short-term municipal bond fund. These funds distribute income exempt from federal an…

QE worked, but not as advertised

Zach Pandl, Portfolio Manager and Strategist | November 3, 2014

…ilable to private investors may affect the prices and yields of those assets. Thus, Federal Reserve purchases of mortgage-backed securities (MBS), for example, should raise the prices and lower the yields of those securities; moreover, as investors rebalance their portfolios by replacing the MBS sold to the Federal Reserve with other assets, the prices of the assets they buy should rise and their yields decline as well” Bernanke was not shy about…

A less certain world favors high-quality stocks

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

Current sentiment indicators do not suggest that Europe is heading back towards recession, though GDP growth will remain subdued. If Q3 sees a rebound, full QE may be unlikely this year, but any further weakness will increase the pressure on the ECB to act. In a less certain growth environment, we believe stocks that are able to deliver earnings growth will command a justifiable premium. Recap: excessive optimism at the start of 2014 As 2014 b…

New taxes require strategies to maximize after-tax return

Abram Claude, Vice President, Columbia Management Learning Center | March 18, 2014

…returns by mitigating the additional tax bite that began in 2013. Managing the differential in tax treatment of securities through asset location Investors with sizeable investments in taxable accounts, especially investors who are still working and are not currently living on their investments, should consider a strategy for sheltering tax-sensitive securities through asset location. Once an optimal asset allocation strategy is in place, the ov…