Perspectives Blog

Engineering a better retirement portfolio

Columbia Management, Investment Team | June 4, 2013

Experiencing a significant portfolio loss in the early retirement years (timing risk) is one of the greatest risks to the longevity of a retirement nest egg (shortfall risk). This risk is typically a function of being concentrated in the wrong asset class — any asset class — at the wrong time. By looking at a portfolio through a risk lens, investors can gain valuable insight into building a portfolio that minimizes concentration risk and can in…

The end of “risk-on/risk-off”

Anwiti Bahuguna, Ph.D., Senior Portfolio Manager | February 3, 2014

…but also rose to over 80% during this same period, reducing the benefits of cross-regional diversification. Similarly, correlation between equities and high yielding bonds rose from about 50% to over 80%. When investors took risk, most assets rallied with the exception of sovereign bonds. Conversely, when risk sold off, only sovereign bonds had positive returns. This risk-on/risk-off regime posed a problem for multi-asset portfolios as many of t…

January asset allocation update

Jeffrey Knight, CFA, Global Head of Investment Solutions and Asset Allocation | February 3, 2014

…ests returns from bonds remain unattractive on a longer term strategic basis. Real returns are likely to be low to potentially negative over a longer holding period for a number of fixed income markets. Although interest rate risk remains strategically unattractive, we note that valuation improved considerably during 2013, and we find rates to be closer to fair value for longer duration bonds. In addition, we find that some fixed-income risks rem…

Q&A with Jeff Knight

Jeffrey Knight, CFA, Global Head of Investment Solutions and Asset Allocation | January 6, 2014

xed income? A: I think it is important to think about fixed income differently now than we have for decades. In other words, a large share of fixed income investments are organized against a benchmark index, and typically the risks of that benchmark come overwhelmingly from interest rate sensitivity and not from other characteristics of bonds that still could be attractive. The universe of opportunities in fixed income is wide and varied, and I t…

Second quarter asset allocation positioning

Columbia Management, Investment Team | May 14, 2013

cial crises. In a low growth environment, we continue to favor high-yielding dividend-paying, defensive stocks with some potential for capital gains. We also continue to advocate caution in portfolio allocations and emphasize risk diversification. Search for yield remains strong in fixed income We made no material changes to our fixed-income positioning during the first quarter of 2013. In general, our portfolios remain overweight in investment-gr…

The secret to managing pension plan risk

Frank Salem, Senior Portfolio Manager | February 10, 2014

Historical overreliance on risk assets have made pension plans vulnerable Why funded status is the best measure of a pension plan’s health How can pension sponsors manage funded status volatility? This past fall marked the one-year anniversary of the devastation to the New York area caused by Super Storm Sandy. Following the disaster, many who rebuilt also added safeguards, such as moving structures further from the beach and building higher a…

Global asset allocation outlook (as of March 2014)

Columbia Management Global Asset Allocation Team, | April 7, 2014

After significant gains in 2013, equities took a breather in the first quarter of 2014 while fixed income assets rallied. The S&P 500 Index experienced a fair amount of volatility, retreating 5.8% at the start of the year and then rallying by more than 7% to end the quarter modestly higher. Within international markets, European, emerging markets (EM) and Japanese equities lagged U.S. equities. By the end of the quarter, however, risk assets…