Perspectives Blog

Engineering a better retirement portfolio

Columbia Management, Investment Team | June 4, 2013

…n be devastating. Exhibit 1 looks at two scenarios for the full decade from January 2000 to December 2009. The green line represents someone who began their retirement withdrawals from a 60/40 portfolio (i.e., 60% stocks, 40% bonds) at the beginning of the decade, and who seeks to close a $1,500 per month retirement income gap by drawing on this portfolio.* That withdrawal amount is then adjusted for inflation in subsequent months. The orange lin…

Puerto Rico’s double-downgrade

Michael Taylor, Senior Municipal Analyst | February 10, 2014

…O rating by two notches to ‘Ba2’; ratings that are capped by or linked to the Commonwealth’s GO rating were also downgraded two notches, with the exception of the Puerto Rico Aqueduct and Sewer Authority (PRASA) Revenue Bonds. The moves were by no means a surprise. Puerto Rico’s economic contraction and fiscal decline has been persistent, well-documented and widely acknowledged within the municipal marketplace. Over the past decade the gove…

Duration for diversification

Columbia Management, Investment Team | November 19, 2013

…still be a cornerstone of any disciplined portfolio. By Zach Pandl, Senior Portfolio Manager, and Gene Tannuzzo, Senior Portfolio Manager We often hear investors say something like the following: “I own stocks for growth and bonds for income.” But in practice, of course, that is not how it really works. Investors hold portfolios for total return but invest across asset classes for diversification. Diversification is still one of the most fascina…

Q&A with Jeff Knight

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

…ther words, a large share of fixed income investments are organized against a benchmark index, and typically the risks of that benchmark come overwhelmingly from interest rate sensitivity and not from other characteristics of bonds that still could be attractive. The universe of opportunities in fixed income is wide and varied, and I think it still offers opportunity for return, but not if we organize our portfolios entirely to be about whether r…

The importance of taking a long-term perspective

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

…xt five years. So too for other fixed-income classes, where the near-term returns suffer from an expectation of rising yields, but the longer term returns benefit from reinvestment opportunities. Frankly, our expectations for bonds in 2014 are even more meager than our already subdued five-year forecasts. The fact that bonds performed well in January, then, could present an opportunity to reduce duration when the current volatility storm subsides…

Second quarter asset allocation positioning

Columbia Management, Investment Team | May 14, 2013

Within equities, we maintained an overweight to U.S. stocks, with emphasis on large-cap stocks and high-quality, dividend-paying equities. For fixed income, we continue to prefer investment grade corporate bonds. We believe low correlation absolute return strategies should continue to be a part of diversified portfolios. The Columbia Management Asset Allocation Team meets to review global economic investment conditions and markets. Team member…

What the NHL playoffs can teach investors

Jeffrey Knight, CFA, Head of Global Asset Allocation | June 13, 2013

NHL playoff teams know the importance of protecting a lead; investors should consider a similar strategy with this year’s stock market gains. Resilient portfolios avoid concentration in one asset class, or any single source of risk. The strong differential performance between stocks and bonds this year presents a timely opportunity to rebalance one’s allocation between the two. The National Hockey League playoffs are marvelous to watch. The le…