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…

Market volatility: Where do we go from here?

Jeffrey Knight, CFA, Global Head of Investment Solutions and Asset Allocation | October 27, 2014

Watch Jeff Knight, CFA, Global Head of Investment Solutions and Asset Allocation, explain his view of the markets and what’s next for investors. Taking a cross-asset perspective, Knight looks at some key trends leading up to the recent market volatility, including falling U.S. bond yields, economic slowdown in Europe and a strengthening U.S. dollar. Given a healthy U.S. corporate sector, we think this may set the stage for building a portfolio a…

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…

Implications of a stronger U.S. dollar

Matthew Cobon, Head of Government and FX Investments, Fixed Income, Threadneedle Int'l Ltd | October 27, 2014

…perform well, but there is a short-term case as to why dollar strength could be accompanied by more asset class volatility. Currency markets are moving ahead of what interest rate markets are telling us, so there is a disconnect. Things could become very challenging for the Fed if the U.S. starts importing deflation from elsewhere. The asset class volatility argument is related to global liquidity being withdrawn and the dollar (as a reserve cur…