Buy and maintain

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Our buy and maintain bond capabilities are available on a pooled or segregated basis and offer investors a smarter low-turnover approach to access global credit market beta relative to traditional passive approaches.

We invest in diversified portfolios of global issuers with strong credit quality and aim to ensure our portfolios are not over-exposed to the most indebted companies or industries, as can be typical with market capitalisation weighted index approaches. Without tracking error and benchmark weighting constraints, these portfolios can focus instead on seeking the best long-term value available in the market and targeting returns in line with which can be tailored to a clients' specific objectives. Our segregated strategies can be constructed to aim to deliver returns in line with a clients' specific requirements. Our pooled funds can offer constant-duration, long-dated or decaying duration solutions.

Benefits

Protection against defaults: the strategies are constantly screened by our portfolio managers and credit analysts for any investments at risk of loss from default or significant deterioration in long-term issuer credit quality.

Avoid biases of market capitalisation-weighted benchmarks: buy and maintain approaches can avoid weighting a portfolio towards the most indebted issuers – an inherent characteristic of market capitalisation weighted benchmarks

Continual refreshment of credit views: we use coupon flow and modest turnover to ensure the composition of issuers and sectors reflects Insight's most up-to-date views.

Performance yardstick: clients can measure the value added over an economic cycle by comparing fund performance versus a customised index constructed using the same buy and maintain ideology.

Cost efficient: we look to deliver market beta without the transaction costs associated with market weighted index tracking strategies.

Risk controlled: our benchmark-agnostic approach can avoid the risk associated with sector and issuer concentration typically associated with traditional indexed approaches.

Snapshot

Fixed income team in numbers

  • 106 Fixed income investment professionals support the team
  • 17years Average experience of fixed income team
  • £121.1bn fixed income assets

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Team statistics as at 30 September 2017. Assets under management (AUM) are represented by the value of cash securities and other economic exposure managed for clients. 

Please note the value of investments and any income from them will fluctuate and is not guaranteed (this may be partly due to exchange rate fluctuations). Investors may not get back the full amount invested. Past performance is not a guide to future performance.

Important information

Derivatives may be used to generate returns as well as to reduce costs and/or the overall risk of the portfolio. Using derivatives can involve a higher level of risk. A small movement in the price of an underlying investment may result in a disproportionately large movement in the price of the derivative investment.

The investment manager may invest in instruments which can be difficult to sell when markets are stressed.

Specific risks for Maturing Buy and Maintain Bond Funds and Long Dated Buy and Maintain Bond Fund:

A credit default swap (CDS) provides a measure of protection against defaults of debt issuers but there is no assurance their use will be effective or will have the desired result.

Investments in bonds are affected by interest rates and inflation trends which may affect the value of the portfolio.

Where leverage is used through the use of swaps and other derivative instruments, this can increase the overall volatility. Any event that adversely affects the value of an investment would be magnified if leverage is employed by the portfolio and losses would be

Specific risks for traditional Buy and Maintain Bond Fund

Where the portfolio holds over 35% of its net asset value in securities of one governmental issuer, the value of the portfolio may be profoundly affected if one or more of these issuers fails to meet its obligations or suffers a ratings downgrade.

The issuer of a debt security may not pay income or repay capital to the bondholder when due.

The Maturing Buy and Maintain Bond Funds meet the definition of a covered fund under Volcker regulations.

Any losses in the fund will be borne solely by investors in the fund and not by BNY Mellon (including its affiliates); therefore BNY Mellon's losses in the fund will be limited to losses attributable to the ownership interests in the fund held by BNY Mellon and any affiliate in its capacity as an investor in the fund or as beneficiary of a restricted profit interest held by BNY Mellon or any affiliate.

Ownership interests in the fund are not insured by the FDIC, are not deposits, obligations of, or endorsed or guaranteed in any way, by BNY Mellon. Neither BNY Mellon nor any of its controlled affiliates (which includes the fund's general manager/ managing partner/ investment adviser), may directly or indirectly, guarantee, assume, or otherwise insure the obligations or performance of the fund or of any other covered fund in which the fund invests.

Investors should read the fund's offering documents before investing in the fund. Information about the role of BNY Mellon, its controlled affiliates, and their employees in sponsoring or providing services to the fund are described in the Volcker Rule section of the offering documents.

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