In the third of this three-part series, the US-headquartered investment firm takes another look at the credit market and how to get the most out of a portfolio.

The authors of this article argue that market volatility will remain elevated – and that creates opportunities. In the third in the series, we conclude with this contribution from BNY Investments.

See the first and second articles. The editors are pleased to share this material; the usual editorial disclaimers apply to views from outside contributors. To comment, email tom.burroughes@wealthbriefing.com and amanda.cheesley@clearviewpublishing.com

What’s the appeal of a global credit strategy?
We believe that investing in global credit can offer a number of attractive benefits to investors. It provides the chance to generate attractive yields from high-quality, global companies. Then there is an additional potential to deliver capital returns should yields decline, while adopting an active approach, as we do, may help to achieve enhanced resilience and improved diversification. 

In our view, to achieve these consistently and reliably depends on a robust and transparent investment process. We believe our global credit strategy exhibits these characteristics.

High-quality investments selected through a rigorous approach
Our approach has an investment grade focus in which we seek to achieve outperformance that is primarily driven by credit decisions. We concentrate efforts on the best way of achieving overall exposure to credit markets and specific issuers where we see value. 

By using the balanced investment platform that we’ve developed, which has an investment presence on both sides of the Atlantic, the generation of ideas can avoid undue geographical bias. We aim to identify and incorporate attractive relative or absolute value opportunities across the entire credit space. We seek to do this without compromising the overall quality of the portfolio. 

Credit strategy decisions sit at the core of our process
We focus on adding value through credit decisions and believe that our investors can have confidence in what they may expect to see drive our performance. We don’t seek to add meaningful value through allocations to currency or duration risk. We implement our credit views across four layers.

Beta management: the directional risk we take on credit spreads, looking at the market’s position in the broad credit cycle, valuations relative to historical experience, and tactical considerations such as investor flows.

Macro credit relative value: our asset allocation decisions, identifying preferences across regions/markets, including such considerations about high yield relative to investment grade, or developed markets versus emerging markets.

Sector strategy: taking positions across industry sectors based on fundamentals and relative value views. 

Security selection: picking the winners we see in regions/sectors and avoiding the losers. Here we seek to call on the depth and breadth of experience across our team of credit analysts. Their detailed understanding of the fundamental financial standing of so many individual companies can help uncover and identify opportunities at issuer and security level.

Consistency of process and people
The team looking after the fund consists of market and company veterans, consistently employing the long-standing investment process that we believe has been a key component of the strategy’s track record since it launched.

Regionally balanced organisational structure
The regionally balanced organisational structure we have in place has credit, economic research and portfolio management teams in both the US and Europe. This is an approach that we believe enables us to stay close to worldwide news flow and market developments better for a global mandate than a single-location model allows. It also provides for increased interaction with our other specialist credit teams.

Success in global credit 
Since the inception of the global credit strategy, we believe that we have built a track record that can demonstrate the success of our approach. A key factor has been our focus on identifying credit deterioration early and avoiding issuers where there has subsequently been a sharp deterioration in credit quality.  

Volatility is nothing to be scared of
It might seem counter-intuitive, but we welcome increased volatility in credit markets. The reason for that is we believe that volatility creates opportunities for security selection and relative value trades. 

Typically, uncertainty that creates turbulence in markets makes pricing more volatile. Increased volatility means that there is less consensus among market participants about what the fair price of a credit (or indeed any asset) should be. That dispersion of opinion can allow for larger and more prolonged gaps between price and value and create more instances of perceived mispricing. 

It increases the chances of attractively valued opportunities arising. Having a broadly and dedicated team of credit research analysts with extensive experience built through periods of both credit market turbulence and calm, may be a powerful tool in the quest for generating outperformance. 

Markets ahead
We believe that there is good reason to expect volatility to remain elevated. Combined with the US administration’s shifting emphasis on trade and tariffs, the significant geopolitical tensions and existence of competing fiscal and monetary priorities in many areas can create an environment of elevated market uncertainty. 

That in turn can present attractive value opportunities available for capture, meaning that conditions remain ripe for the global credit strategy to continue delivering for our clients, through a diversified mix of high-conviction active positions.

Disclaimer
Past performance is not a guide to future performance. 

The value of investments can fall. Investors may not get back the amount invested. Income from investments may vary and is not guaranteed. 

12 month returns (%)  

Source: Insight as at 31 March 2025. Performance calculated as total return, income reinvested, gross of fees, in USD. Fees and charges apply and can have a material effect on the performance of your investment. Insight claims compliance with the Global Investment Performance Standards (GIPS). A GIPS compliant presentation is available upon request via your BNY Investments EMEA contact.

About BNY Investments
BNY Investments is a division of BNY, one of the world’s largest and most-trusted financial services groups. With a presence in 35 countries, BNY seeks to connect investors with opportunities across every major asset class. Relentlessly investor-driven, our investment management model brings the best of both worlds to clients: a firm built on specialist expertise, powered by world-class distribution capability, and backed by the strength and commitment to financial stewardship of BNY.

Important information
For Professional Clients only. This is a financial promotion. Any views and opinions are those of the investment manager, unless otherwise noted. This is not investment research or a research recommendation for regulatory purposes. For further information visit http://www.bnymellonim.com  Document ID 2540000. EXP: 25 December 2025