Perspectives Blog

Surveying the landscape for M&A

Robert McConnaughey, Director of Global Research | March 3, 2014

Cash-rich corporations are increasingly considering M&A. The market is rewarding acquirers generously (for now). How can investors position in front of potential M&A without paying an excessive premium that leaves room for disappointment? Cash balances at U.S. non-financial corporations have exploded in the post-crisis era, despite a rising return of cash to shareholders in the form of dividends and share repurchases. One other option…

Q2 fixed income outlook – Hitting for the cycle

Gene Tannuzzo, CFA, Senior Portfolio Manager | March 31, 2014

We have started to reduce exposure to high-quality bonds with limited upside potential and high-yield bonds in which credit risk appears too aggressive. Following weakness last year, emerging market debt has posted gains this year, and we expect further strength ahead as volatility subsides. While we expect a flatter yield curve over the next few months as investors focus on the timing and pace of rate increases, we don’t think they should avoi…

Trust accounts and the net investment income tax

Abram Claude, Vice President, Columbia Management Learning Center | October 9, 2013

…e reached at a far lower income amount than individual income tax brackets. The same compression is true for reaching the highest general long-term capital gains rate of 20%. In general, trust income (in the form of interest, dividends, ordinary income and capital gains) retained by the trust is taxable to the trust. Distributed income, to the extent it is not a return of trust principal, is taxable to the beneficiary who receives the distributio…

Rebalancing the U.S. economy

Marie M. Schofield, CFA, Chief Economist and Senior Portfolio Manager | January 13, 2014

…al investment growth from near 2% to about 8% this year. The key to getting growth to accelerate beyond 2% is for business to borrow to improve and expand their productive capital, not return it to shareholders in the form of dividends. This capital deepening can begin to close the output gap and is probably what the markets are counting on. We are beginning to see some lift in private sector construction spending on offices, commercial space and…

What is the Net Investment Income Tax, and how is it calculated?

Abram Claude, Vice President, Columbia Management Learning Center | September 18, 2013

…reshold; then you determine the amount of net investment income earned for the year. The tax applies to the lesser of the two figures. What is included under net investment income? Among income included is taxable interest, dividends, capital gains, rent, royalties and taxable distributions from non-qualified annuities. Income from a trade or business that is a passive activity (under the passive loss rules) is also included. What is not includ…

Should your income be fixed?

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

…rs. Fortunately, the words “income” and “fixed” are not linked by decree. There are many non-fixed, income-oriented security structures which are suitable for investment, including: – Common stocks with safe, stable or rising dividends – Floating rate bonds – Bank loans – Preferred stocks and bonds with interest rate reset features – Master Limited Partnerships Without question, some of these asset classes are more volatile than investment-grade…

Casting a wider net for income

Columbia Management, Investment Team | May 28, 2013

To generate sufficient investment income in today’s low-yield world, you may need to look at new sources of income. Many corporations are currently awash in cash and offer investment opportunities across the capital structure. Floating rate loans, corporate bonds, convertible securities and dividend-paying stocks each offer specific advantages. In today’s low-yield world, advisors and investors alike are looking for income. And while the…