Funds Centre

BNY Mellon Global Strategic Bond - new launch

BNY Mellon is a specialist asset manager with expertise covering many sectors and assets. This new fund will be managed by Standish, who are based in the US and are specialists in fixed income; they are owned by BNY Mellon.The global credit crisis

has created many opportunities in the fixed income market across a number of different sectors. There are dislocations in many areas of the bond market and this fund aims to capture the growth prospects created as a result of the mis-pricing of many bonds.The fund is managed by David Leduc who has 22 years experience in the fixed income markets and has the support of a skilled team of 76 investment professionals. He begins the research process by taking into account the wider economic picture to identify interesting themes. This helps him form views on the different bond sectors emphasising the areas on which he is positive. This is then followed by individual bond selection within his favoured areas of the fixed income market.This fund takes full advantage of global bond markets and will be a diversified portfolio of over 100 holdings. While it can invest in government bonds, higher quality corporate bonds and the higher risk high yield bonds, its universe is diverse. The risk is increased as the fund has the ability to take advantage of opportunities in overseas bonds, including emerging market bonds, bank loans, mortgage backed securities etc. While up to 20% of the fund can make use of currencies as a way to generate additional returns, the fund as a whole is hedged back into sterling. Returns will therefore be subject to the movements in currency and this will be an additional risk that needs to be taken into account.At launch, the fund is expected to yield 5.5% (net of charges, variable and not guaranteed). The fund will aim to outperform the Barclays Capital Global Aggregate Bond Index by 1% (net of fees) over a three to five year market cycle. This may not sound like a high performance target, but Standish feel it is a more realistic target than aiming too high and potentially disappointing investors. Additionally, there is an annual management charge of 1% with no performance fee, which makes it competitive relative to its peers.Standish manages a similar fund in the US which has performed well considering the recent volatile environment, although past performance is not a guide to the future. We would however like to see how the BNY Mellon Global Strategic Bond Fund gets on and therefore it has not been included on the Wealth 150 list of our favourite funds.Meera Patel, Senior Analyst> Key Features of the BNY Mellon Global Strategic Bond Fund