Notification of changes to BNY Mellon Global Bond Fund
BNY Mellon Global Funds, plc has notified us of upcoming changes to its BNY Mellon Global Bond Fund (the “Fund”). These changes take effect 24 June 2026 (the “Effective Date”).
We feature the following share classes in our defined fund ranges:
- BNY Mellon Global Bond A Acc EUR IE0003921727
- BNY Mellon Global Bond A Acc USD IE0003924739
Change to the risk measurement methodology and increase in the financial derivative instruments limit
Currently, the Fund may use financial derivative instruments (“FDI”) for hedging, efficient portfolio management and investment purposes. The use of FDI for investment purposes is not currently extensive.
From the Effective Date, the Fund’s global exposure (market risk due to exposure to FDI) is measured is changing from current Commitment approach to the Relative Value at Risk (“VaR”) approach. It has been assessed that the Relative VaR approach is more suitable for the Fund as it provides a more meaningful measure of the market risk to which the Fund is exposed by comparing the portfolio’s risk to that of a representative benchmark. There will be no material change to the Fund’s risk profile as a result of the change of method of measuring global exposure.
In addition, from the Effective Date, Newton Investment Management Limited, the Fund Investment Manager, will have increased flexibility to use FDI (including but not limited to certain futures, options, forwards, swaps and other securities with embedded FDI or leverage.) within the Fund for investment purposes, which may include employing synthetic long and synthetic short exposures in the existing asset classes as referenced in the existing investment policy of the Fund. As a result, the updated thresholds have been reflected in the table further below.
Consequential risk factors associated with investments in FDI (including general derivatives risks (which include counterparty/credit risk, liquidity, valuation and volatility risk and over the counter transaction risk), high leverage risk (whereby the leverage component can magnify potential negative impacts of changes in value of underlying assets on the Fund) and risk implementing an active FDI position (whereby FDI positions not correlated with the underlying securities positions held by the Fund may lead to a significant or total loss even if there is no loss of value of such underlying securities).
Over time, the Investment Manager’s implementation of the Fund’s investment policy and strategy has evolved to include greater use of FDI. This has been primarily in response to changing market conditions, such as changes to global interest rates, and considerations relating to cost and efficiency of implementing the Investment Manager’s investment views. As a result, the Fund exposure to FDI may vary over time.
The table below includes details of both commitment and relative VaR approaches, as well as the current and new limits for the Fund, for reference.
| Current disclosure | New disclosure | Explanation | |
|---|---|---|---|
| Global Exposure Methodology Commitment Approach Limit | Commitment approach 40% of Net Asset Value | Relative VaR 500% of Net Asset Value | Under the current commitment approach, FDI are translated so they correspond to an investment in the underlying instrument of the FDI. The amount of FDI in relation to the Fund’s Net Asset Value shows to what extent its risk position has changed through the use of FDI.
Although moving to a Relative VaR monitoring approach, the Investment Manager will continue to disclose and monitor the new commitment approach limit. VaR (Value at Risk) estimates the maximum expected loss of an investment over a set period at a chosen confidence level.
Where the Fund uses the Relative VaR approach, it compares its overall risk of loss to a representative benchmark and ensures its risk does not exceed twice the benchmark’s risk.
Here it is measured over a 20 Business Day period, which means the calculation looks at potential changes in value over about one month.
Under this regulatory calculation method, this figure can appear high (particularly for interest rate FDI). This may not be an accurate representation of the actual risk within the Fund as it ignores whether the FDI reduce risk or cancel each other out. |
| Relative VaR Limit | Not applicable | The Underlying Fund’s portfolio will not exceed twice the VaR on a representative benchmark (i.e., the relative VaR benchmark stated below) (using a 20 Business Day holding period) | |
| Relative VaR benchmark | Not applicable | JP Morgan Global GBI Unhedged TR Index | |
| Gross Leverage Limit | Not applicable | 0% - 1000% of the Net Asset Value. The gross leverage may exceed this target level at times |
Emerging Markets Exposure
As from the Effective Date, the Fund’s investment limit in securities listed or traded on Eligible Markets located in emerging market regions will be increased from 10% to 15% of its net assets. This change will have no material impact in the way the Underlying Fund is currently managed.
These changes will take effect automatically and policyholders do not need to take any action.
For more information regarding the BNY Mellon funds please visit: https://www.bny.com/investments/ie/en/intermediary.html