sustainability. With market uncertainty still present, investors need to be prepared for a
pullback and protect against downside risk.
OutlookThe struggle between improving U.S. market fundamentals and continued macroeconomic
worries are likely to persist. The Federal Reserve (the Fed) recently highlighted moderatebut improving U.S. economic growth but also stressed a need for accommodativmonetary policy to bring down unemployment. The European Central Bank (ECB) hasmade some extraordinary efforts toaddressmarket liquidity pressures brought on by thesovereign debt crisis, but evidence suggests the underlying indebtedness issues are far
from resolved. While this dovish approach to monetary policy and liquidity has themarkets flush with cash, it has also allowed for de-emphasis of fundamental analysis andcompany differentiation.
When combined with the unstable Middle Eastern and North
Korean nuclear situation and a slowing Chinese economy, i shop t becomes clear that conflictinginformation will continue to plague the global markets.
Results in 2012 will depend on whether the improving U.S. economy can offset the
relative slowness being experienced by China. Furthermore, the accommodative nature ofthe Fed and the ECB will eventually end the requirement for managers with strongfundamental analysis backgrounds to evaluate between alternatives. Opportunities willemerge, but volatility will also be present as global governments move toward resolutions.Our feeling that the major source of volatility in 2012 will likely be
themarket’reactiontleadershippolicies has not changed. We recommend including an assortment ofstrategies with low correlation to each othertobuffer any unexpected events. We try to
manage our absolute return funds to offer the potential for reduced correlation to broad
markets while seeking to minimize volatility and produce positive absolute returns.
Additional online resources
Featured funds video: Columbia Absolute Return Multi-Strategy Funds — Portfolio
Manager Todd White discusses the design and potential benefit