Ukraine/Russia: Important notice on how we are
managing our funds

We are saddened by the humanitarian crisis unfolding in Ukraine. The situation there continues to evolve as nations, leaders and companies react by instituting policies and measures against Russia. Global markets are reacting as a consequence and we are seeing heightened volatility, inflation and supply chain disruption.

As a global investment company and a responsible investor, we are conscious of the investment ramifications of this ongoing crisis. From a social and governance perspective, as well as its implications on markets, BNY Mellon Investment Management and its investment firms are closely monitoring the developments in Ukraine. As a trusted steward for our clients and investors, we have implemented measures to ensure we adhere to imposed sanctions and are monitoring further actions in this area.

We do not have any dedicated Russian or Eastern European funds. However, we do invest in emerging markets. Many developed market companies also have exposure to Russia.

We have consistently reviewed and assessed fund holdings with exposures to Russia, Belarus and Ukraine. We continue to manage this heightened risk carefully in line with our regulatory and fiduciary obligations and in a way that seeks to protect the interests of our clients and investors. To date we have not suspended any of our funds’ NAVs or restricted any of our clients’ rights to redeem shares and they continue to be managed in respect of their stated investment objectives. We continue to closely monitor the situation and remain ready to take appropriate steps if required to protect our clients’ interests.

Fixed income holdings

Our funds with exposure to Russia are predominantly emerging markets fixed income strategies, holding relatively small amounts of government and/or corporate debt. The ability of foreign investors to be paid coupons (interest payments) on bonds and principal (the original sum) is currently hampered. These include controls introduced by the Russian government that require certain payments to foreign investors to be made in Russian rubles (RUB). However, many securities settlement systems1 have stopped settling in RUB for the time being. At this juncture, therefore, there is considerable uncertainty surrounding the ability for Russian entities to continue to pay interest on their debt to foreign investors, raising the risk of defaults (inability to repay a loan).

Such securities in our funds are currently being fair value priced2 where required, in accordance with established protocols. We continue to monitor ongoing market developments, trading information and valuations closely.

Equity exposure

Where it was in the best interest of clients, any Russian equity holdings have been fair value priced2 at zero, for now. This will have had an impact on the short-term performance in those affected funds. However, the equity exposures to Russian equities across sub-funds in the BNY Mellon Investment Funds (BNY MIF) and BNY Mellon Global Funds (BNY MGF) ranges, were small – limited to a single Russian company (which was listed in the US).

We continue to monitor ongoing market developments closely.

Our funds with Russian/Ukraine exposures. The % reflect the valuation adjustments as at 21 March 2022. (In some instances, as mentioned above, the exposure is 0% for valuation reasons rather than the exposure has been sold)

Funds with % exposure as at 21 March 2022

Fund Range
Fund Name
Russia
Ukraine
Total
FI Exposure
FX FWD
BNY MGF
BNY Mellon Emerging Markets Debt Total Return Fund
2.92%
2.18%
5.10%
3.80%
1.31%
BNY MGF
BNY Mellon Emerging Markets Debt Fund
0.94%
1.15%
2.09%
2.09%
0.00%
BNY MGF
BNY Mellon Emerging Markets Debt Opportunistic Fund
0.84%
0.67%
1.52%
1.52%
0.00%
BNY MGF
BNY Mellon Emerging Markets Corporate Debt Fund
0.50%
0.30%
0.79%
0.56%
0.23%
BNY MGF
BNY Mellon Emerging Market Debt Local Currency Fund
0.40%
0.40%
0.40%
0.00%
BNY MIF
Responsible Horizons Strategic Bond Fund
0.31%
0.31%
0.31%
0.00%
BNY MGF
BNY Mellon Efficient Global High Yield Beta Fund
0.09%
0.10%
0.18%
0.18%
0.00%
BNY MGF
BNY Mellon Absolute Return Bond Fund
0.24%
0.09%
0.33%
0.09%
0.24%

Source: BNY Mellon Investment Management

Funds with holdings in Russian companies but valued at 0% as at 21 March 2022.

Fund Range
Fund Name
BNY MGF
BNY Mellon Emerging Markets Debt Local Currency Fund
BNY MGF
BNY Mellon Sustainable Global Real Return Fund (EUR)
BNY MGF
BNY Mellon Global Emerging Markets Fund
BNY MIF
BNY Mellon Global Emerging Markets Fund
BNY MIF
BNY Mellon Sustainable Real Return Fund
BNY MIF
BNY Mellon Sustainable Global Emerging Markets Fund

Source: BNY Mellon Investment Management

What will happen next?

Our people continue to work hard to deliver on our promise to be a trusted investment partner. We will continue to provide our clients and investors with market commentary and perspectives to help them navigate through the uncertainty and to provide transparency on how we are managing investment portfolios. If you have any questions, please contact your usual client representative.

1Securities settlement systems are used for post-trade processing
2The process by which the value of a security is estimated where a current price isn’t readily available