Mellon Capital Management Launches Long Bond Strategy to Help Pension Funds Protect Against Market Volatility
February 10 2009 - 7:36AM
PR Newswire (US)
Strategy Launches with $100 Million in Assets from Three Clients
SAN FRANCISCO, Feb. 10 /PRNewswire-FirstCall/ -- Mellon Capital
Management Corporation, part of BNY Mellon Asset Management, has
launched its High Quality Long Corporate Bond Strategy with $100
million in assets from three clients. The strategy, which was
developed to help pension funds protect their assets against market
volatility, primarily invests in high quality longer term corporate
bonds that are rated at least single A and have a maturity of more
than 20 years. "We believe there will be significant demand for
this product from pension plans as they look to implement liability
driven investment (LDI) strategies," said Charlie Jacklin,
president and chief executive officer of Mellon Capital Management.
"This strategy is attractive because the yields on high quality
long corporate bonds are currently more than 300 basis points
higher than typical LDI implementation vehicles, such as longer
term Treasury bonds or interest rate swaps. Also, this strategy
includes the types of securities that establish the discount rate
for pension plan liabilities. That makes this strategy a much
better liability match than other vehicles." LDI strategies aim to
insulate plan sponsors from market volatility because they tend to
move in tandem with typical pension plan liabilities. Typically,
these liabilities rise when yields on bonds decline and decrease
when bond yields increase. "Our goal is to outperform the Barclays
Capital U.S. Credit Corporate 20+ ex-Baa Index," said Bill Hoskins,
managing director and head of fixed income research for Mellon
Capital Management. "We are calling this a high-quality fund
because, typically, long term credit index funds have a much
greater exposure to lower quality BBB bonds. In addition, such
funds usually invest in shorter duration bonds with maturities as
short as 10 years." This strategy is managed by a team led by Susan
Kobayashi, director, fixed income, Mellon Capital Management.
Founded in 1983 by innovators in the investment management field,
Mellon Capital specializes in global quantitative investment
strategies. As of December 31, 2008, the firm had $152.0 billion in
assets under management, including assets managed by dual officers
of Mellon Capital Management and The Bank of New York Mellon, and
$12.9 billion in overlay strategies. Additional information about
Mellon Capital is available at http://www.mcm.com/. It is part of
BNY Mellon Asset Management, one of the world's largest asset
managers. The Bank of New York Mellon Corporation is a global
financial services company focused on helping clients manage and
service their financial assets, operating in 34 countries and
serving more than 100 markets. The company is a leading provider of
financial services for institutions, corporations and
high-net-worth individuals, providing superior asset management and
wealth management, asset servicing, issuer services, clearing
services and treasury services through a worldwide client-focused
team. It has $20.2 trillion in assets under custody and
administration, $928 billion in assets under management and
services more than $11 trillion in outstanding debt. Additional
information is available at bnymellon.com. DATASOURCE: The Bank of
New York Mellon Corporation CONTACT: Mike Dunn, of The Bank of New
York Mellon Corporation, +1-212-922-7859, Web Site:
http://www.bnymellon.com/
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