BNY Mellon Real Return fund page

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BNY Mellon Real Return

IA Sector:

Targeted Absolute Return

Asset Manager:

BNY Investments

Asset Manager Website:

www.bnyinvestments.com

Asset Manager Factsheet:

A globally diversified, multi-asset fund that is structured around the team's global themes. The fund is constructed with a return-seeking core combined with a series of offsetting risk positions. The fund aims to deliver positive returns within a range of cash and cash plus 4% (SONIA 30-day compounded) before fees over 5 years. Within its sector, the fund features in our 'Multi-Asset, Directional' category.

Opinion, Characteristics & Utility

Opinion

This Recommended fund is built from the perspective of risk and return and aspires to achieve an absolute return over the medium term.
Using the fund's flexible mandate, the team adjusts the portfolio's allocations according to their global themes, risk/return assessments and valuation opportunities, whilst never losing sight of their capital preservation mantra. They are prepared to stand firm in their views even when the market is moving away from them.
The team is supported by a well-resourced global research team covering global equity sectors, credit, strategy and responsible investments.

Characteristics & Utility

Framed by the team's global themes, the portfolio is constructed with a return-seeking core and a series of offsetting risk positions with a view to dampening volatility and preserving capital.
The fund's sensitivity to market direction changes through time. The team is not afraid to expose the fund to risk at times of opportunity, albeit with a constant awareness of the downside. Equally, they are prepared to stand aside when valuations or other factors render risk assets relatively unattractive.
This total return-orientated multi-asset fund is suited to cautious investors seeking to grow their capital in a conservative fashion.

Risk Commentary

The fund’s KIID Synthetic Risk and Reward Indicator (SRRI) is 4. 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 4 means the fund’s historic volatility is between 5% and 10%.

Our analysis indicates that the fund’s five-year standard deviation is more elevated than lower risk funds in the diverse IA Targeted Absolute Return sector, notably market neutral equity funds. This is to be expected given the ‘directional’ attributes of the fund. We are not surprised to see the score vary through time, as market conditions and the team’s asset allocation preferences change. Different share classes could have differing SRRI scores.

Description

Investment Team

The fund is co-managed by Aron Pataki and Ella Hoxha of Newton Investment Management, a wholly owned subsidiary of The Bank of New York Mellon Corporation. They are co-heads of the Real Return team. Mr Pataki has been a member of the Real Return team since 2010 with a focus on risk management. Ms Hoxha is Head of Fixed Income and became co-lead of the firm’s absolute return mandates in May 2025. Together, they are responsible for the final capital allocation decisions on the strategy. The team is supported by research analysts and portfolio managers from the fixed income, equity and multi-asset desks.

Investment Philosophy

By adopting a global approach to understanding the prospects for asset classes and giving due consideration to the thematic drivers of those assets, the team aims to identify the forces of change influencing various investment opportunities. This is all undertaken within a very risk-aware framework.

Portfolio Construction & Risk Controls

The team takes a holistic approach to portfolio risk assessments. All positions in the portfolio are conviction-based, with the size of any position a function of the expected risk/return profile. There are no formal asset allocation restrictions in place and the team can shift the portfolio tactically as required.

Investment Process

The fund's emphasis is upon traditional asset classes, managed with a long-term mindset. The portfolio is constructed with a return-seeking core and a series of offsetting risk positions, with a view to dampening volatility and preserving capital. The process begins with the identification of investment themes, which direct analysts and managers towards what they perceive to be the best investment opportunities globally. At a macro level, the team generates views on the relative attractiveness of base asset classes from both a short and long-term perspective. Extensive use is made of the global analysts to generate a large database of proprietary research. The fixed interest exposure uses the same thematic framework to analyse valuations and trends within global bond markets.

Positions in the portfolio are added according to the long-term view of the investment environment, with the team always being aware of the objective to generate "real", absolute returns and a lower volatility outcome. The return-seeking core can be comprised of corporate debt, equities, emerging market debt, infrastructure and energy renewable-related investments. The stabilising (or risk-offsetting) layer can feature commodities, cash and short-term debt, a variety of derivatives, active currency positions and currency/equity market hedges. The portfolio features no leverage, no individual short positions and no exposure to direct property.

Key Fund Facts

Inception Date:

01 September 1993

Manager(s) (Since):

Aron Pataki (Dec 18)

Ella Hoxha (May 25)

Fund Domicile:

United Kingdom

Base Currency:

£ Sterling

Fund Benchmark:

N/A

IA Sector:

Targeted Absolute Return

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.