MainStay Investments Introduces New York Municipal Bond Fund
Robert DiMella, John Loffredo and the Team at Mackay Municipal Managers Will Sub-Advise the MainStay New York Tax Free Opportunities Fund
New York, June 13, 2012 – MainStay Investments, a New York Life company, today announced the successful introduction of the MainStay New York Tax Free Opportunities Fund, the firm’s first state-specific municipal bond strategy managed by Robert DiMella and John Loffredo at affiliate MacKay Shields LLC. The mutual fund provides investors, and especially the residents of the State of New York, a diversified relative-value investment opportunity with attractive tax advantages.
Now managing over $5 billion in assets for both institutions and within the MainStay Tax Free Bond Fund and the MainStay High Yield Municipal Bond Fund, respectively, this latest offering is the next focused application of the team’s existing capability set
“Since the Mackay Shields acquisition of MacKay Municipal Managers three years ago, MainStay has had the opportunity to provide investors access to one of the most respected municipal bond investments teams in the U.S. Bob and John have managed municipal credit and portfolio strategies together for 19 years and are supported by dedicated research and risk management personnel with an average of 20 years of experience,” said Stephen Fisher, president of the MainStay Funds.
New York is not only a high tax bracket state, (therefore there are significant benefits for in-state residents), but also is a state that issues about 15 percent of the supply in the entire municipal marketplace, second only to California. This creates the opportunity to manage diversified portfolios and deliver a relative value within the state of New York.
“When you factor in the higher taxes in New York and that there are a lot of residents in upper tax brackets in the state, this fund could prove to be a compelling value for residents as well as for some outside of New York, who may be looking for diversification within their entire municipal bond exposure,” said Fisher.
MacKay Municipal Managers have been increasing New York exposure in their national funds, because the relative value in the state has been rising due to the pragmatic and disciplined approach in getting the state’s fiscal house in order. Of note, significant changes in New York’s pension structure will result in saving the state hundreds of billions of dollars over the next 20 to 30 years in forward liability.
“It is this type of action and the continued efforts of the governor and legislative body that provide us comfort in terms of the strength of the fundamental credits and the outlook for New York State being very positive right now,” said Robert DiMella, Mackay Municipal Managers.
Recently a lot of the issuance in New York has come from transportation and infrastructure. Toll roads have been issued, as well as some economic development project financings (specifically in New York City) that the team finds attractive, especially the way that these deals have been structured.
“When it comes to the New York municipal market, the supply is manageable, it’s diversified enough where we can run relative value strategies to it, and we believe demand is only going to increase as time goes on,” concluded John Loffredo, MacKay Municipal Managers.
MacKay Shields LLC (“MacKay”) serves as the Fund’s investment sub-advisor. MacKay is an indirect wholly-owned subsidiary of New York Life Insurance Company and a wholly-owned subsidiary of New York Life Investment Management Holdings LLC. MacKay is a multi product investment management firm with approximately $64.8 billion in assets under management as of March 31, 2012. MacKay manages a number of fixed income strategies for institutional clients and retail mutual funds, including: high yield, high yield active core, core plus, global fixed income, municipal and investment grade. MacKay also manages convertible strategies.
With over $51 billion in assets under management, as of March 31, 2012, MainStay Investments is the mutual fund distribution arm of New York Life. A Barron’s Top 3 Fund Family*, MainStay provides financial advisors access to a powerful mix of autonomous, institutional investment managers, delivered by people who understand the needs of today’s financial advisor. As an indirect subsidiary of New York Life Insurance Company, a Fortune 100 company founded in 1845, MainStay is owned by the largest mutual life insurance company in the United States** and one of the largest life insurers in the world.
*Barron’s Annual Ranking of mutual fund families (February 6, 2012)
**Based on revenue as reported by “Fortune 500 ranked within Industries, Insurance: Life, Health (Mutual),” Fortune magazine, May 21, 2012.
The Barron’s Annual Ranking of mutual fund families is in no way intended to be used as a proxy for performance of the MainStay New York Tax Free Opportunities Fund, which has no historical performance.
New York Life
Before You Invest
A portion of the Fund's income may be subject to state and local taxes or the alternative minimum tax. Income from municipal bonds held by the Fund could be declared taxable because of unfavorable changes in tax law, adverse interpretations by the Internal Revenue Service or state tax authorities, or noncompliant conduct of a bond issuer.
The Fund may invest in derivatives, which may increase the volatility of the Fund's net asset value and may result in a loss to the Fund.
Funds that invest in bonds are subject to interest-rate risk and can lose principal value when interest rates rise. Bonds are also subject to credit risk, in which the bond issuer may fail to pay interest and principal in a timely manner.
High-yield securities ("junk bonds") are sometimes considered speculative because they present a greater risk of loss than higher quality debt securities, may be less liquid, and can also be subject to greater price volatility. High-yield municipal bonds may be subject to increased liquidity risk as compared to other high-yield debt securities.
Municipal bond risks include the ability of the issuer to repay the obligation, the relative lack of information about certain issuers, and the possibility of future tax and legislative changes which could affect the market for and value of municipal securities. Securities purchased by the Fund that are liquid at the time of purchase may subsequently become illiquid due to events relating to the issuer of the securities, market events, economic conditions or investor perceptions.
Because the Fund invests primarily in municipal bonds issued by or interests in the State of New York and its political subdivisions, agencies and instrumentalities, events in New York are likely to affect the Fund’s investments and performance. These events may include fiscal or political policy changes, tax base erosion, and state constitutional limits on tax increases, budget deficits and other financial difficulties. New York continues to experience financial difficulties due to the economic environment. The further deterioration of New York’s fiscal situation and economic situation of its municipalities could cause greater volatility and increase the risk of investing in New York.
How Barron’s Ranks the Fund Families: To qualify for the Lipper/Barron’s Fund Survey, a fund family must have at least three funds in Lipper’s general U.S.-stock category, one in world equity (which combines global and international funds), one mixed-equity fund (which holds stocks and bonds), at least two taxable-bond funds, and one tax-exempt offering. Each fund’s returns are adjusted for 12b-1 fees. Fund loads, or sales charges, aren’t included in the calculation of returns, either. Each fund’s return is measured against those of all funds in its Lipper category, such as, say, small-cap value. That leads to a percentile ranking, with 100 the highest and 1 the lowest, which is then weighted by asset size, relative to the fund family’s other assets in its general classification, world equity, for instance. If a family’s biggest funds do well, that boosts its overall ranking. Poor performance in a big fund would have the opposite effect. Finally, the score is multiplied by the weighting of its general classification, as determined by the entire Lipper universe of funds. The category weightings for the one-year results: general equity, 38.04%; world equity, 12.77%; mixed equity, 17.36%; taxable bonds, 27.43%; and tax-exempt bonds, 4.40%. The category weightings for the five-year results: general equity, 40.12%; world equity, 12.32%; mixed equity, 17.30%; taxable bonds, 25.56%; and tax-exempt bonds, 4.70%. The category weightings for the 10-year results: general equity, 41.89%; world equity, 12.30%; mixed equity, 14.44%; taxable bonds, 25.99%; and tax-exempt bonds, 5.38%. The scoring: Say a company has a fund in the general U.S. equity category with $50 million in assets that accounts for half of the company’s assets in that category. Its ranking is the 75th percentile. The first calculation would be 75 x 0.50, which comes to 37.5. That score is then multiplied by 38.04%, general equity’s overall weighting in Lipper’s universe. So it would be 37.5 x 0.3804, which totals 14.265. Similar calculations are done for each fund in the study. Then, all the numbers are added up for a total score. The fund family with the highest score wins, both for every category and overall. The same process is repeated for the five- and 10-year rankings based on their weightings. Ranking data is from Lipper. Source: Barron’s, 2/6/12. Overall, MainStay Funds ranked seven for the one-year period, eight for the five-year period, and three for the 10-year period ended December 31, 2011, out of 58, 53, and 45 fund families, respectively.
Please call 800-MAINSTAY (624-6782) for a prospectus or summary prospectus. Investors are asked to consider the investment objectives, risks, and charges and expenses of the investment carefully before investing. The prospectus or summary prospectus contains this and other information about the investment company. Please read the prospectus or summary prospectus carefully before investing.
MainStay Investments is a registered name under which New York Life Investment Management LLC does business. MainStay Investments, an indirect subsidiary of New York Life Insurance Company, New York, NY 10010, provides investment advisory products and services. The MainStay Funds are managed by New York Life Investment Management LLC and distributed through NYLIFE Distributors LLC, 169 Lackawanna Avenue, Parsippany, NJ 07054, a wholly owned subsidiary of New York Life Insurance Company. NYLIFE Distributors LLC is a Member of FINRA/SIPC.