Perspectives Blog

Big picture supports allocating risk to equities

Jeffrey Knight, CFA, Global Head of Investment Solutions and Asset Allocation | October 25, 2013

In the current environment, focusing portfolio risk on equities is a sensible approach. Given policy uncertainties in the U.S., we think it’s time to incorporate more international diversification. Fixed income markets are once again relevant in the search for diversification, along with unconventional diversifiers like absolute return funds. Watch: Investment Strategy Outlook Q4 2013 See more Market Insights from Columbia Management…

Should your income be fixed?

David King, CFA, Senior Portfolio Manager | December 16, 2013

…defining quality bonds, even temporarily, as highly predictable assets without an adequate return profile immediately casts traditional portfolio construction views into question. Quality bonds continue to provide statistical diversification, which could be reason enough to maintain some exposure, but the goal of most portfolios is not predictable, inadequate returns. Is this a case where diversification is really di-worse-ification? The question…

Opportunities in global infrastructure

Peter Santoro, Senior Portfolio Manager | February 3, 2014

Infrastructure investments may offer stable cash flows and diversification from more cyclical investments Infrastructure investments span the emerging and developed markets across many industries Today’s current market environment offers unprecedented opportunities for well-resourced investors Infrastructure represents the foundation for our day-to-day lives—the societal staples we rely on. And the stable fundamental demand drivers of infrastr…

Does a perfect policy portfolio exist?

Jeffrey Knight, CFA, Global Head of Investment Solutions and Asset Allocation | May 5, 2014

…To accomplish this, allocations to asset classes are measured by “risk contribution” as opposed to simply measuring the proportion of capital invested in each asset class. Intuitively, Risk Parity strategies extract a greater diversification benefit than portfolios that are unbalanced in their risk allocations. For the most part, the theoretical benefits of these strategies have been realized in the real world, as investors who have been willing…

Asset allocation: The conundrum of 2014

Jeffrey Knight, CFA, Global Head of Investment Solutions and Asset Allocation | March 3, 2014

…, having closed 2013 above 3%, bond yields had reached a level where interest rate risk was no longer over-priced. With valuation back to fair value, at least in the short run, bonds had become a relevant choice for portfolio diversification once again. Second, the economic data have been markedly weaker so far in 2014 than most forecasters expected. Our research on asset class sensitivities to economic activity suggests that in an economy that i…

Three tools for a resilient portfolio

Jeffrey Knight, CFA, Global Head of Investment Solutions and Asset Allocation | January 15, 2014

Portfolio resilience refers to the ability of a portfolio to withstand unanticipated adversity and to respond from that adversity. Effective diversification requires thinking not only about allocating the assets in a portfolio but about allocating the risks. A flexible strategy enables a portfolio to adapt to changes in the relative attractiveness of different risks. Watch: Jeff Knight describes three strategies his team employs in seeking to…