The strategy, which Mellon Capital Management says was developed to help pension funds protect their assets against market volatility, primarily invests in high quality longer term corporate bonds that are rated at least single A and have a maturity of more than 20 years.
“We believe there will be significant demand for this product from pension plans as they look to implement liability driven investment (LDI) strategies,” said Charlie Jacklin, president and chief executive officer of Mellon Capital Management, in a press release. “This strategy is attractive because the yields on high quality long corporate bonds are currently more than 300 basis points higher than typical LDI implementation vehicles, such as longer term Treasury bonds or interest rate swaps. Also, this strategy includes the types of securities that establish the discount rate for pension plan liabilities. That makes this strategy a much better liability match than other vehicles.”
Bill Hoskins, managing director and head of fixed income research for Mellon Capital Management, said in the announcement that the strategy’s goal is to outperform the Barclays Capital U.S. Credit Corporate 20+ ex-Baa Index.
The strategy is managed by a team led by Susan Kobayashi, director, fixed income, Mellon Capital Management.
More information is at www.mcm.com .