BNY Mellon Wealth Management has launched a new municipal bond strategy that will invest predominately in investment grade municipal bonds and will seek to take advantage of the extraordinary market environment.
“The dislocation in the fixed income market, presents a unique opportunity for our fixed income team to pursue a more aggressive investment approach that takes advantage of market inefficiencies during these volatile market conditions,” says John Flahive, BNY Mellon wealth management’s director of fixed income group, which manages about $24 billion of client assets as of 30 September.
Flahive and Senior Portfolio Manager Gary G. Crofton will co-manage the portfolio that will have the Lehman Municipal Bond Index as its benchmark. “Our experience in uncovering value makes this an ideal time to generate alpha for our clients,” says Flahive.
This new strategy is designed for clients who want a tax-efficient fixed income approach and who are able to take additional risk on part of their fixed income allocation. The portfolio will invest in a wide range of instruments, including lower credit-quality vehicles, such as high-yield bonds, in contrast with BNY Mellon Wealth Management’s core municipal bond strategy.
“The current market environment, while extremely unsettling, is also creating opportunities for potential reward in the years ahead,” says Leo Grohowski, chief investment officer, who oversees the management of about $158 billion of Wealth Management client assets as of 30 September. “We are offering this timely strategy to high net worth investors who are looking for a diverse array of solutions.”
Managers of the strategy will seek to achieve higher tax-free yields and total return than the firm’s core strategy. But it also will carry more volatility relative to BNY Mellon Wealth Management’s typical strategy. The firm has set a target of $100 million in assets for the first year and intends to cap it at $500 million.
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