BNY Mellon High Yield Strategies Fund Permitted to Invest Up to 20% of Total Assets in Floating Rate Loans
BNY Mellon High Yield Strategies Fund (NYSE: DHF) has announced a significant change in its investment strategy. Effective August 15, 2024, the Fund will be permitted to invest up to 20% of its total assets in floating rate loans. This decision, approved by the Board of Trustees on August 8, 2024, expands the Fund's investment options.
The Fund will primarily focus on senior secured loans but may also include other types of loans and floating rate securities. While mainly targeting U.S. issuers, the Fund may invest in foreign issuers from OECD countries. This new strategy introduces potential benefits and risks, including exposure to less liquid over-the-counter markets, longer settlement times, and the inherent speculative nature of below investment grade securities.
Il BNY Mellon High Yield Strategies Fund (NYSE: DHF) ha annunciato un cambiamento significativo nella sua strategia di investimento. A partire dal 15 agosto 2024, il Fondo sarà autorizzato a investire fino al 20% dei suoi attivi totali in prestiti a tasso variabile. Questa decisione, approvata dal Consiglio di Amministrazione l'8 agosto 2024, amplia le opzioni di investimento del Fondo.
Il Fondo si concentrerà principalmente sui prestiti garantiti senior, ma potrà includere anche altri tipi di prestiti e titoli a tasso variabile. Sebbene sia orientato principalmente verso emittenti statunitensi, il Fondo potrebbe investire in emittenti stranieri provenienti da paesi OCSE. Questa nuova strategia introduce potenziali benefici e rischi, compresa l'esposizione a mercati over-the-counter meno liquidi, tempi di regolamento più lunghi e la natura intrinsecamente speculativa dei titoli con rating inferiore a quello investibile.
El BNY Mellon High Yield Strategies Fund (NYSE: DHF) ha anunciado un cambio significativo en su estrategia de inversión. A partir del 15 de agosto de 2024, el Fondo podrá invertir hasta el 20% de sus activos totales en préstamos a tasa flotante. Esta decisión, aprobada por la Junta de Fideicomisarios el 8 de agosto de 2024, amplía las opciones de inversión del Fondo.
El Fondo se centrará principalmente en préstamos garantizados senior, pero también podrá incluir otros tipos de préstamos y valores a tasa flotante. Aunque está dirigido principalmente a emisores estadounidenses, el Fondo puede invertir en emisores extranjeros de países de la OCDE. Esta nueva estrategia introduce beneficios y riesgos potenciales, incluyendo la exposición a mercados extrabursátiles menos líquidos, tiempos de liquidación más largos y la naturaleza especulativa inherente de los valores por debajo de la calidad de inversión.
BNY Mellon 하이 일드 전략 펀드(NYSE: DHF)가 투자 전략에 대한 중대한 변화를 발표했습니다. 2024년 8월 15일부터 해당 펀드는 총 자산의 최대 20%를 변동 금리 대출에 투자할 수 있게 됩니다. 이 결정은 2024년 8월 8일 이사회에서 승인되었으며, 펀드의 투자 옵션을 확장합니다.
펀드는 주로 선순위 담보 대출에 초점을 맞추겠지만, 다른 유형의 대출 및 변동 금리 증권도 포함할 수 있습니다. 주로 미국 발행자를 대상으로 하겠지만, 펀드는 OECD 국가의 외국 발행자에도 투자할 수 있습니다. 이 새로운 전략은 less liquid over-the-counter 시장, 더 긴 결제 시간 그리고 신용 등급이 투자 등급 미만인 증권의 본질적으로 투기적인 성격에 대한 노출을 포함한 잠재적인 이점 및 위험을 도입합니다.
Le BNY Mellon High Yield Strategies Fund (NYSE: DHF) a annoncé un changement significatif dans sa stratégie d'investissement. À compter du 15 août 2024, le Fonds sera autorisé à investir jusqu'à 20 % de ses actifs totaux dans des prêts à taux variable. Cette décision, approuvée par le Conseil des fiduciaires le 8 août 2024, élargit les options d'investissement du Fonds.
Le Fonds se concentrera principalement sur les prêts garantis senior, mais pourra également inclure d'autres types de prêts et de titres à taux variable. Bien qu'il s'adresse principalement aux émetteurs américains, le Fonds peut également investir dans des émetteurs étrangers des pays de l'OCDE. Cette nouvelle stratégie introduit des avantages et des risques potentiels, y compris une exposition à des marchés de gré à gré moins liquides, des délais de règlement plus longs et la nature spéculative intrinsèque des titres de qualité inférieure à l'investissement.
Der BNY Mellon High Yield Strategies Fund (NYSE: DHF) hat eine bedeutende Änderung seiner Anlagestrategie angekündigt. Ab dem 15. August 2024 wird es dem Fonds erlaubt sein, bis zu 20% seines Gesamtvermögens in variabel verzinsliche Darlehen zu investieren. Diese Entscheidung, die am 8. August 2024 vom Board of Trustees genehmigt wurde, erweitert die Anlageoptionen des Fonds.
Der Fonds wird sich hauptsächlich auf senior gesicherte Kredite konzentrieren, kann aber auch andere Arten von Krediten und variabel verzinsliche Wertpapiere einbeziehen. Während der Fonds hauptsächlich auf US-Emittenten abzielt, kann er auch in ausländische Emittenten aus OECD-Ländern investieren. Diese neue Strategie bringt potenzielle Vorteile und Risiken mit sich, darunter die Exposition gegenüber weniger liquiden Over-the-Counter-Märkten, längere Abwicklungszeiten und die inhärente spekulative Natur von Wertpapieren mit einem Rating unterhalb der Investment-Grade-Grenze.
- Diversification of investment portfolio with up to 20% allocation to floating rate loans
- Potential for increased yield through exposure to senior secured loans and other loan types
- Flexibility to invest in both U.S. and foreign issuers from OECD countries
- Exposure to less liquid over-the-counter loan markets with potential for irregular trading activity
- Longer settlement times for loan trades compared to traditional securities
- Increased credit risk due to focus on below investment grade quality loans
- Potential challenges in valuation and liquidation of loan collateral
- Higher risks associated with subordinated and unsecured loans in the portfolio
The Fund's investments in floating rate loans will be generally focused on senior secured loans but also may include second lien loans, senior unsecured loans, subordinated loans, and fixed rate loans with respect to which the Fund has entered into derivative instruments (principally swap agreements and options on swap agreements) to effectively convert the fixed rate interest payments into floating rate interest payments. The Fund also may purchase participations and assignments in, and commitments to purchase, floating rate loans. Investments in floating rate loans and other floating rate securities generally will focus on
Unlike publicly traded common stocks which trade on national exchanges, there is no central market or exchange for loans to trade. Loans trade in an over-the-counter market, and confirmation and settlement, which are effected through standardized procedures and documentation, may take significantly longer than seven days to complete. The secondary market for floating rate loans also may be subject to irregular trading activity and wide bid/ask spreads. The lack of an active trading market for certain floating rate loans may impair the ability of the Fund to realize full value in the event of the need to sell a floating rate loan and may make it difficult to value such loans. There may be less readily available, reliable information about certain floating rate loans than is the case for many other types of securities, and the Fund's portfolio managers may be required to rely primarily on their own evaluation of a borrower's credit quality rather than on any available independent sources. The value of collateral, if any, securing a floating rate loan can decline, and may be insufficient to meet the issuer's obligations in the event of non-payment of scheduled interest or principal or may be difficult to readily liquidate. In the event of the bankruptcy of a borrower, the Fund could experience delays or limitations imposed by bankruptcy or other insolvency laws with respect to its ability to realize the benefits of the collateral securing a loan. The floating rate loans in which the Fund may invest typically will be below investment grade quality and, like other below investment grade securities, are inherently speculative. As a result, the risks associated with such floating rate loans are similar to the risks of below investment grade securities, although senior loans are typically senior and secured in contrast to other below investment grade securities, which are often subordinated and unsecured. Floating rate loans may not be considered to be "securities" for purposes of the anti-fraud protections of the federal securities laws, including those with respect to the use of material non-public information, so that purchasers, such as the Fund, may not have the benefit of these protections.
Holders of securities that are subordinated or "junior" to more senior securities of an issuer are entitled to payment after holders of more senior securities of the issuer. Subordinated securities are more likely to suffer a credit loss than non-subordinated securities of the same issuer, any loss incurred by the subordinated securities is likely to be proportionately greater, and any recovery of interest or principal may take more time. As a result, even a perceived decline in creditworthiness of the issuer is likely to have a greater impact on the market value of these securities. Subordinated loans generally are subject to similar risks as those associated with investments in senior loans, except that such loans are subordinated in payment and/or lower in lien priority to first lien holders. Consequently, subordinated loans generally have greater price volatility than senior loans and may be less liquid. The risks associated with subordinated unsecured loans, which are not backed by a security interest in any specific collateral, are higher than those for comparable loans that are secured by specific collateral.
A participation interest gives the Fund an undivided interest in a loan in the proportion that the Fund's participation interest bears to the total principal amount of the loan, but does not establish any direct relationship between the Fund and the borrower. If a floating rate loan is acquired through a participation, the Fund generally will have no right to enforce compliance by the borrower with the terms of the loan agreement against the borrower, and the Fund may not directly benefit from the collateral supporting the debt obligation in which it has purchased the participation. As a result, the Fund will be exposed to the credit risk of both the borrower and the institution selling the participation. The Fund also may invest in a loan through an assignment of all or a portion of such loan from a third party. If a floating rate loan is acquired through an assignment, the Fund may not be able to unilaterally enforce all rights and remedies under the loan and with regard to any associated collateral.
Because there may be a lack of centralized information and trading for certain loans in which the Fund may invest, reliable market value quotations may not be readily available for such loans and their valuation may require more research than for securities with a more developed secondary market. Moreover, the valuation of such loans may be affected by uncertainties in the conditions of the financial market, unreliable reference data, lack of transparency and inconsistency of valuation models and processes.
This press release is published solely for informational purposes and is not to be construed as specific tax, legal or investment advice. Nor is this document intended as a solicitation or an offer to buy or sell securities or related financial instruments. The release should not be regarded by recipients as a substitute for exercise of their own judgment. Statements made in this release are based on current market conditions. Different market conditions and assumptions could have materially different results. Neither BNY Investment Adviser, Inc. “BNY Investment Adviser”), the Fund nor any of their affiliates, directors, employees or agents accept any liability for any loss or damage arising out of the use of all or any part of this release.
Certain statements contained in this release may be forward-looking in nature. Such statements represent current beliefs, based on information available at the time the statements are made, with regard to matters addressed. Actual future occurrences may differ significantly from those anticipated in any forward-looking statements due to numerous factors. These include, but are not limited to, those noted above, and other additional risks and uncertainties. The Fund, BNY Investment Adviser and any of their affiliates, directors, employees or agents undertake no responsibility to update publicly or revise any forward- looking statements.
Important Information
BNY Mellon Investment Adviser, Inc., the investment adviser for the Fund, is part of BNY Investments. BNY Investments is one of the world’s largest asset managers, with
BNY Investments is a division of BNY, which has
Closed-end funds are traded on the secondary market through one of the stock exchanges. The Fund's investment returns and principal values will fluctuate so that an investor’s shares may be worth more or less than the original cost. Shares of closed-end funds may trade above (a premium) or below (a discount) the net asset value of the fund’s portfolio. There is no assurance that the Fund will achieve its investment objective.
This release is for informational purposes only and should not be considered as investment advice or a recommendation of any particular security.
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Source: BNY Mellon High Yield Strategies Fund
FAQ
What is the new investment limit for floating rate loans in DHF's portfolio?
What types of floating rate loans will DHF primarily invest in?
Will DHF invest in foreign issuers through its new floating rate loan strategy?
What are the main risks associated with DHF's new floating rate loan investments?
