Perspectives Blog

Puerto Rico’s turbulent ride

Michael Taylor, Senior Municipal Analyst | September 26, 2013

…cal operations, liquidity, and maintaining investment-grade agency credit ratings. We maintain the opinion that investing in Puerto Rico municipal bonds remains appropriate only for investors who can tolerate rating and price volatility. Since publishing our June 2013 commentary on Puerto Rico’s weakening financial health, the market for the Commonwealth’s municipal bonds has been nothing but turbulent. Over the past several weeks, particularly…

Navigating rising rates

Columbia Management, Investment Team | June 11, 2013

…ortfolio Manager It’s time for investors to start thinking seriously about interest rate risk in portfolios. Over the last three decades, long-term government bonds rewarded investors with healthy real returns, relatively low volatility and good performance during economic downturns. But at current yield levels, it is hard to escape the conclusion that prospective returns look much worse than the solid performance of recent history. Long-term int…

Engineering a better retirement portfolio

Columbia Management, Investment Team | June 4, 2013

…ust a few of the options, although none are terribly appealing. How you invest your nest egg is one lever you may be able to pull rather painlessly to help improve your retirement funding outlook. The interaction of portfolio volatility and bad timing increases shortfall risk Investors need positive returns to increase the probability of meeting their withdrawal needs throughout retirement. The risk of not meeting these needs is known as “shortfa…

Q&A with Jeff Knight

Jeffrey Knight, CFA, Head of Global Asset Allocation | January 6, 2014

…in the last 10-15 years. Investors have begun to think more carefully about ways to extract as large a benefit as possible from diversification. The traditional 60/40 portfolio isn’t as diversified as it could be because the volatility of stocks swamps the volatility of bonds. So we’ve seen an evolution in how to think about risk allocation as opposed to asset allocation. We’ve seen loosening constraints so that we can dial in the right ba…

January asset allocation update

Jeffrey Knight, CFA, Head of Global Asset Allocation | February 3, 2014

As we assess the global markets in early 2014, our overall portfolio strategy remains modestly overweight equities and underweight fixed income. While we have been anticipating an increase in volatility, we still believe equities will outperform bonds over the course of the year. The current low level of interest rates suggests returns from bonds remain unattractive on a longer term strategic basis. Real returns are likely to be low to potential…

The perils and pitfalls of buying individual municipal bonds

James Dearborn, Head of Municipal Bonds | February 27, 2014

Volatile ratings leave retail investors at risk Retail investors could pay higher prices Deck is stacked against retail investors With an increasing focus on the benefits of owning municipal bonds — attractive after-tax yields, low historical default rates and relatively low volatility — investors are again considering purchasing individual muni bonds. But the deck may be stacked against the retail investor. The allure of owning individual bon…

Should investors care about valuation?

Rich Rosen, Portfolio Manager | November 25, 2013

…n, the market doesn’t like inflation (because the quality of earnings stink), and hates deflation (earnings growth is harder to come by) and uncertainty (the hardest variable to get a grasp on). To us, the four year valuation volatility had more to do with rising and falling inflation/deflation fears, rather than stocks being overvalued or undervalued. Our conclusion: We would counsel investors who invest in stocks that doing so is a long-term pr…