Dreyfus Launches Program to Help Investors and Advisors Navigate Risks of Challenging Fixed Income Market
KnowYourBonds.com Highlights Critical Factors to Consider When Investing in Non-Traditional Fixed Income Solutions
NEW YORK, June 2, 2014 – As investor interest grows in non-traditional fixed income, Dreyfus, a BNY Mellon company, has launched an integrated program designed to help educate investors and their financial advisors about the risks and opportunities for investing in a changing fixed income environment.
“The prospect of rising interest rates, bond market liquidity challenges and shifting monetary policy pose significant risks for fixed income investing,” said Kim Mustin, Head of North American Distribution for BNY Mellon Investment Management. “While investors are embracing non-traditional fixed income strategies in response to these challenges, they may be trading one set of risks for another. We’ve designed an education platform to help investors and their advisors ask the right questions to make informed decisions for their fixed income portfolios.”
Encouraging investors to “know what you own” in fixed income portfolios, Dreyfus has launched KnowYourBonds.com, a new website that focuses on three pillars when considering non-traditional fixed income funds:
1. Is the fund able to take a high conviction position on small bond issues?
2. Are the drivers of fund performance transparent and clear?
3. Is the fund flexible enough to pursue positive returns regardless of the rate environment?
“KnowYourBonds.com is designed to serve as a central source for investors and their advisors to discover, learn and explore what we believe investors need to know about non-traditional fixed income strategies,” Mustin said. The microsite includes an introduction to Dreyfus Opportunistic Fixed Income Fund, investment insight materials for that fund, a video from Standish Opportunistic Fixed Income Portfolio Managers, and an opportunity to subscribe for future updates.
White Paper - Know What You Own in Your Unconstrained Bond Portfolio
The site also features a white paper entitled “New Bond Investing for New Times – Execution Matters in Opportunistic Fixed Income Strategies,” which underscores the importance for investors to understand the ‘what’ and the ‘how’ of these strategies so that investors avoid potentially trading one kind of risk for another.
Beyond a certain size threshold, it becomes more difficult to transact in cash bond markets, according to the paper. Larger funds may need to gain exposure to certain parts of the market through derivative contracts, introducing special counterparty and liquidity risks that must be managed. While Dreyfus believes that derivatives can be useful tools for managing interest rate changes and other kinds of portfolio risk, the paper explains why it is important for investors to understand exactly how they are used within an unconstrained portfolio.
“We believe that a smaller asset base could provide for capturing more meaningful, high conviction exposures in an opportunistic fixed income bond fund,” said David Leduc, Chief Investment Officer at Standish Mellon Asset Management Company LLC, the Boston-based fixed income specialist for BNY Mellon, and a portfolio manager of Dreyfus Opportunistic Fixed Income Fund. “We also believe that our bond-by-bond implementation of Standish’s ‘best ideas’ across 50-150 issuers from all sectors and regions of the fixed income markets is easier for investors to understand what drives the risks and returns in their opportunistic fixed income portfolio.”
The paper concludes that individual security selection will likely be even more important than intelligent sector rotation within the unconstrained bond asset class.
For more information on opportunistic fixed income at Dreyfus, visit www.knowyourbonds.com.
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Investors should consider the investment objectives, risks, charges and expenses of a mutual fund carefully before investing. Investors should contact their financial advisor or visit www.dreyfus.com to obtain a prospectus, or a summary prospectus, if available, that contains this and other information about a fund. Read the prospectus carefully before investing.
Past performance is no guarantee of future results. There can be no guarantee that the fund’s investment approach will be successful or that any particular level of return will be achieved. Asset allocation and diversification cannot ensure a profit or protect against loss of principal.
Bond funds are subject generally to interest rate, credit, liquidity and market risks, to varying degrees, all of which are more fully described in a fund’s prospectus. Generally, all other factors being equal, bond prices are inversely related to interest-rate changes, and rate increases can produce price declines. Foreign bonds are subject to special risks including exposure to currency fluctuations, changing political and economic conditions, and potentially less liquidity. The use of derivative instruments, such as options, futures and options on futures, forward contracts, swaps, options on swaps, and other credit derivatives, involves risks different from, or possibly greater than, the risks associated with investing directly in the underlying assets. A small investment in derivatives could have a potentially large impact on the fund’s performance.
The investment adviser for the fund is The Dreyfus Corporation. The fund’s portfolio managers are dual employees of Dreyfus and Standish, and apply Standish’s proprietary investment process in managing the fund for Dreyfus.
© 2014 MBSC Securities Corporation, Distributor
Notes to Editors:
The Dreyfus Corporation, established in 1951 and headquartered in New York City, is one of the nation's leading asset management and distribution companies currently managing more than $280 billion in mutual funds and other cash management vehicles.
Standish Mellon Asset Management Company LLC, with approximately $162 billion of assets under management, provides investment management services across a broad spectrum of fixed income asset classes. These include corporate credit, emerging markets debt (dollar-denominated and local currency), core / core plus, tax–sensitive, short duration, stable value and opportunistic (U.S. and global) strategies. Standish also offers full service capabilities in insurance client strategies and liability driven investing. The firm includes assets managed by Standish personnel acting as dual officers of The Dreyfus Corporation and The Bank of New York Mellon and Alcentra NY, LLC personnel acting as dual officers of Standish. Standish, Dreyfus and The Bank of New York Mellon are affiliated subsidiaries of BNY Mellon.
BNY Mellon Investment Management is one of the world's leading investment management organizations and one of the top U.S. wealth managers, with $1.6 trillion in assets under management. It encompasses BNY Mellon’s affiliated investment management firms, wealth management services and global distribution companies. More information can be found at www.bnymellon.com.
BNY Mellon is a global investments company dedicated to helping its clients manage and service their financial assets throughout the investment lifecycle. Whether providing financial services for institutions, corporations or individual investors, BNY Mellon delivers informed investment management and investment services in 35 countries and more than 100 markets. As of March 31, 2014, BNY Mellon had $27.9 trillion in assets under custody and/or administration, and $1.6 trillion in assets under management. BNY Mellon can act as a single point of contact for clients looking to create, trade, hold, manage, service, distribute or restructure investments. BNY Mellon is the corporate brand of The Bank of New York Mellon Corporation (NYSE: BK). Additional information is available on www.bnymellon.com, or follow us on Twitter @BNYMellon.
Unless otherwise noted, all information source BNY Mellon as of March 31, 2014. This press release is qualified for issuance in the US only and is for information purposes only. It does not constitute an offer or solicitation of securities or investment services or an endorsement thereof in any jurisdiction or in any circumstance in which such offer or solicitation is unlawful or not authorized. This press release is issued by BNY Mellon Investment Management to members of the financial press and media and the information contained herein should not be construed as investment advice. Past performance is not a guide to future performance. A BNY Mellon Company.