Perspectives Blog

Finding the sweet spot — Value investing along the muni yield curve

Paul Fuchs, CFA, Portfolio Manager, Municipal Bonds | August 27, 2014

We look for securities that offer a balance of credit fundamentals and yield. We use a “roll-down” analysis to identify the sweet spot on the yield curve. We believe yield curve positioning is the largest driver of returns for intermediate municipal portfolios. The cornerstone of the Columbia Management municipal investment process is identifying relative value opportunities. As we construct and manage portfolios, a relative value component is…

Oil and the high yield market

Columbia Management, Investment Team | December 8, 2014

By Jennifer Ponce de Leon, Senior Portfolio Manager and Head of High Yield and Mark Van Holland, CFA, Senior Portfolio Manager  Size of the Energy Sector Because the energy sector is a large component of the U.S. high yield market relative to some other asset classes, the market has received increased scrutiny due to recent declines in oil prices. Prior to the recent sell off, energy accounted for more than 15% of the high yield market, making i…

Hungry for income? High yield munis could be your meal ticket

Chad Farrington, CFA, Head of Municipal Bond Credit Research and Senior Portfolio Manager | May 28, 2014

High yield muni bonds represent an attractive investment opportunity Professional money managers can help with the intricacies of the high yield muni space Current income and potential tax advantages in the high yield space Attractive yields, potential for price appreciation Many investors are concerned about the prospect of rising interest rates and the impact higher rates may have on bonds, especially since we’ve been in a very low rate envi…

Fixed income strategies – The pros and cons of generating returns with negative duration

Columbia Management, Investment Team | July 14, 2014

…profile. Keep in mind that selling Treasury futures is not free and can actually cost the portfolio in terms of yield and total return if the yield curve shifts down. What a portfolio manager is doing is selling Treasury futures on a specific maturity (e.g., selling the 5- or 10-year Treasury) and essentially betting that the yield on that specific maturity moves higher. The portfolio is no longer collecting that yield or rolling down the yield

What’s the outlook for muni bonds?

James Dearborn, Head of Municipal Bonds | June 19, 2014

…falling rates, a dearth of new supply and a resurgent demand by investors seeking attractive taxable-equivalent yields. We believe municipal bonds should continue to perform well in the second half of 2014. Yields on muni bonds are compelling when considering the impact of taxes on non-exempt securities. As we reach the halfway point of 2014, it’s a good opportunity to review our full-year outlook for the municipal bond market and consider what…

Are financial markets priced for secular stagnation?

Columbia Management, Investment Team | December 15, 2014

…ice bubble bursting in 1989 (Exhibit 2). Exhibit 1: Japanese CPI versus U.S. CPI (18yr lag) Exhibit 2: 5y5y JGB yields versus 5yr5yr U.S. Treasury yields (18yr lag) There is still some way to go before U.S. markets fully discount a Japanese policy environment. As we have previously written, a rate cycle more in keeping with our near-term economic analysis could represent a rude shock to holders of interest rate duration. If we believe on the o…

Do you know what’s in your short-term bond fund?

Columbia Management, Investment Team | December 1, 2014

…e prudent to examine your bond portfolio to ensure you understand the risks therein. In their ongoing search for yield, some investors may have missed how much interest rate risk or credit risk was driving the strong returns of their short-term bond funds. Looking under the hood of your bond fund can help shed light on the amount and kinds of risks the fund is taking. Is the fund earning its yield by investing in riskier below-investment grade bo…