⁷ As of 12/31/2023

⁸ As of 12/31/2023

GLOSSARY/DISCLOSURES

Investors should consider the investment objectives, risks, charges, and expenses of a mutual fund carefully before investing. Contact a financial professional or visit im.bnymellon.com to obtain a prospectus, or a summary prospectus, if available, that contains this and other information about the fund, and read it carefully before investing.

All investments involve risk, including loss of principal. Certain investments involve greater or unique risks that should be considered along with the objectives, fees, and expenses before investing. 

No investment strategy or risk management technique can guarantee returns or eliminate risk in any market environment. Asset allocation and diversification cannot assure a profit or protect against loss.

Bonds are subject to interest rate, credit, liquidity, call and market risks, to varying degrees. Generally, all other factors being equal, bond prices are inversely related to interest-rate changes and rate increases can cause price declines. High yield bonds involve increased credit and liquidity risk than higher rated bonds and are considered speculative in terms of the issuer’s ability to pay interest and repay principal on a timely basis. Investing in foreign denominated and/or domiciled securities involves special risks, including changes in currency exchange rates, political, economic, and social instability, limited company information, differing auditing and legal standards, and less market liquidity.  These risks generally are greater with emerging market countries.

A leveraged loan is one that is extended to companies or individuals that already have considerable amounts of debt or a poor credit history. Lenders consider leveraged loans to carry a higher risk of default, and as a result, a leveraged loan is more costly to the borrower. CapEx Supercycle refers to an extended period during which companies are significantly increasing plant, equipment or machinery often lasting several years or even decades. During it, investors may aim to capitalize on the upward trend by investing in the asset or sector experiencing strong growth. Gross domestic product (GDP) is the total monetary or market value of all the finished goods and services produced within a country’s borders in a specific time period. As a broad measure of overall domestic production, it functions as a comprehensive scorecard of a given country’s economic health. A collateralized loan obligation (CLO) is a single security backed by a pool of debt. Often these are corporate loans that have a low credit rating or leveraged buyouts made by a private equity firm to take a controlling interest in an existing company. An illiquidity premium is the explanation for a difference in yield or total return between investments that have similar qualities except liquidity, or the ability to trade on a daily basis.

The ICE Bofa US 3 Month Treasury Bill Index measures the performance of US dollar denominated US Treasury Bills. The Bloomberg US Treasury Index, IG Corporates measures US dollar-denominated, fixed-rate, nominal debt issued by the US Treasury. The Bloomberg US Corporate Investment Grade Index is a broad-based benchmark that measures the investment grade, fixed-rate, taxable, corporate bond market. The Bloomberg US Aggregate Index is a broad-based benchmark that measures the investment grade, US dollar-denominated, fixed-rate taxable bond market. The S&P 500 Index is an unmanaged index that tracks the performance of the 500 largest US companies. The Bloomberg US Mortgage Backed Securities (MBS) Index tracks fixed-rate agency mortgage backed pass-through securities guaranteed by Ginnie Mae (GNMA), Fannie Mae (FNMA), and Freddie Mac (FHLMC). Bloomberg US Corporate Bond Index measures the investment grade, US dollar-denominated, fixed-rate, taxable corporate bond market. Bloomberg US Corporate High Yield Bond Index measures the US dollar-denominated, high yield, fixed-rate corporate bond market. Bloomberg US Asset-Backed Securities (ABS) Index is the ABS component of the Bloomberg US Aggregate Bond Index, a flagship measure of the US investment grade, fixed-rate bond market. The Bloomberg US High Yield (1-5 Year) (BB/B) Index measures that part of the market with maturities of five years or less. The Bloomberg Emerging Markets Aggregate Index measures the performance of hard currency Emerging Markets (EM) debt, including fixed and floating-rate US dollar-denominated debt issued from sovereign, quasi-sovereign, and corporate EM issuers Investors cannot invest directly in an index. The Credit Suisse Leveraged Loan Indextracks the investable market of the U.S. dollar denominated leveraged loan market. It consists of issues rated “5B” or lower, meaning that the highest rated issues included in this index are Moody’s/S&P ratings of Baa1/BB+. All loans are funded term loans with a tenor of at least one year and are made by issuers domiciled in developed countries. The MarketVector^TMUS Business Development Companies Liquid Index (MVBIZD) tracks the performance of the largest and most liquid Business Development Companies.

HIKING CYCLE: The first two columns in the chart below show the start and end dates of the Fed hiking rates. The pace and size of rate cuts is detailed in the larger table below. Cycle lengths may vary.

PLATEAU: The third column shows the period between “date of last hike” and “last day before cut” and represents a plateau, or when the Fed was on pause (neither hiking nor cutting).

RATE CUTS: The last column indicates when the easing (cutting of rates) cycle began.

Hiking Cycles are the period where the Federal Open Market Committee (FOMC) increases the range of the federal funds rate, which determines the overnight interest rate at which commercial banks borrow and lend their excess reserves to each other.

Interest Rate Plateau is the period where the Federal Open Market Committee (FOMC) stops increasing the range of the federal funds rate.

Interest Rate Cut Cycle is the period where the Federal Open Market Committee (FOMC) decreases the range of the federal funds rate.

Illiquid credit (or private debt) represents part of the broader alternative credit space, referring to those non-traditional asset classes where there is limited ability to sell prior to maturity. The illiquidity premium is the additional return that investors expect if an asset cannot be sold easily or quickly. Illiquidity is considered an investment risk since you can’t sell the asset quickly if needed. It can also be an opportunity risk if better investments emerge while the investment is tied up.

This material has been provided for informational purposes only and should not be construed as investment advice or a recommendation of any particular investment product, strategy, investment manager or account arrangement, and should not serve as a primary basis for investment decisions.

Prospective investors should consult a legal, tax or financial professional in order to determine whether any investment product, strategy or service is appropriate for their particular circumstances. Views expressed are those of the author stated and do not reflect views of other managers or the firm overall. Views are current as of the date of this publication and subject to change.

The information is based on current market conditions, which will fluctuate and may be superseded by subsequent market events or for other reasons.

References to specific securities, asset classes and financial markets are for illustrative purposes only and are not intended to be and should not be interpreted as recommendations. Information contained herein has been obtained from sources believed to be reliable, but not guaranteed. No part of this material may be reproduced in any form, or referred to in any other publication, without express written permission.

BNY Mellon Investment Management is one of the world's leading investment management organizations encompassing BNY Mellon's affiliated investment management firms and global distribution companies. BNY Mellon is the corporate brand of The Bank of New York Mellon Corporation and may also be used as a generic term to reference the Corporation as a whole or its various subsidiaries generally. BNY Mellon Investment Advisor, Inc., Insight Investment and BNY Mellon Securities Corporation are subsidiaries of BNY Mellon.

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