Perspectives Blog

When do floating rate loans begin to float?

Columbia Management, Investment Team | July 11, 2013

Given the significant and rapid move in Treasury yields over the last month, many investors in the floating rate asset class may be expecting to see higher income distributions. The presence of LIBOR floors in the leveraged loan market today means that investors may end up waiting a little bit longer to realize an uptick in coupon payments. However, relative performance for bank loans has been strong, and this asset class provides important div…

Gimme credit

Marie M. Schofield, CFA, Chief Economist and Senior Portfolio Manager | August 22, 2013

…sales—this is overwhelming any increase in balances from home purchases so far.Home equity lines of credit fell by $12 billion, falling a steady 8% annually. On to the good news. There was a ninth consecutive increase in auto loans (up $20 billion and the largest quarterly rise since 2006), rising 8.5% in the last year. This is consistent with the healthy increases in auto sales in the last year, which has been a bright spot for manufacturing and…

Outlook for the leveraged loan market

Columbia Management, Investment Team | June 20, 2013

We find that the leveraged loan market is much healthier today than five years ago and we continue to be constructive on the asset class. Compared to the pre-Great Recession period, the pricing of loans today is much more reasonable in the context of credit risk and corporate fundamentals are stronger. A robust credit review process is a key component of successful investing in this asset class. By Lynn Hopton and Yvonne Stevens, Co-Heads of L…

Parental income, not assets, affects college financial aid

Columbia Management, Investment Team | May 29, 2013

…and the cost of attendance. This table looks at the Jones family and demonstrates how difficult it can be to qualify for needs-based aid. According to the College Board, a large amount of financial aid (44%) is in the form of loans that need to be repaid.* It’s also important to note that there is no guarantee that financial need will be fully met by a financial aid package offered by any particular school. Planning to meet your EFC Though you m…

Gut check: The outlook on fixed income

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

…be able to tighten enough to offset the effect of rising rates. High-quality bonds may struggle to generate coupon-like returns, which is better than last year but nothing to brag about. Do we prefer high-yield bonds or bank loans? High-yield bonds. High-yield bonds and bank loans were the only two winning sectors in fixed income in 2013 with returns of 7% and 5%, respectively. We are comfortable holding our current positions in high yield and b…

Casting a wider net for income

Columbia Management, Investment Team | May 28, 2013

To generate sufficient investment income in today’s low-yield world, you may need to look at new sources of income. Many corporations are currently awash in cash and offer investment opportunities across the capital structure. Floating rate loans, corporate bonds, convertible securities and dividend-paying stocks each offer specific advantages. In today’s low-yield world, advisors and investors alike are looking for income. And while the…

How will you pay for your child’s future education?

Columbia Management, Investment Team | August 27, 2013

College savings plans offer an important tool for managing the cost of higher education. Saving in advance could offer a significant cost savings compared to taking loans during college. College Savings Calculators can help you assess your personal situation. Before you know it, that special day will arrive — your child will be off to college. But are you prepared for the significant college expenses that may come your way? With an education f…