Major fixed income indices are the most common benchmarks for evaluating managers, but their design typically has little bearing on the investment objective of pension plans. Greg Curran, Standish Mellon Director - Index Strategies, outlines how using a major index as a manager benchmark can be a poor match, for a number of reasons:

• Duration volatility has increased in many indices due to the growing presence of mortgage-backed securities.
• Indices are composed of bonds that are issued on terms most advantageous to the issuer, not the investor.
• The average quality of bonds in indices is moving lower, with a growing number close to below-investment grade.

A custom index - from a slice of a major index to a special weighting of certain sectors - could better suit many plans. For a hard copy, or more information about any product or services of Standish Mellon Asset Management, please contact Jim Kohley at 412 234-0341.

The preceding information is based upon the analysis of historical performance of various asset classes and assumptions with respect to future economic conditions. Past performance is not an indication of future results. This information is not intended to provide specific advice, recommendations or projected returns of any particular BNY Mellon Asset Management product.