BNY Mellon Global Equity Income Fund

Fund Manager

Nick Clay

Fund Inception

29 July 2010

Why invest in this fund?

The case for equity income

The defensive, robust nature of dividend-paying companies can create an asymmetric return profile. This, combined with the significant benefits of compounding income over time, can generate strong, long-term returns and we believe this is an attractive strategy against a backdrop of lower growth and increased volatility.

Disciplined, concentrated and sustainable

The Fund follows a clearly defined philosophy and process, which combines the use of Newton’s global investment themes with buy and sell yield criteria to create a disciplined and sustainable approach. In addition, the Fund has a highly-committed, active approach, focused on generating sustainable returns and a premium level of income, with the portfolio typically comprising of 40 to 70 stocks.

Experience and track record

The Fund is one of the longest-running, truly global equity income funds. Income remains a core competency at Newton, with investors able to benefit from the broad expertise of both the global equity and income teams, and the proprietary research of Newton’s global sector analysts.

Fund positioning

The Newton Global Equity Income team is poised to celebrate another year where it believes positive returns are the consequence of skill rather than luck. Or perhaps more accurately, the stringent process underpinning the Fund since inception.

As the adage goes, if it ain’t broke, don’t fix it. Newton boasts one of the longest pedigrees in the Investment Association (IA) Global Equity Income sector and, for fund manager Nick Clay, consistency, repeatability and sustainability have been the fundamental foundation of that track record.

“Since inception,” he says, “we’ve remained committed to our clearly defined philosophy, a disciplined process and to generating sustainable returns from what we believe to be a statistically attractive opportunity set.”

In the team’s opinion, there are primary factors that feed into the investment process on the BNY Mellon Global Equity Income Fund. The first is that sustainable income makes for a smoother client journey. Says Clay: “With a demonstrable approach to harnessing time, consistency and compounding in order to achieve income distributions and long-term capital growth, the team maintains a clarity of purpose, while the yield discipline means every stock in the portfolio must contribute to the income.”

The second is consistent dividends pay over time. Says Clay: “While the income ‘kicker’ is critical, capital preservation is also key. Many investors would prefer missing out on some of the rampant rallies as long as their capital is protected and income generated is compounded over time. The team believe this is a more repeatable process than trying to successfully time the market.”

Fund performance

Annual Performance (%)​

2015
2016
2017
2018
2019
4.00
7.18
17.70
-6.25
25.53

Source: Lipper as at 31 December 2019. 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.

Agents of Change in practice

Technology: Cisco

As the largest holding in the Fund, the stock represents an exciting sector with strong fundamentals underpinning balance sheet expectations.
To support the rational for holding Cisco, Newton undertook an in-depth survey of Chief Technology Officers around the world and simply asked the basics; what do they think of Cisco; are you intending to spend more or less with the company; how does it fare versus competitors? The results were that CTOs are resolutely supportive of Cisco and looks to remain a strong player in the technology world.

Consumer: H&M

Swedish company H&M has struggled with knowing its place in the high street – and now online retail – fashion world.
However, as a single brand retailer, H&M is the largest retail brand in the world but only has a 2% market share.1 It is the lowest cost producer of T-shirts in the world. It has been expanding in Asia and through investing in online it has taken online sales from zero to 12% of its business.2 The management of H&M have put in US$1.4bn of self-investment, demonstrating how aligned their interests are and may signal that H&M is on a longer transition journey.
1 Statista as at April 2019.
2 H&M annual report, as at end of December 2018.

About Newton Investment Management

Newton pursues a distinctive global thematic approach and provides added value from extensive proprietary research.

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Investment Managers are appointed by BNY Mellon Investment Management EMEA Limited (BNYMIM EMEA), 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.

Past performance is not a guide to future performance.

The value of investments can fall. Investors may not get back the amount invested. Income from investments may vary and is not guaranteed.

Objective/Performance Risk: There is no guarantee that the Fund will achieve its objectives.

Currency Risk: This Fund invests in international markets which means it is exposed to changes in currency rates which could affect the value of the Fund.

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