UK- BNY Mellon has released its BNY Mellon Global Strategic Bond Fund, a global multi-sector fixed income fund targeted to UK investors designed to capture alpha opportunities from across the global fixed income markets.
The fund, which is managed by Standish, is not constrained like typical UK corporate bond funds, which are limited to investing only in assets of the sterling credit range. As a result, the new fund mitigates both asset class and geographical risk by offering broad diversification.
"It's a great strategy for the market. At the moment, there is lots of money going into UK corporate bonds - it's becoming a highly concentrated market and so it can be quite illiquid," said BNY Asset Management International head of distribution Paul Feeney.
However, once inflation starts rising, investors will require more flexibility than what is offered in corporate bonds, he said. "In terms of liquidity risk - a sharp uplift in inflation may make UK corporate bonds become more illiquid, whereas a global portfolio is not holding bonds in one particular market place." ( I moved this up)
The underlying portfolio is also hedged back into sterling, which mitigates currency risk for sterling investors.
He added that the fund enables clients to invest in investment grade bonds on a global basis, therefore providing diversification.
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