Perspectives Blog

Holding multiple investments does not ensure better diversification

Columbia Management, Investment Team | April 23, 2014

The degree of risk reduction benefit in diversification depends directly upon the correlation of the portfolio’s assets. Adding just one zero-correlated asset to a portfolio reduces risk 29.5%, while adding a thousand 66%-correlated assets reduces risk by only 19%. Well-designed absolute return products can be meaningful additions to traditional allocations, substantially enhancing diversification. By Todd White, Head of Alternative Investment…

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…

The case for active muni management

Kimberly Campbell, Senior Portfolio Manager | April 21, 2014

Muni bonds represent an attractive investment opportunity Active management is a value add in these volatile markets Professional money managers can help investors navigate an ever-changing environment Where does one invest in a world of uncertainty? Rising taxes, volatile markets, low yields, economic stagnation, geopolitical unrest. We live in a world of great uncertainty — yet our investment goals remain the same: a comfortable retirement,…

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…

The beginnings of a new moderation in Asia

Soo Nam Ng, Head of Asian Equities | June 2, 2014

The Great Moderation was a period of macroeconomic growth and reduced volatility that provided a backdrop to the strong performance of U.S. equities. The lessons hold relevance for equity investors in Asia as big picture conditions for a Great Moderation are starting to fall into place. We believe the “new moderation” mindset will take Asia into its next leg of development, unleashing its potential in a more sustainable and stable manner. Less…

January asset allocation update

Jeffrey Knight, CFA, Global Head of Investment Solutions and 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…

Special report – 2014 mid-year review and outlook

Columbia Management, Investment Team | June 16, 2014

Key investment professionals review the first half of 2014 and share their insights into what may be ahead for the second half of the year. Interest rates Zach Pandl, Portfolio manager and strategist Review: Government bond yields declined in early 2014, both in the U.S. and in other developed market economies. This surprising change in course after increases in 2013 caught many investors off guard. In our view, declining interest rates reflect…