Launch Establishes First Fixed Income Offering Within
New York Life Investment Management’s 130/30 Product Suite
NEW YORK(January 29, 2008) – MacKay Shields LLC, and its affiliate New York Life Investment Management (NYLIM), today announced the availability of the company’s first 130/30 fixed income product offering. Launched on December 14, 2007, the MainStay 130/30 High Yield Fund, sub-advised by MacKay Shields, is NYLIM’s first short-extension high yield product and joins a NYLIM 130/30 product line-up that already includes several 130/30 equity products managed by NYLIM’s Equity Investor’s Group.
As the name suggests, the MainStay 130/30 High Yield Fund invests approximately 130 percent of its assets in long positions (either directly or through derivatives) while approximately 30 percent of its assets are sold short (either directly or through derivatives). Normally, the Fund invests at least 80 percent of its assets in high-yield corporate debt securities. Benchmarked to the Merrill Lynch U.S. High Yield Master II Constrained Index, the MainStay 130/30 High Yield Fund provides MacKay’s High Yield Active Core (“HYAC”) team the flexibility to short bonds, allowing managers to capitalize on both positive and negative return forecasts -- potentially improving risk-adjusted returns.
“130/30 strategies have emerged as a viable solution for institutional investors seeking to benefit from exposure to short equity positions in a measured, risk-controlled manner. We believe the same opportunity exists in fixed income portfolio management,” said Osbert Hood, chairman and chief executive officer of MacKay Shields LLC.
MacKay’s HYAC investment team, which is comprised of Dan Roberts, Michael Kimble, Louis Cohen and Taylor Wagenseil, has worked together for over 16 years. They joined MacKay Shields from Pareto Partners in 2004.
“This product offering is a natural extension of MacKay’s existing investment acumen and capabilities. The ‘negative screening’ process the HYAC team already implements is ideally suited to identify short sale candidates. In fact, short selling has been used by the founding members of the team, Dan Roberts and Mike Kimble, since 1989. We’re pleased to provide clients such an innovative product solution,” said Hood.
The team currently manages defensive bond arbitrage strategies, which are essentially low volatility high yield long-short strategies, as well as long-only high yield strategies for institutional clients and as a sub-advisor for registered mutual funds (other than the MainStay Funds). With $3.5 billion in assets under management at MacKay Shields, the team holds a composite track record dating back to 1997.
Although the fund is managed based on fundamental analysis, it is built with a quantitative bias in portfolio construction ensuring that beta remains close to 1, a critical aspect to effective “130/30” management.
130/30 strategies involve risk of loss of capital. There can be no assurance that the strategy's objective will be achieved as the underlying investment options are subject to market risk and will fluctuate in value.
About MacKay Shields LLC
MacKay Shields LLC manages more than $38 billion in assets as of December 31, 2007. Its clients include pension funds and other institutional investors in the US and overseas. MacKay Shields is an affiliate of New York Life Investment Management LLC
About New York Life Investment Management
New York Life Investment Management Holdings LLC, ranks among the largest asset management firms in the United States. Through its multiple boutique investment structure, NYLIM delivers investment performance through an array of products designed for both institutional and retail clients. Through MainStay Investments, NYLIM distributes some of the most highly regarded mutual funds and wrap accounts in the industry.
NYLIM is a leading provider of retirement plans for corporations, multi-employer trusts, and individuals, and is recognized as one of the nation’s top providers of guaranteed products to both the qualified and non-qualified markets. Together with its affiliates and over 1,500 employees, NYLIM manages over $249 billion in assets as of December 31, 2007.
Before you invest please keep in mind that the Fund principally invests in high-yield debt securities, which are generally considered speculative because they present a greater risk of loss, including default, than higher quality debt securities. Also, short sales involve costs and risk. If a security sold short increases in price, the Funds may have to cover their short position at a higher price than the short sale price, resulting in a loss. When borrowing a security for delivery to a buyer, the Funds also may be required to pay a premium and other transaction costs, which would increase the cost of the security sold short. By investing the proceeds received from selling securities short, the Funds are employing a form of leverage, which creates special risks. The use of leverage may increase the Funds’ exposure to long equity positions and make any change in the Funds’ NAVs greater than it would be without the use of leverage. This could result in increased volatility of returns. The Funds may experience a portfolio turnover rate of over 100% and may generate short-term capital gains which are taxable.
These products are not federally insured or guaranteed by the U.S. government, the Federal Deposit Insurance Corporation, or similar agency.
Please contact your investment professional for a free prospectus. Investors are asked to consider the investment objectives, risks, and charges and expenses of the investment carefully before investing. The prospectus contains this and other information about the investment company. Please read the prospectus carefully before investing.
Distributed by NYLIFE Distributors LLC, 169 Lackawanna Avenue, Parsippany, New Jersey 07054.
Media Contact:
Allison Scott
New York Life Investment Management
212-576-4517
allison_scott@nylim.com
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