"Investors need to be prepared for higher volatility because of growing liquidity constraints, especially in certain parts of the bond markets," said Lynn Challenger, a co-author of the report and managing director of trading at Mellon Capital Management Corporation, a BNY Mellon investment manager. "They should consider their liquidity needs in both benign and turbulent markets and how they will source it."
Another defensive move suggested by the traders is for investors to maintain tighter tolerance ranges around asset allocation targets so they have a smaller effect on the markets when they need to rebalance.
However, the fragmentation of liquidity also is likely to create transitory distortions in prices, providing opportunities for those with readily available capital and the ability to deploy it before the opportunity disappears, said Amy Koch, a co-author of the report and managing director of fixed income trading at Standish Mellon Asset Management Company, a BNY Mellon investment boutique.
Notes to Editors:BNY Mellon Investment Management is one of the world's leading investment management organizations and one of the top U.S. wealth managers, with $1.4 trillion in assets under management. 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. BNY Mellon is a global financial services company focused on helping clients manage and service their financial assets, operating in 36 countries and serving more than 100 markets. BNY Mellon is a leading provider of financial services for institutions, corporations and high-net-worth individuals, offering superior investment management and investment services through a worldwide client-focused team. It has $27.9 trillion in assets under custody and administration and $1.4 trillion in assets under management, services $11.6 trillion in outstanding debt and processes global payments averaging $1.4 trillion per day. BNY Mellon is the corporate brand of The Bank of New York Mellon Corporation (NYSE: BK). Additional information is available on www.bnymellon.com or follow us on Twitter@BNYMellon. All information source BNY Mellon at September 30, 2012. This press release is qualified for issuance in the UK and US 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 (US) and BNY Mellon Asset Management International Limited (ex-US) 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. The value of investments and the income from them is not guaranteed and can fall as well as rise due to stock market and currency movements. When you sell your investment you may get back less than you originally invested. Registered office of BNY Mellon Asset Management International Limited: BNY Mellon Centre, 160 Queen Victoria Street, London, EC4V 4LA. Registered in England no. 1118580. Authorized and regulated by the Financial Services Authority. A BNY Mellon Company SOURCE BNY Mellon
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