Perspectives Blog

When the QE tide recedes, focus on what is revealed

Robert McConnaughey, Director of Global Research | January 6, 2014

…ll increased cost-competitiveness. On the risk side of the ledger is the lack of adequate progress around fiscal reform or entitlements, the challenges of growing profits off of a base of historically high margins, and equity valuations that, while not excessive, leave far less margin of safety than we saw at this time a year ago. Our European team is optimistic that we will see a continuation of gradual European recovery, but on both the global…

Global Asset Allocation Outlook (as of February 24, 2014)

Columbia Management Global Asset Allocation Team, | March 10, 2014

…support this trend. In our country scorecard, U.S. rankings improved significantly. Earnings growth has improved and technical conditions have strengthened. U.S. monetary policy remains largely accommodative and stock market valuations are not overtly elevated for this stage in the business cycle. In light of these developments, we raised our preference for U.S. equities from a modest underweight to neutral. Related to this increase, we raised U…

An improving outlook for European equities

Philip Dicken, Head of European Equities, Threadneedle International Ltd | October 18, 2013

Economic data confirm that the Eurozone has exited recession. There are signs that corporate transactional activity is increasing as businesses become more financially secure. While Europe remains beset by challenges, the economic background is improving, valuations are looking more attractive and investors who have not been paying attention to European stocks may want to take a closer look. According to Eurostat, the 17 eurozone member states…

What to make of the rebound in emerging market equities

Dara White, Senior Portfolio Manager | April 14, 2014

Despite continuing headlines of concern, EM markets have rebounded recently. In order to sustain that rally, we need to see progress on export volumes and political/economic reforms. While not universally cheap, EM equity valuations are not unreasonable and we continue to find bottom-up opportunities. A month ago, much of the news from the emerging markets (EM) was negative. We saw headlines highlighting the liquidity headwinds created by U.S….

January asset allocation update

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

…weight position in equities, we remain slightly underweight U.S. equities. Our analysis indicates a continued decline in the attractiveness of U.S. equities. Instead, we opt for more geographic diversification and find better valuations in select markets abroad. While short-term valuations have run up recently, we continue to favor both the UK and eurozone on better economic momentum. In addition, we maintain our strong overweight to Japan as we…

The importance of taking a long-term perspective

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

…ve equities, meanwhile, offer returns that are only slightly below their long-term average levels. This forecast derives from an expectation of ongoing economic growth (and consequently, earnings growth), and worldwide equity valuations that are not extremely expensive. Accordingly, we find that portfolios designed to rely more upon equity risk than fixed-income risk are more likely to succeed, on average, across the next five years. That returns…

The secret to managing pension plan risk

Frank Salem, Senior Portfolio Manager | February 10, 2014

…mes more transparent to the public. In 2013, a typical S&P 500 company pension plan’s funded status increased to an estimated 95%, the highest level since before the financial market collapse of 2008. Rising stock market valuations are estimated to have accounted for 40% of the improvement and higher interest rates contributed the remaining 60% of improvement. Any decline in stocks or a lower liability discount rate will reduce these gains….