Mellon Capital Ultra-Long Bond Product Surpasses $100 Million in Assets
June 12 2007 - 7:46AM
PR Newswire (US)
SAN FRANCISCO, June 12 /PRNewswire-FirstCall/ -- Mellon Capital
Management Corporation, one of the investment boutiques within
Mellon Asset Management, announced today that its U.S. Extended
Long Duration Alpha Plus strategy has surpassed $100 million in
assets under management. "This strategy provides pension plans with
very high duration without the use of leverage or illiquid
securities," said Charlie Jacklin, president and chief executive
officer of Mellon Capital. "The performance of long-duration bonds
tends to mirror the rise and fall of pension plan liabilities,
making this type of investment one way to help pension plans
immunize themselves against interest rate volatility. Many pension
plans are underexposed to assets that match long-term liabilities
because of a shortage of long-duration bonds." The U.S. Extended
Long Duration Alpha Plus strategy seeks to match the duration of
the Lehman Brothers U.S. 30 Year Zero Coupon SWAP Index(R) and
generate excess return by providing exposure to Mellon Capital's
proprietary global alpha strategy, which takes long and short
positions in global equity, sovereign bond and currency markets. It
obtains exposure to the index through the use of swap contracts.
"The global alpha portion of the investment aims to have a low
correlation with the returns of traditional bond markets," said
Bill Hoskins, director of fixed income research at Mellon Capital.
"The long duration of the fixed income portion of the strategy
means that this is designed to be an efficient method of adding
duration to a pension plan portfolio." The product, launched on
December 15, 2006, is one of three strategies introduced last year
to help pension funds hedge against the liabilities in their plans
while seeking to achieve equity-like returns. Among these is the
U.S. Long Duration Alpha Plus strategy, which now has more than
$300 million in assets under management. This strategy also seeks
to help pension plans gain exposure to assets that match long-term
liabilities. In this case, the strategy seeks to match the duration
of the Lehman Brothers U.S. 20+ Treasury Index(R). "Together, the
two strategies provide plan sponsors with assets that correspond
with the longer-term liabilities that are among the most
challenging to match," Hoskins said. "The global alpha return
enhancement is designed to mitigate the decline in expected return
when plans transition from equities to long bonds to reduce pension
risk." Founded in 1983 by innovators in the investment management
field, Mellon Capital specializes in global quantitative investment
strategies. As of March 31, 2007, the firm had $187 billion in
assets under management, including assets managed by dual officers
and $31.2 billion in overlay strategies. Additional information
about Mellon Capital is available at http://www.mcm.com/. Mellon
Financial Corporation (NYSE:MEL), is a global financial services
company. Headquartered in Pittsburgh, Mellon is one of the world's
leading providers of financial services for institutions,
corporations and high net worth individuals, providing asset
management, wealth management, asset servicing, issuer services and
treasury services. Mellon has approximately $5.8 trillion in assets
under management, administration or custody, including $1.034
trillion under management. News and other information about Mellon
is available at http://www.mellon.com/. DATASOURCE: Mellon
Financial Corporation CONTACT: Mike Dunn of Mellon Financial
Corporation, +1-212-922-7859, Web site: http://www.mellon.com/
http://www.mcm.com/
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