BNY Mellon transfers its active management to its affiliates

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BNY Mellon Investment Management’s decision to transfer the active units of its Mellon Investments Corp. business. to its affiliated managers is not of particular concern to players in the sector.

The $ 2.2 trillion fund manager said this month that Mellon’s $ 105.2 billion fixed income unit, covering stable value, municipal, efficient beta and fixed income strategies taxable income, will transition to global fixed-income, liability-focused investment firm Insight Investment, bolstering assets under management. to $ 1.1 trillion.

Mellon’s equity and multi-asset capabilities will be transferred to Newton Investment Management, which will also get BNY Mellon Investment Management Japan’s Japanese equity team, creating a $ 140 billion company. Newton had $ 62.8 billion in assets under management as of December 31.

And Mellon’s cash capacity will be transferred to Dreyfus Cash Investment Strategies, creating a $ 300 billion business, up from Dreyfus 259.5 billion as of December 31.

The moves are expected to be completed by the end of the third quarter, leaving Mellon Investments as a $ 390 billion company focused on executing institutional index strategies – “that’s really what created Mellon so many years ago. decades, ”said Hanneke Smits, CEO of BNY Mellon IM. based in London.

Mellon CEO Des Mac Intyre will be leaving at the end of February. Michael Germano, COO, will assume the responsibilities of CEO of active management during the transition. Stephanie Pierce will remain CEO of the index business.

While the decisions were made in conjunction with the respective managers, this is also the first major change under Ms Smits, who replaced Mitchell Harris in October.

“This is a very exciting opportunity to realign a number of key components of Mellon, particularly in Insight and Newton,” Ms. Smits said in an interview.

The justifications for the changes include strengthening each branch manager, increasing Insight and Newton’s global footprint, and ensuring that each company could meet the demands of increasingly results-oriented customers, said Mrs. Smits.

Clients “are increasingly looking for results-oriented investments, moving away from traditional benchmarks. They are also turning more to alternatives, ”she said.

The company’s other affiliates, including high conviction equity manager Walter Scott & Partners Ltd. and private credit manager Alcentra Ltd. complement “a pretty nice range of specialties that we can start to offer on a larger scale to our customers,” Ms. Smits mentioned.

For those in the market who keep an eye on the manager and his stores, there are no particular qualms about the changes – especially as BNY Mellon IM is no stranger to evolving capabilities.

“I certainly don’t expect a material change in the company’s financial results as a result of the realignment,” said Rajiv Bhatia, equity research analyst at Chicago-based Morningstar Inc., in a report. -mail. “It seems to me that they take the active part of Mellon… and transfer it to their respective specialists, leaving Mellon to be a benchmark player.”

Mr Bhatia said the realignments – particularly against a backdrop of consolidation and pressure on industry fees – “are not new to BNY Mellon’s investment management unit with its multi-store model,” noting that the company had 27 stores at the end of 2007 but now has eight.

The industry context was also highlighted by consultant RVK Inc. based in Portland, Oregon. A statement provided by a spokesperson said the move was one of many money management restructurings and mergers and acquisitions that she tracks and evaluates for clients.

RVK’s only concern is whether the change “is negatively affecting our clients and we are looking for signs of weakening organizational culture, distractions that distract from investment, higher turnover among key professionals in investment, reduced focus on innovation and performance in favor of simple scale construction to name a few examples, ”the statement said.


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