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

Why invest in long-term muni bonds? Why investors should focus on tax-free income and total return Many investors fled the muni market in 2013, as $60 billion in mutual fund redemptions attests. Particularly hard hit were longer-maturity funds, likely due to investors anticipating higher interest rates and the negative impact that would have on fixed-income investments, especially longer bonds. While such concerns appear rational, is avoiding…

Compelling opportunity in municipal bonds

Catherine Stienstra, Senior Portfolio Manager | November 7, 2013

nicipal market — the number of municipal defaults is at its lowest level since at least 2009. With rising tax rates, the advantages of tax-exempt income can be considerable. Attractive yields vs. corporate and Treasury bonds, a historically steep yield curve, defaults at their lowest level since 2009, increasing tax revenues and high income tax rates make municipal bonds a compelling investment opportunity. Third quarter 2013 was a roller…

Navigating rising rates

Columbia Management, Investment Team | June 11, 2013

…Pandl, Senior Interest Rate Strategist, and Gene Tannuzzo, Senior Portfolio Manager It’s time for investors to start thinking seriously about interest rate risk in portfolios. Over the last three decades, long-term government bonds rewarded investors with healthy real returns, relatively low volatility and good performance during economic downturns. But at current yield levels, it is hard to escape the conclusion that prospective returns look muc…

Gut check: The outlook on fixed income

Colin J. Lundgren, CFA, Head of 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…

Should your income be fixed?

David King, CFA, Senior Portfolio Manager | December 16, 2013

…complementary. An investment where you expect complete return of your capital at a future point in time is conservative. So is an investment with regular, defined cash returns. No wonder high-quality government and corporate bonds are a huge asset class. It feels uncomfortable to challenge the merits of popular and conservative investment vehicles, but today there is basis for doing so. The historical role of bonds, bank term deposits, savings a…

Puerto Rico’s turbulent ride

Michael Taylor, Senior Municipal Analyst | September 26, 2013

Puerto Rico’s economic contraction and fiscal decline is persistent, well-documented and widely acknowledged within the municipal marketplace. For Puerto Rico, continued access to affordable capital remains imperative for the maintenance of fiscal operations, liquidity, and maintaining investment-grade agency credit ratings. We maintain the opinion that investing in Puerto Rico municipal bonds remains appropriate only for investors who can tole…

Fear is not a strategy

James Dearborn, Head of Municipal Bonds | November 18, 2013

As muni bond prices fell and yields soared in recent months, fear and uncertainty kept investors away. Amidst the unprecedented fear-based sell-off, the fundamentals of the muni bond market continue to strengthen. Bypassing muni bonds may mean missing out on today’s attractive long-term buying opportunities. Tax-free income is a big reason why so many investors have included municipal bonds in their financial plans. In recent months, yie…