Bear Stearns Asset Management has begun to proactively market its bank loan separate account capabilities to non-profit investors for the first time, according to sister publication Money Management Letter. The effort is being undertaken as part of a larger re-evaluation of the investment needs of foundations and endowments in the current market environment. "Many non-profit plans have been heavily equitized, and there is an examination going on as to whether that is still appropriate," said Maureen Mitchell, managing director of institutional marketing. "You might see a shift into fixed-income and other deflation-hedging strategies."
The bank loan asset class makes sense for non-profits because its returns have been better than many other fixed-income categories and it has a lower standard deviation than many other asset classes, Mitchell explained. In addition, bank loan funds offer cash-generation capabilities that would be of interest to some larger non-profit organizations, she noted.
In particular, BSAM--under the direction of Justin Driscoll--has a proven track record in the bank loan asset class. "We're interested in bringing this to the non-profit market," Mitchell said. "We're really just beginning discussions with clients now." BSAM's bank loan separate accounts are suitable for large non-profit funds with more than $1 billion in total assets, she noted, adding that bank loan funds traditionally have been funded by insurance funds.