Perspectives Blog

Implications of a stronger U.S. dollar

Matthew Cobon, Head of Government and FX Investments, Fixed Income, Threadneedle Int'l Ltd | October 27, 2014

…perform well, but there is a short-term case as to why dollar strength could be accompanied by more asset class volatility. Currency markets are moving ahead of what interest rate markets are telling us, so there is a disconnect. Things could become very challenging for the Fed if the U.S. starts importing deflation from elsewhere. The asset class volatility argument is related to global liquidity being withdrawn and the dollar (as a reserve cur…

October — It always seems to happen in October!

Ted Truscott, CEO, Global Asset Management | October 20, 2014

…omic growth is now the problem, and the current downturn is a reaction to changes in growth expectations and the volatility of that growth. Market assumptions for steady growth did not necessarily account for all the other risks. The road ahead It is important in these times of market volatility (positive or negative) to keep a calm, long-term perspective. With market realization of risks inevitably comes overreaction and opportunity. Keeping one…

Ghost of crises past

Jay Leopold, Head, U.S. Investment Risk | October 27, 2014

…treats than tricks in the future. Economic growth and the capital markets experienced an extended period of low volatility in recent years. As a result, a sense of complacency had been building among investors. Historically, these periods of low volatility can last a number of years as seen by the VIX Index (a measure of expected volatility in the equity markets) between 1993-1997 and 2003-2007 (Exhibit 1). This environment was shattered suddenl…

To infinity and beyond!

Colin Moore, Global Chief Investment Officer | October 13, 2014

…imit on an infinite policy and what lies beyond its expiration? Transition points are often the source of market volatility as the certainty of the previous focus is replaced by the uncertainty of the new focus. In addition to increased volatility, we may also experience a correction, loosely defined as a drop in major indices of at least 10%. While volatility and corrections are unpleasant, they can motivate investors to focus less on QE (an ext…

The importance of taking a long-term perspective

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

…part of our investment process. These expectations can help us to make rational decisions in the face of market volatility. The research that underpins these forecasts, meanwhile, helps us to distinguish temporary trading volatility from more significant fundamental changes that could alter our longer term assessments. So far, market volatility in 2014 has not changed our outlook for the major drivers of our strategic forecasts, like economic gr…

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…

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

Columbia Management, Investment Team | December 1, 2014

…rm bond funds may be worth a closer look. Short-term bond funds can deliver attractive yields and a low level of volatility while investing in high-quality bonds with limited credit/interest rate risk. Regardless of the investing climate, we believe at least a portion of an investor’s assets should be allocated to lower volatility, liquid investments, whether to meet planned or unexpected expenses. The last thing you want is for your investment t…