Insights Investment

BNY Mellon Investment Managemen said this month that Mellon’s $105.2 billion fixed-income unit, covering stable value, municipal, efficient beta and taxable fixed-income strategies, will move to global fixed income and liability-driven investment firm Insight Investment, bolstering AUM to $1.1 trillion. Insight is gaining expertise in municipal bonds and efficient beta as well as access to new areas in terms of client reach — specifically the insurance sector and defined contribution market.

DB plan sponsors need to think about restructuring their LDI portfolios, says Kevin McLaughlin, head of liability risk management, North America, at Insight Investment. He says plan sponsors should focus on two things: increasing the hedge ratio due to extreme volatility to make sure they have enough liquidity and increasing returns to fill funding gaps. More than ever, plan sponsors need a hedge for liabilities, McLaughlin says. “If they don’t hedge for interest rates and get it wrong, even small movements in interest rates will mean the return needed from growth assets will increase exponentially,” he explains.

Companies and governments issued $500 billion in impact bonds last year, a 60% increase from $313 billion in 2019, Insight Investment says. The asset manager says issuance of impact bonds, which raise money for social or environmental projects, is likely to reach record levels in 2021. Insight says green bonds remained the biggest impact bond category, at 53% of issuance. Government-related issuance, at $260 billion, accounted for more than half of 2020’s total issuance and the financial industry led issuance from the corporate sector at $121 billion, Insight says.