Perspectives Blog

Navigating rising rates

Columbia Management, Investment Team | June 11, 2013

…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 interest rates have declined for roughly 30 years but are bounded at zero. It…

Opportunity in lower-quality municipals

Columbia Management, Investment Team | August 15, 2013

Recently enacted higher tax rates — and the threat of even higher rates — enhance the attractiveness of tax-exempt income, especially versus other income-producing securities. Lower quality, shorter maturity investment-grade municipal bonds may provide similar yields as longer maturity bonds, but with lower interest-rate risk and volatility. Independent and well-resourced credit research is a critical tool in lower-quality municipal bond invest…

Are municipal bond rating agencies shifting the goalposts (again)?

Columbia Management Municipal Investment Team, | September 30, 2013

…o other fixed-income asset classes, state and local government officials successfully argued that their respective governmental entities were underrated compared with corporate peers, and, as a consequence, were paying higher yields. In hindsight, the ratings recalibrations created confusion, increased market volatility, diluted municipal rating granularity and the value of ratings as a pricing tool, and ultimately highlighted the importance of b…

Monetary policy shift creates new investment challenges

Columbia Management, Investment Team | August 6, 2013

Going forward, investors should look for return opportunities that do not depend upon easy money. Diversification strategies must take into account expected high correlations and the vulnerability of “safe” assets to changes in monetary policy The repricing of many assets as the second quarter drew to a close has created an expanded set of attractive investment opportunities. For most of 2013, financial markets have been responding to a nearly…

The world has gone global. Have you?

Paul Berlinguet, Vice President, Equity Products | May 21, 2013

Many large companies derive significant revenue outside of the U.S. International markets offer both growth opportunities and attractive equity yields. Investors should consider global dividend funds as part of their current portfolio. The line between domestic and global securities has blurred. The top constituents by market capitalization of the S&P 500 index include Apple, Exxon Mobil, Microsoft and Johnson & Johnson. The MSCI All C…

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…

Fear is not a strategy

James Dearborn, Head of Municipal Bonds | November 18, 2013

As muni bond prices fell and yields soared in recent months, fear and uncertainty kept investors away. Amidst the unprecedented fear-based sell-off, the fundamentals of the muni bond market continue to strengthen. Bypassing muni bonds may mean missing out on today’s attractive long-term buying opportunities. Tax-free income is a big reason why so many investors have included municipal bonds in their financial plans. In recent months, yie…