A trio of fixed income funds at BNY Mellon Investment Management have lost the backing of the analysts at Square Mile after a change in fund manager.
The BNY Mellon Global Dynamic Bond fund, the BNY Mellon Sustainable Global Dynamic Bond fund and the BNY Mellon Global Dynamic Bond Income funds had enjoyed an ‘A’ rating - the ratings range from A to AAA - but Square Mile removed the ratings last month.
It comes after Paul Brain, who had specialised in fixed income at Newton Investment Management (now part of BNY Mellon) for 20 years, became deputy chief investment officer of the fund house’s multi-asset investment team and handed over the reins of the fund range.
Ella Hoxha, previously a senior portfolio manager at Pictet, was hired to take over as manager of the funds.
If you knew the surrounding team and new manager well, you might take a slightly different view.Juliet Schooling-Latter, Chelsea FSShe had led the development and launch of Pictet’s Global Climate Government Bond fund and played a key role in the company’s ESG efforts in the fixed income space.
There was a transition period from July to December, but the switch officially occurred in December.
Square Mile said: “[We] suspended the ratings on the funds in June 2023 on the news that Brain was to assume the role of deputy chief investment officer of multi-asset.
“Our analysts recently met the new portfolio manager and discussed several changes that are being implemented to portfolio construction, and they believe that it will take time to fully appreciate the impact of those changes.”
It also noted that medium term returns had not been in line with expectations.
When the changes were announced, Euan Munro, chief executive of Newton, said that Brain would provide the fund house’s multi-asset franchise with a “rigorous leader”, while Huxho’s leadership in the fixed income team would be key to further developing the company’s credentials in the market.
Juliet Schooling-Latter, research director at Chelsea Financial Services, said that removing ratings was a “pretty typical” reaction to a fund manager move.
“If you knew the surrounding team and new manager well, you might take a slightly different view, but it’s often an automatic trigger,” said Schooling-Latter.
“Paul Brain was a big person in the fixed income team at BNY and it looks like Square Mile needs to let the change bed in.”
Over the past year, the BNY Mellon Global Dynamic Bond fund has returned 1.69 per cent, compared to a benchmark return of 6.8 per cent.
The sustainable version has returned 2.94 per cent compared to a benchmark of 4.79 per cent, while Global Dynamic Bond Income fund has returned 1.45 per cent, compared to a return of 5.25 per cent from the FTSE One-Month US Treasury Bill index.
Hal Cook, an investment analyst at Hargreaves Lansdown, said that Brain’s move to the multi-asset team had strengthened the platform’s backing of the BNY Mellon Multi-Asset Balanced fund.
He said: “It was added to the Hargreaves Lansdown Wealth Shortlist in 2023. The team who run this fund along with a number of other multi-asset solutions should benefit from Paul’s additional input at a senior level.”
Imogen Tew is a freelance financial journalist
