NEW YORK, Feb. 3, 2016 /PRNewswire/ -- New survey data
from BNY Mellon Investment Management, one of the world's largest
investment managers, suggests that a lack of knowledge about the
global bond market makes investors reluctant to invest in global
fixed-income. In fact, 70% of retail investors do not hold any
global fixed-income investments and 62% do not see global
fixed-income as important. The data also indicates that there
is a significant opportunity for financial advisors to impact
retail investment behavior and sentiment by educating their clients
about the benefits of a globally diversified fixed-income
portfolio. Forty four percent of retail investors with an advisor
believe it is important to include in their portfolios some fixed
income exposure outside of the US, compared to 26% of retail
investors without an advisor.
The Global Fixed-Income Viewpoints survey was conducted
by Brunswick Insight on behalf of BNY Mellon Investment Management
which polled 356 retail investors and 201 financial advisors to
understand their investment behavior and outlook on the global bond
market. The results revealed that financial advisors are much more
likely than retail investors to prioritize global fixed-income
securities.
- Only 38% of retail investors surveyed believe it's important
that their portfolio includes some global fixed-income securities.
By contrast, 63% of financial advisors think it is important that
their clients' portfolios include some global fixed-income
securities.
- While a majority (56%) of the financial advisors surveyed
recommend holding at least some global fixed-income securities in
an investment portfolio, only 30% of retail investors reported
having any global fixed-income securities.
"The global bond market is at an inflection point – we believe
the disconnect in global monetary policy has created an opportunity
to generate positive fixed-income returns outside the U.S.," said
Raman Srivastava, Co-Portfolio Manager for the Dreyfus/Standish
Global Fixed Income Fund, which received the highest amount of net
new flows among products in the Lipper Global Income category in
2015.1 "The survey results highlight this may be an
optimal time for investors to consider global fixed income
securities as a core holding within their investment portfolio.
Financial advisors can close this gap by educating investors on the
impact of interest rate hikes on U.S. bond prices, as well as the
potential benefits of diversifying their fixed-income portfolios
across global markets."
Misperceptions Drive Hesitation
The survey uncovered several reasons why retail investors and
advisors may not be allocating more of their investments to global
fixed income, including:
- A lack of understanding regarding the relationship between
interest rates and bond prices: 40% of retail investors
polled were unaware that as interest rates increase, bond prices
generally go down.
- Misperception of the prevalence of global bonds: 79% of
retail investors are either unsure of the percentage of bonds
issued outside the U.S., or say that the percentage is less than
50% (when the actual percentage of non-U.S. opportunities is
60%2). Similarly, 59% of advisors are either unsure of
the percentage of bonds issued outside the U.S., or say that the
number is less than 50%.
Advisors Bullish on Global Diversification Though Inertia
Sets in Among Retail Investors
According to the survey, retail investors do not share the same
sense of urgency as financial advisors when it comes to increasing
their global investment allocation.
- Advisors show a greater propensity to diversify geographically
over the next year, with 44% recommending a more globally
diversified investment allocation to their clients.
- Only 9% of retail investors intend to increase their global
diversification over the next 12 months.
- Although a plurality (40%) have encouraged their clients to
keep their current global fixed-income allocation, a considerable
portion of advisors (33%) are giving advice to establish or
increase a global fixed-income allocation.
- Only 12% of retail investors say they would increase the global
diversification of their fixed-income allocation after a rate hike,
while one-third (35%) of advisors would recommend a more globally
diversified fixed-income allocation.
Advisors Play a Significant Role Though Their Voice is Not
Always Heard
The results reveal that advisors play a significant role in
shaping their clients' attitudes toward global fixed income, but
also suggest that their recommendations are not reaching all retail
investors. In addition, the survey uncovered a gap between retail
investors who work with financial advisors and those who don't.
- Only 26% of retail investors without an advisor think it's
important to invest in fixed-income from outside the U.S., and only
16% of them hold at least some global fixed-income securities in
their investment portfolio. By contrast, 44% of retail investors
with an advisor think that it is important to invest in fixed
income from outside the U.S. and 38% hold at least some global
securities in their investment portfolios.
- While 84% of financial advisors say they have given some advice
on global fixed-income allocation, most (44%) retail investors with
an advisor say that they have not received any advice on global
fixed income over the past year.
"Financial advisors have a significant opportunity in 2016 to
enhance retail investors' knowledge of the global bond market so
they understand both the prevalence and potential performance of
international bonds," added Kim
Mustin, Co-Head of Global Distribution, Head of Americas
Distribution, BNY Mellon Investment Management.
Global Fixed-Income Viewpoints Study Methodology
The survey was conducted online from November 24 - December 1, 2015 by Brunswick
Insight, a third party research firm, on behalf of BNY Mellon
Investment Management. It included 201 financial advisors and 356
retail investors (defined as active in their own investment
decisions and having $100,000 or more
in investable assets). For financial advisors, the margin of
error was +/- 6.9, while retail investors has a margin of
error of +/- 5.2. Both were at the 95% confidence interval
and comprised individuals who qualified through a number of strict
criteria.
View the full survey results and infographic here:
https://im.bnymellon.com/gfisurvey
ABOUT BNY MELLON INVESTMENT MANAGEMENT
BNY Mellon Investment Management is one of the world's leading
investment management organizations and one of the top U.S. wealth
managers, with $1.6 trillion in
assets under management as of December 31,
2015. It encompasses BNY Mellon's affiliated investment
management firms, wealth management services and global
distribution companies. More information can be found at
www.bnymellon.com.
ABOUT BNY MELLON
BNY Mellon is a global investments company dedicated to helping
its clients manage and service their financial assets throughout
the investment lifecycle. Whether providing financial services for
institutions, corporations or individual investors, BNY Mellon
delivers informed investment management and investment services in
35 countries and more than 100 markets. As of Dec. 31, 2015, BNY Mellon had $28.9 trillion in assets under custody and/or
administration, and $1.6 trillion in
assets under management. BNY Mellon can act as a single point of
contact for clients looking to create, trade, hold, manage,
service, distribute or restructure investments. BNY Mellon is the
corporate brand of The Bank of New York Mellon Corporation (NYSE:
BK). Additional information is available on www.bnymellon.com.
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This press release is qualified for issuance in the US only and
is for information purposes only. It does not constitute an offer
or solicitation of securities or investment services or an
endorsement thereof in any jurisdiction or in any circumstance in
which such offer or solicitation is unlawful or not authorized.
This press release is issued by BNY Mellon Investment Management to
members of the financial press and media and the information
contained herein should not be construed as investment
advice. Past performance is not a guide to future
performance. A BNY Mellon
Company.
1- BNY Mellon Investment
Management analyzed all of the funds in the Lipper Global Income
category and sorted them by 2015 total net flows. The
Dreyfus/Standish Global Fixed Income Fund ranked #1 as a result of
the firm's review through Dec. 2015.
(Source: Strategic Insight Simfund/MF Desktop). According to
the Lipper U.S. Open-End, Closed-End, and Variable Annuity Fund
Classification Descriptions, Global Income Funds are defined as
funds that state in their prospectus that they invest primarily in
U.S. dollar and non-U.S. dollar debt securities of issuers located
in at least three countries, one of which may be the United States.
2- FactSet, based on total
market capitalizations across the foreign and U.S. fixed income
markets as tracked by the Barclays Indices as of 12/31/15.
Disclosure Statement
Investors interested in the Fund should consider the
investment objectives, risks, charges, and expenses of the Fund
carefully before investing. To obtain a mutual fund prospectus that
contains this and other information about the Fund, investors
should contact their financial representatives or visit
Dreyfus.com. Read the prospectus carefully before
investing.
Past performance is no guarantee of future results. Asset
allocation and diversification cannot ensure a profit or protect
against loss in declining markets. All investments involve some
level of risk, including loss of principal. Certain investments
have specific or unique risks.
Main Risks
Bond Risk: Bonds are subject generally to interest rate,
credit, liquidity, call and market risks, to varying degrees.
Generally, all other factors being equal, bond prices are inversely
related to interest-rate changes and rate increases can cause price
declines. Credit Risk: High yield bonds are subject to
increased credit risk and are considered speculative in terms of
the issuer's perceived ability to continue making interest payments
on a timely basis and to repay principal upon maturity.
Derivatives Risk: A small investment in derivatives could
have a potentially large impact on the fund's performance. The use
of derivatives involves risks different from, or possibly greater
than, the risks associated with investing directly in the
underlying assets. Derivatives can be highly volatile, illiquid and
difficult to value. Emerging Market Risk: Emerging markets
tend to be more volatile than the markets of more mature economies,
and generally have less diverse and less mature economic structures
and less stable political systems than those of developed
countries. The fund's concentration in securities of companies in
emerging markets could cause the fund's performance to be more
volatile than that of more geographically diversified funds.
Foreign Investment Risk: To the extent the fund invests in
foreign securities, its performance will be influenced by
political, social and economic factors affecting investments in
foreign companies. These special risks include exposure to currency
fluctuations, less liquidity, less developed or less efficient
trading markets, lack of comprehensive company information,
political instability, and differing auditing and legal
standards.
© 2016 The Bank of New York Mellon Corporation. All rights
reserved.
Ben Tanner
212 635 8676
ben.tanner@bnymellon.com
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SOURCE BNY Mellon