Perspectives Blog

Three reasons why REITs can continue to rally

Arthur Hurley, CFA, Senior Portfolio Manager | May 19, 2014

…And the stronger apartment markets in the country are operating at record occupancies. 2) Demand for commercial real estate remains strong The demand for commercial real estate has proven to be very resilient despite the prospect of higher interest rates. Transaction activity remains very high across property types, and the lending environment has been vigorous to start the year. Institutional investors, private investors and foreign investors h…

Apparel retail doldrums

Mari Shor, Senior Equity Analyst | August 11, 2014

…g to take share from traditional apparel, even should the recovery’s pace increase. Oversupply of inventory and real estate exacerbate demand concerns The aforementioned macro and micro headwinds have been further exacerbated by the oversupply of both inventory and real estate. Poor inventory controls amid a weak demand backdrop have forced apparel retailers to compete on price in an effort to drive traffic to their stores. As a result, both sal…

Slow growth: Why is it here and will it stay?

February 24, 2014

…est wave of interest in secular stagnation as just more evidence that you can’t keep a bad idea down. Exhibit 1: Real fed funds and U.S. core inflation, 1980–2013 Source: Federal Reserve, December 2013 But Summers had a deeper point: that even at the peak of the booms of the past 20 years, there has been no real inflation to speak of in the United States. And so, by inference, the equilibrium real rate may well have fallen meaningfully. Exhibit…

Rising rates and REIT returns

Arthur Hurley, CFA, Senior Portfolio Manager | September 15, 2014

…stment opportunity, regardless of the interest rate environment. Co-authored by Michael Orr, Product Manager Do Real Estate Investment Trusts (REITs) always underperform when interest rates rise? Many investors believe they do. However, analysis of historical REIT performance provides strong evidence to the contrary. Like many other income-oriented investments, the income characteristics of REITs may influence returns. However, we believe intere…

Half-time report on the U.S. consumer

Marie M. Schofield, CFA, Chief Economist and Senior Portfolio Manager | July 28, 2014

…umbing (inflation adjusted) rate of about 2% annually during the entire recovery. Past recoveries have witnessed real spending gains of about 4%, excepting the recovery earlier this decade where real consumption gains slowed to 3%. A big swing factor over the last few decades was the expansion of leverage and credit, as avenues and incentives to borrow increased over the last 30 years via credit cards, home equity loans and cash-out mortgage refi…

U.S. rates – Headwinds

Zach Pandl, Portfolio Manager and Strategist | March 17, 2014

…r job. For economists the term “headwinds” is just a stand-in for a familiar concept: the short-term equilibrium real rate (also known as r*). The specific definition for this variable that the Federal Reserve uses in its Blue Book is the real interest rate that closes the output gap in three years, given a certain model’s forecast for the economy. Conceptually, if the funds rate is above the equilibrium rate monetary policy should be considered…

Capture five tax benefits with a 529 college savings plan

Columbia Management, Investment Team | March 21, 2014

…riginal beneficiary without penalty. Assets contributed to a 529 plan are removed from the owner’s taxable estate. Due to special provisions available only with 529 college savings plans, you can contribute up to $14,000 per year ($28,000 for married couples), per beneficiary without triggering federal gift taxes. Contributions are considered completed gifts and are excluded from your taxable estate, even though you as the account owner mai…