Perspectives Blog

Duration for diversification

Columbia Management, Investment Team | November 19, 2013

…tion exposure comes through diversification. Because of the negative correlation between duration and the returns of riskier assets, high-quality fixed income will still be a cornerstone of any disciplined portfolio. By Zach Pandl, Senior Portfolio Manager, and Gene Tannuzzo, Senior Portfolio Manager We often hear investors say something like the following: “I own stocks for growth and bonds for income.” But in practice, of course, that is not h…

Navigating rising rates

Columbia Management, Investment Team | June 11, 2013

Interest rates will rise at some point; investors must consider how to manage interest rate exposure in their portfolios. Duration can be a highly misleading measure of interest rate risk when making comparisons across products. For fixed income investors, sector exposure matters, and fundamental research can help avoid potholes. By Zach Pandl, Senior Interest Rate Strategist, and Gene Tannuzzo, Senior Portfolio Manager It’s time for investors…

Is a stock market correction coming?

Jeffrey Knight, CFA, Head of Global Asset Allocation | December 16, 2013

…ues for ongoing equity market strength. What might bring a correction? 1) Recession. Interestingly, in the absence of recession, the stock market tends to perform fairly well. Neither Marie Schofield (our chief economist) nor Zach Pandl (our chief interest rate strategist) assigns a material probability to recession in the United States next year. 2) Financial accident. Of course, you can never know for sure, but we believe this is not likely in…

Gaps, not growth

Zach Pandl, Portfolio Manager and Strategist | February 25, 2014

Monetary policy is primarily about “gaps” not growth: the Fed is trying to reduce spare capacity in the economy, not bring about a rapid expansion per se. Despite concerns over cyclical weakness in labor force participation, the unemployment rate is sending similar signals as most other output gap proxies. The output gap improved despite a relatively slow expansion, suggesting weak potential growth. While it’s far too soon to revise any medium…

What to expect from Janet Yellen’s testimony

Zach Pandl, Portfolio Manager and Strategist | February 10, 2014

Yellen’s testimony before U.S. lawmakers will help clarify how she plans to govern the committee Some investors are expecting a meaningful change in direction from the Yellen Fed We look at four reasons why we anticipate continuity with the Bernanke regime After a few bewildering weeks with Nicolas Maduro and Erdem Basci, I can’t be the only one grateful to be turning attention back to Janet Yellen. The new Federal Reserve Board Chair will mak…