8-28-13 7:21 AM EDT | Email Article

BNY Mellon Investment Boutique Sees Potential Pitfalls in Carry

NEW YORK, Aug. 28, 2013 /PRNewswire/ -- Investment grade credit, high yield debt and emerging markets debt appear attractive to fixed income investors, according to a recent report from Standish, the Boston-based fixed income specialist for BNY Mellon.

The report, Bond Investors Keep Calm and Carry Carefully, notes the importance of focusing on areas of the market where valuations are attractive while avoiding idiosyncratic risks. 

The nearly 100-basis-point increase in 10-year Treasury yields between May and June pushed the yields into the low-end of Standish's fair valuation range, increasing the attractiveness of several fixed income categories, the report said.

Long corporate bond spreads widened during the rise in yields to 197 basis points (bps) over Treasuries. "Long corporate valuations appear attractive, particularly for pension plans that are now in better financial shape and looking to implement liability driven investing (LDI) strategies," said David Leduc, chief investment officer of the active fixed income division of Standish and author of the report.  "It may be an opportune time to increase allocations to long corporate bonds while the supply and demand picture is still relatively balanced."

The recent sell off in emerging markets has made this sector increasingly attractive, Standish said.  "Tighter fiscal policies, lower debt levels and relatively low inflation pressures mean that emerging markets generally enjoy greater policy flexibility than developed markets," Leduc said. 

If the U.S. outlook continues to improve, as Standish expects, emerging market countries could benefit from the ensuing increase in trade and international investment, the report said.  However, Standish said it is being selective as some countries and companies could face challenges in a higher interest rate environment, particularly if portfolio flows to emerging markets halt or temporarily reverse.

Regarding carry, Standish sees it as attractive in some market sectors and unattractive in others where the potential risks outweigh the potential returns.

Carry is one of the two components that determine the total return of a bond, with appreciation being the other component.  Assuming that the price stays constant, the carry of a bond is its current yield   The value of carry can change due to market fluctuations, possibly lowering or increasing the return to investors, Standish said. 

Notes to Editors:

Standish Mellon Asset Management Company LLC, with approximately $165 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.

BNY Mellon Investment Management is one of the world's leading investment management organizations and one of the top U.S. wealth managers, with $1.4 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 June 30, 2013, BNY Mellon had $26.2 trillion in assets under custody and/or administration, and $1.4 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.

All information source BNY Mellon as of June 30, 2013. This press release is qualified for issuance in the UK and US 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 (US) and BNY Mellon Asset Management International Limited (ex-US) 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.  The value of investments and the income from them is not guaranteed and can fall as well as rise due to stock market and currency movements.  When you sell your investment you may get back less than you originally invested. Registered office of BNY Mellon Asset Management International Limited: BNY Mellon Centre, 160 Queen Victoria Street, London, EC4V 4LA. Registered in England no. 1118580. Authorized and regulated by the Financial Conduct Authority. A BNY Mellon Company.          

         

SOURCE BNY Mellon

Add a Comment

News   More...

Securities related to this article
Southshore Community Bk View sshc Stock Quote
BK One Limited Pref Share View bk1p Stock Quote
Golden State Business Bk View gsbb Stock Quote
Santa Cruz County Bk Ca View sczc Stock Quote
Mother Lode Bk Sonora Ca View molb Stock Quote
Community Bk Santa Maria View cysm Stock Quote
Commonwealth Business Bk View cwbb Stock Quote
Citizens Community Bk Va View czyb Stock Quote
Barnes & Noble, Inc. View bks Stock Quote
Bank of New York Mellon Corp View bk Stock Quote
 
Start Premium Trial Register For Free

P F Fund Financial Data (13,000+ funds)
P F Stock Financial Data (7,000+ stocks)
P F Stock and Fund Screeners (basic)
P F Investing Articles and Market Commentary
P F Articles Archive (>30 days)
P F Discuss (dozens of stock, fund, bond, and general bulletin boards)
P F Portfolio Manager (basic)
P F Morningstar Investment Classroom
P F Access Your Portfolio Anytime, Anywhere via Your Mobile Device
P   Morningstar Fund Analyst Reports (full research on 1,700 funds, ETFs, and CEFs)
P   Morningstar Stock Analyst Reports (full research on more than 1,100 stocks)
P   Portfolio Manager (advanced with 10 X-Ray analyses, including recommendations)
P   Portfolio Monitor (monthly and on-demand personalized portfolio statements)
P   Morningstar Proprietary Stock Information (stock star ratings, buy/sell prices, economic moat ratings, and more)
P   Morningstar 5-Star Stock and Fund Favorites & Red Flags eNewsletters
P   Premium Stock and Fund Screeners (advanced with nearly infinite ways to find the best securities for you)
P   Discounts on Morningstar newsletters, books, seminars, and more

Sign-up to Morningstar


Basic Access

Articles and Videos
Morningstar video reports, articles, data, and tools. Dig into our lineup of e-newsletters and investing classroom courses outlining sensible strategies for maximizing your investments.
Morningstar Discuss
Follow the buzz on individual stocks or fund families. Plus, read the latest posts from Morningstar members and analysts.
Portfolio Manager
Track your investments and watch lists with our Portfolio Manager. Customize your view with our comprehensive stock, fund, and ETF data.

Access these features and more when you sign up for Free Membership.
Join Morningstar today. It's Free.

Unlimited Access

Analyst Research
Gather in-depth, actionable insight on over 3,700 stock and mutual funds covered by Morningstar analysts. View our mutual fund Analyst Reports favored by professionals, savvy experienced investors, and new investors researching options for retirement savings, college plans, or other investment needs.
Portfolio X-Ray®
Ensure your portfolio is positioned exactly how you want with Morningstar's X-Ray Interpreter and Stock Intersection tools. A Barron's "Best of the Web" award winner for five years running, X-Ray Interpreter goes under the hood of your portfolio to provide a useful allocation, sector, and geographic analysis. And you can discover how much of a stock you really own, individually and through mutual funds, with Stock Intersection.
Investment Picks
Find new 5-star stocks (greatly undervalued companies) to consider daily. Our 5-star stock rating is a proven winner, consistently beating benchmarks like the S&P 500. Plus, browse our Fund Analyst Picks and Stewardship Grades to find shareholder-friendly mutual funds that are poised for outperformance.
Portfolio Monitor
Get a clear view of your investments with personalized reports about your portfolio. Receive monthly statements and generate reports on-demand to help you stay on track to meet your investment goals.

Access these features and more when you sign up for Premium Membership.
Start your free 14-day trial today online
Your subscription may be tax deductible. Please contact your tax advisor.

Content Partners
Morningstar - 2013/8/28 - Investment Grade Credit, High Yield Debt, Emerging Markets Debt Appear Attractive, Standish Says
Name |  Ticker |  Star Rating |  Market Cap |  Stock Type |  Sector |  Industry Star Rating |  Investment Style |  Total Assets |  Category |  Top Holdings |  Top Sectors |  Symbol |  Title Star Rating |  Category |  Total Assets |  Top Holdings |  Top Sectors |  Symbol |  Name Topic |  Sector |  Key Indicators |  User Interest |  Market Cap |  Industry Name |  Ticker |  Star Rating |  Market Cap |  Stock Type |  Sector |  Industry Star Rating |  Investment Style |  Total Assets |  Category |  Top Holdings |  Top Sectors |  Symbol / Ticker |  Title Star Rating |  Category |  Total Assets |  Symbol / Ticker |  Name Title |  Date |  Author |  Collection |  Popularity |  Interest Title |  Date |  Company |  Symbol |  Interest |  Popularity Title |  Date |  Company |  Symbol |  Interest |  Popularity Title |  Date |  Author |  Collection |  Interest |  Popularity

Previous: Investment Banks Cut China Growth Forecasts  |  Next: Investment in Bona Film Group to be Held by 21st Century Fox Following Separation of Businesses by News Corporation