Perspectives Blog

Q3 fixed income outlook – The demise of volatility

Gene Tannuzzo, CFA, Senior Portfolio Manager | June 30, 2014

…g invested rather than sitting in cash or taking a decisively negative position on bonds. History has shown that volatility can stay low for extended periods. In that case, we would expect credit sensitive assets to continue to generate reasonable returns. While we think investors should retain exposure in the bond market, it is important to be flexible and protect the downside, especially when the price of insurance (i.e. volatility) is low. Fo…

From tactical to core – The case for emerging market debt

Columbia Management, Investment Team | June 2, 2014

…ome A dominant theme over the past few years has been the search for yield, particularly when accompanied by low volatility. Given the meager return on cash, investors have been moving into credit in search of additional returns and into asset classes with perceived levels of low volatility. Corporate credit spreads have tightened steadily, in part due to this demand, resulting in a steady return profile for the asset class. The stresses in the c…

The secret to managing pension plan risk

Frank Salem, Senior Portfolio Manager | February 10, 2014

…ing number of pension sponsors have done just this, embarking on a process to build a better structure to manage volatility of funded status. The process improves the matching of fluctuations in plan assets and liabilities to better manage funded status volatility in future periods of market volatility. While this is certainly a step in the right direction, many sponsors have either not taken any measures or made too-modest modifications to their…

Thoughts on navigating market volatility in today’s technology markets

Rahul Narang, Senior Portfolio Manager | April 28, 2014

We are seeing a market rotation from momentum to value on macro factors and internal market dynamics. Keys are to stay diversified, look for businesses with strong moats and that produce solid cash flow and compare to historical valuations. Favored themes are industry consolidation plays, mobile and Internet. In recent weeks there has been a dramatic shift in alpha generation from hyper growth technology stocks to more value-oriented names. We…

Volatility and Goodhart’s Law

Zach Pandl, Portfolio Manager and Strategist | May 21, 2014

Markets are starting to make understandable inference that Fed officials see a fixed timeline for rate hikes. Implied volatility is low because perceived policy uncertainty is low. We remain focused on modest slack and sturdy growth. Recent Fed communication brings to mind Goodhart’s Law: “When a measure becomes a target, it ceases to be a good measure.” In a speech Tuesday, New York Fed President Dudley noted that Eurodollar futures are prici…

October — It always seems to happen in October!

Ted Truscott, CEO, Global Asset Management | October 20, 2014

…omic growth is now the problem, and the current downturn is a reaction to changes in growth expectations and the volatility of that growth. Market assumptions for steady growth did not necessarily account for all the other risks. The road ahead It is important in these times of market volatility (positive or negative) to keep a calm, long-term perspective. With market realization of risks inevitably comes overreaction and opportunity. Keeping one…

Correlation’s essential role in diversification

Columbia Management, Investment Team | December 5, 2013

Diversification strategies can help mitigate overall portfolio volatility. An important component of diversification strategies is correlation, or the measure of how one security moves in relation to another. Portfolios with lower correlation among assets will experience less overall volatility, even if the underlying assets are equally volatile individually. Most investors have heard about the concept of diversification, the typical expressio…