Perspectives Blog

Don’t throw the baby out with the bath water – The case for long muni bond funds

Catherine Stienstra, Senior Portfolio Manager | January 29, 2014

…unicipal Bond Index as a proxy for longer muni bonds) was negative only once for a brief two month period. While munis occasionally have had a negative year, they have generally been consistent performers over time. On a valuation basis, long munis have become more attractive as 30-year yields ended the year at 107% of Treasury yields, meaning a 30-year muni bond is paying 107% of what a 30-year Treasury bond is paying — and this excludes the tax…

Hungry for income? High yield munis could be your meal ticket

Chad Farrington, CFA, Head of Municipal Bond Credit Research and Senior Portfolio Manager | May 28, 2014

High yield muni bonds represent an attractive investment opportunity Professional money managers can help with the intricacies of the high yield muni space Current income and potential tax advantages in the high yield space Attractive yields, potential for price appreciation Many investors are concerned about the prospect of rising interest rates and the impact higher rates may have on bonds, especially since we’ve been in a very low rate envi…

The case for active muni management

Kimberly Campbell, Senior Portfolio Manager | April 21, 2014

…funds for the opportunity to earn an attractive tax-free yield with lower volatility than equities. In addition, munis have historically provided long periods of positive performance, as shown in the Barclays Municipal Bond Index chart below. Exhibit 1: Barclays Municipal Bond Index calendar-year returns Past performance does not guarantee future results. It is not possible to invest directly in an index. Source: Barclays, as of March 31, 2014….

What’s the outlook for muni bonds?

James Dearborn, Head of Municipal Bonds | June 19, 2014

Strong YTD performance resulted from falling rates, a dearth of new supply and a resurgent demand by investors seeking attractive taxable-equivalent yields. We believe municipal bonds should continue to perform well in the second half of 2014. Yields on muni bonds are compelling when considering the impact of taxes on non-exempt securities. As we reach the halfway point of 2014, it’s a good opportunity to review our full-year outlook for the m…

Gut check: The outlook on fixed income

Colin J. Lundgren, CFA, Head of U.S. Fixed Income | February 24, 2014

The next big move in rates may be triggered by concerns about possible future Fed rate hikes. High-quality bonds may struggle to generate coupon-like returns. Emerging markets may ultimately benefit from the synchronized uptick in growth in global developed markets. With nearly two months of the year behind us, we thought now would be a good time to see how the fixed-income market is faring in 2014 and assess our outlook. We asked our investme…

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

Short term munis may make sense in a rising rate environment. They provide attractive yields and investment flexibility vs. cash investments and interest rate protection vs. longer assets. Cash investments have come with considerable opportunity cost in recent years. Co-authored by James Dearborn, Head of Municipal Bond Investments 2014 has offered many investment surprises, perhaps none bigger than the downward move in yields across virtuall…

Finding the sweet spot — Value investing along the muni yield curve

Paul Fuchs, CFA, Portfolio Manager, Municipal Bonds | August 27, 2014

We look for securities that offer a balance of credit fundamentals and yield. We use a “roll-down” analysis to identify the sweet spot on the yield curve. We believe yield curve positioning is the largest driver of returns for intermediate municipal portfolios. The cornerstone of the Columbia Management municipal investment process is identifying relative value opportunities. As we construct and manage portfolios, a relative value component is…