Please ensure Javascript is enabled for purposes of website accessibility Leading the way

The combination of growth and resilience are attributes highly sought after by investors.
In the form of the BNY Mellon Global Leaders Fund, Walter Scott1 has created exactly that. George Dent, investment manager at the firm, looks at what helps its strategy stand out from the crowd.

The BNY Mellon Global Leaders Fund was borne out of investor desire for an even ‘purer’ version of Walter Scott’s Long-Term Global Equity strategy.

The Edinburgh-based firm – which celebrates its 40th birthday this year – launched the Global Leaders strategy in order to meet clients’ evolving needs. The result? A portfolio of its highest conviction ideas – between 25 and 30 stocks – to hold for the long-term, strictly centred upon businesses that have strong balance sheets, are highly profitable, and have pricing power. The philosophy and investment process mirror that of the Long-Term Global Equity strategy; the only difference being the more concentrated nature of Global Leaders.

The fund is Walter Scott in its purest form,” explains Dent, who joined the firm as an investment manager in 2008. “The pandemic years gave a really good test of the strategy’s resilience, something which we see as a non-negotiable attribute for a fund like this; a focus on companies with a history of resilience in various market conditions tends to underpin the resilience of a fund – the Covid era showed that,” he adds.

Quality, quality, quality

Launched in December 2016, it might seem like the fund’s large technology weighting – at around 40% – has driven performance, but that’s not been the case. “Tech is a major part of the fund, along with healthcare and the consumer, but it’s important to note that we don’t hold a number of the companies that have been major drivers of the market this year, most notably Nvidia and Apple. While our tech holdings have delivered solid returns, our approach is conservative and we have largely sat out the ‘big 7’ tech rally as a result,” Dent says. “Valuations are all-important and we are very wary of going anywhere near those companies at risk of being in bubble territory,” he adds.

Healthcare has been the greatest source of relative outperformance, again down to stock selection. The sector makes up around 36% of the fund, and holdings such as West Pharmaceutical Services and Intuitive Surgical are among the portfolios largest holdings.

Dent identifies West Pharmaceutical as a typical Global Leaders company. The US business is a manufacturer of packaging components and delivery systems for injectable drugs and healthcare products. “It had a phenomenal pandemic,” he explains, “which comes as little surprise when you learn that the business is focused on producing the vials, seals and stopper for injectable medications. When drugs get FDA approval, the containment solutions – encompassing vials, seals and stoppers – require approval too, pretty much locking in the supplier for the lifetime of that drug run; this gives good visibility, music to the ears of long-term investors like us,” Dent adds.

The company’s share price, like many of those which enjoyed a knock-out pandemic, had suffered from something of a hangover over the past 18 months or so as the market grappled with the valuation of the business after such a freak event. Dent continues: “We saw price weakness as an opportunity to establish a position and initially added it to the portfolio in October 2022, topping it up a couple of times since. It is a business that benefits from the rising complexity of medications, and the shift towards more biological molecules increases its pricing power. Supported by long-term structural tailwinds, it is a high-quality company and boasts exactly the type of characteristics we are looking for in the fund,” he explains.

Elsewhere, the fund’s lack of energy exposure – not a philosophical stance, merely the result of a current lack of opportunity – has also boosted relative performance, along with being underweight, coupled with strong stock selection in, consumer staples – L’Oréal being a notable contributor.

Keeping active

We are moving into an environment which not only favours active management, but our kind of active management,” Dent says. “The implications of an inflationary, high interest-rate environment are significant; are the companies in which we invest able to weather those challenges and continue to thrive?

In 2021, before inflation started its sharp ascent, we pored over the portfolio to firmly challenge every company we own to see if they were able to stand up to that test. We were pleased to conclude that the core characteristics of the companies in which we invest – highly profitable, pricing power, strong balance sheets – hold the portfolio in good stead,” he adds.

Dent continues: “This year looks to be the real test of pricing power – 2022 saw pretty much all areas of the market able to put price hikes through, but now is the true test as inflation actually bites. We believe this will favour those genuinely high-quality businesses with pricing power.”

From a valuation point of view, the sell-off at the start of 2022 means that valuations look a lot healthier than they were, according to Dent, with many having come back closer to their five- to 10-year averages. “As such, it feels more like a starting point compared to the heady days of late 2021,” he explains. “There will be opportunities to add high-quality businesses that benefit from structural tailwinds – our task is to take advantage when those opportunities arise,” Dent concludes.

For a full list of risks applicable to this fund, please refer to the Prospectus or other offering documents.

Please refer to the prospectus and the KIID before making any investment decisions. Documents are available in English and an official language of the jurisdictions in which the Fund is registered for public sale. Go to

  • There is no gurantee that the fund will achieve its objectives.
  • This Fund invests in international markets which means it is exposed to changes in currency rates which could affect the value of the Fund.
  • Derivaties are highly senstitive to changes in the value of the asset from which their value is derived. A small movement in the value of the underlying asset can cause a large movement in the value of the derivative. This can increase the sizes of lossess and gains, causing the value of your investment to fluctuate. When using derivatives, the Fund can lose significantly more than the amount it has invested in derivatives.
  • Emerging Markets have additional risks due to less-developed market practises.
  • A fall in the value of a single investment may have a significant imact on the value of the Fund because it typically invests in a limited number if investments.
  • The insolvency of any institutions providing services such as custody of assets or acting as a counterparty to derivatives or other contractual arrangements, may expose the Fund to financial loss.
  • If this share class is denominated in a different currency from the base currency of the Fund. Changes in the exchange rate between share class currency and the base currency. It may not completely achieve this due to factors such as interest rate differentials.
  • A complete descriptipon of risk factors is set out in the Prospectus in the section entitled "Risk Factors".

Investment Objective

To achieve long-term capital growth.

Performance Benchmark

The Fund will measure its performance against the MSCI World NR Index (the Benchmark*)

The Fund is actively managed, which means the Investment manager has absolute discretion to invest outside the Benchmark subject to the investment objective and policies disclosed in the Prospectus. While the Fund's holdings may include constituents of the Benchmark, the selection of investments and their weightings in the portfolio are not influenced by the Benchmark. The investment strategy does not restrict the extent to which the investment Manager may deviate from the Benchmark.





Source: Lipper as at 30 June. Fund performance USD W (Acc.) calculated as total return, based on net asset value, including charges, but excluding initial charge, income reinvested gross of tax, expressed in share class currency. The impact of the initial charge, which may be up to 5%, can be material on the performance of your investment. Performance figures including the initial charge are available upon request. Returns may increase or decrease as a result of currency fluctuations.

1518729 Exp: 15 August 2024

Past performance is not a guide to future performance.

1 Investment Managers are appointed by BNY Mellon Investment Management EMEA Limited (BNYMIM EMEA), BNY Mellon Fund Managers Limited (BNYMFM), BNY Mellon Fund Management (Luxembourg) S.A. (BNY MFML) or affiliated fund operating companies to undertake portfolio management activities in relation to contracts for products and services entered into by clients with BNYMIM EMEA, BNY MFML or the BNY Mellon funds.

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