BNY Mellon Long-Term Global Equity fund page

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BNY Mellon Long-Term Global Equity

IA Sector:

Global

Asset Manager:

BNY Investments

Asset Manager Website:

www.bnyinvestments.com

Asset Manager Factsheet:

Ideas for this global equity fund are generated in a strongly collegiate manner, with the investment teams seeking companies that have the potential to generate meaningful real rates of returns over the long term. Within its sector, the fund features in our 'Larger-Cap, Growth' category.

Opinion, Characteristics & Utility

Opinion

This Recommended fund is managed by a firm that has retained its boutique culture within the BNY Investments umbrella.
The firm has a distinctive investment culture, where individuals are encouraged to work creatively in the search for companies that generate substantial internal wealth. This intellectual freedom is granted on the expectation that individuals work collegiately, accept scrutiny and cross-fertilise thoughts and ideas.
The firm’s long-term mindset fosters the search for deep knowledge of companies and industries.

Characteristics & Utility

The fund is managed without benchmark constraints. The team analyses companies through the lens of generating attractive real, compounding returns over the long term. Portfolio turnover is low.
With the team’s focus upon strong balance sheets, the fund tends to show resilience compared to growth-biased peers, typically faring relatively well in more challenging market conditions. By the same token, it is less likely to capture all the upside of rapidly rising markets.
Style-wise, the fund resides firmly in the large-cap growth category. Therefore, performance is also likely to lag markets driven by cyclical/recovery stocks and/or periods of small/mid cap outperformance.
The fund is suitable for investors who are attracted to the long-term focus upon sound companies in growth industries and are comfortable with the benchmark unconstrained approach.

Risk Commentary

The fund’s KIID Synthetic Risk and Reward Indicator (SRRI) is 5. This is a regulatory measurement that is, where possible, calculated from the volatility of its weekly performance over a five-year period. A score of 5 means the fund’s historic volatility is between 10% and 15%.

The fund’s SRRI score is broadly in keeping with that of the benchmark. The bias to companies with strong balance sheets and low debt explains a lower risk outcome when the fund is viewed over the long term, particularly compared to growth peers. Different share classes could have differing SRRI scores.

Description

Investment Team

The fund is managed by Walter Scott & Partners Ltd, a specialist asset manager under the BNY Investments’ umbrella. It operates a fully integrated, team-based approach, where Investment Managers and Investment Analysts are responsible for both research and investment recommendations. The Research team is organised into three groups - the Americas, Asia Pacific and EMEA.

Investment Philosophy

The firm’s core conviction is that over the long term, the return to shareholders can only ever be as great as the wealth generated by the underlying businesses in which they are invested. Therefore, by investing in companies capable of delivering high rates of internal wealth creation over the long term, they believe that superior rates of return can be achieved for their investors.

Portfolio Construction & Risk Controls

The fund is constructed without reference to benchmark, sector or geographic guidelines. It typically holds 40-60 positions, with any new positions initiated at 2%. Stock weights are determined by the team’s conviction, as well as valuation and liquidity considerations, although position sizes do not exceed 5%. Risk controls are multi-faceted and, beyond the investment process itself, involve oversight from the dedicated portfolio implementation team, the dealing team and the risk and compliance team.

Investment Process

The focus is upon bottom-up stockpicking based upon original, in-house research, with ideas emanating from the individuals in the Research team. These can be generated from multiple sources including management meetings, conversations with sector experts, industry conferences and discussions with suppliers and competitors. The team meets three times a week to review stocks and discuss ideas. The potential stock universe is around 2,000 companies, but this is whittled down by focusing on those displaying superior growth, profitability and robust balance sheets. All stocks in the portfolio have a dedicated stock champion, who is typically the person originally proposing the stock.

Companies are viewed through the lens of their ability to generate 7-10% real returns for the overall portfolio. The stock champion deploys quantitative and qualitative analysis to complete the research on the stock. The quantitative process follows the firm’s proprietary quantitative spreadsheet to allow for comparisons across stocks. The qualitative analysis covers seven key areas of investigation, including the company’s history and integrity, its financial characteristics, the quality of the management and control over its destiny. Stock champions present the idea to the entire research team and the decision to buy the stock must be unanimous. It is then presented to the Investment Executive for ratification; this group consists of the firm’s Managing Director and two Investment Directors.

Key Fund Facts

Inception Date:

24 August 2007

Manager(s) (Since):

Walter Scott Research Team

Fund Domicile:

United Kingdom

Base Currency:

£ Sterling

Fund Benchmark:

FTSE All World

IA Sector:

Global

Formal documentation, including the fund prospectus and the KIID, should be sought directly from the asset manager. For ease of reference, a link to the ASSET MANAGER WEBSITE can be found above, as well as a link to the ASSET MANAGER FACTSHEET.