BNY Mellon Multi-Asset Income
This fund seeks to achieve a stable income with the potential for capital growth over the long term (five years of more) by investing in equities, bonds and alternatives. It is part of a wider multi-asset range and uses the full power of Newton’s 130 investment professionals to invest in any geographic or economic sector in the world.
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Paul is a lead strategist at Newton, managing several multi-asset portfolios, including the Multi-Asset Income strategy, and setting risk profiles across Newton's multi-asset range. Since 2008, he has focused on alternative assets, providing leadership in asset allocation, derivatives, and convertible bonds. Paul joined Newton in 2004 and previously worked at Mellon Investment Funds Europe as a unit trust dealer. He holds a CFA charter and a Certificate in Quantitative Finance with distinction. Paul studied Astrophysics at the University of St Andrews and is an avid cyclist and marathon runner.
Bhavin joined Newton in June 2011 as a portfolio manager in the multi-asset team, after spending seven years at SG Hambros managing client portfolios focused on absolute return and multi-asset strategies. He is the co-lead manager on several multi-asset accounts at Newton and is also a member of the Investment Risk Oversight Group. Additionally, Bhavin co-leads the Net Effects thematic group, which focuses on digitalization trends. He holds an MSc in Mathematics with distinction and is a CFA charterholder.
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Investment process
This is a well-diversified portfolio typically holding 120-140 securities, with each individual investment needing to offer an attractive return and income to qualify for the portfolio. This is a portfolio of directly invested holdings in companies (it does not invest in other funds).
Stock selection is determined by four specific factors – global themes (such as clean energy or deglobalisation); company fundamentals (such as a company’s balance sheet/business model); a strong and improving ESG footprint; and valuations.
The team will talk to the wider research desk at Newton when evaluating potential equity and bond positions (the latter includes government, corporate, high yield and emerging market debt bonds).
The alternatives exposure has been a constant part of the portfolio since launch. This is run within the multi-asset team, with the alternatives split into two specific buckets. The first bucket is structured returns – this covers areas like renewables, infrastructure, shipping finance and royalties, where the team sees fixed inflation revenue streams and power price related revenues. The second bucket covers unstructured returns – this includes the likes of private equity, hedge funds and catastrophe bonds – these are avoided as the team believes they are unattractive from a risk/reward perspective.
It is standard practice for the team to meet management. This is particularly important from an income perspective, where it wants to feel comfortable that dividend payments are transparent and secure.
This all feeds back to delivering a strong, stable and growing income. The fund has no biases from a geographical perspective but is likely to have an overweight to developed markets, given the wider availability of dividend paying companies.
Risk
The main risks on this fund are focused around stock selection and asset allocation. The fund invests globally, meaning there are both currency fluctuations and the additional volatility of investing in emerging markets to consider. Bond holdings can also be impacted by changing interest rates.
The firm does have an independent risk team that evaluates style and valuation biases that run through the fund. There is also a constant focus on asset correlation and liquidity.
ESG
ESG-Integrated
Responsible investing has been a feature of the Newton Investment Management approach for over four decades. The team has been a proxy voter since the 1970’s, as well as being one of the first signatories for the Principles for Responsible Investment.
The managers behind this fund want to make sure they are getting paid for all of the risks they are taking – this includes risks around governance and penalties for failing on environmental aspects.
The most important part of the ESG focus will be governance – as the team believes strong governance means management is more likely to take care of both the environmental and social footprints of their business.
However, this does not mean the fund cannot hold a company with ESG challenges. For example, the team may hold an oil & gas company if it feels the valuation is low enough to compensate for issues like carbon taxes or oil spills.
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