April brought the news that ETF industry giant BNY Mellon was to launch its first range of ETFs. Stephanie Pierce (pictured), CEO of BNY Mellon Investment Management’s ETF and Index Business, commented at the time that the launch was focused on meeting the needs of the firm’s clients.
A few months later and Pierce confirms that all of the ETFs have had inflows, totalling USD34 million across the suite. “We are most excited about the trading behaviour of the ETFs and how tight the bid-offer spreads have been” she says. “To have tight spreads, just as larger funds do, is what we were seeking, and we’re pleased that we’ve been able to achieve it.”
Pierce believes that two dynamics lie behind that.
“The first is that while BNY Mellon Investment Management is new to being an issuer, it’s not new to the ETF space given our ETF sub-advisory business and all the BNY Mellon ETF businesses across the firm,” she says.
“People recognise that we have been thoughtful in how we have constructed our ETFs and brought them to market.”
The second dynamic that Pierce identifies is that the sheer size of BNY Mellon’s footprint in the ETF marketplace means they are recognised in the space.
“The index team which manages these ETFs has significant trading relationships with the authorised participants and market makers across our index business, which helps the ETFs to trade well,” she says.
Pierce reports that there have been a number of due diligence enquiries from professional buyers on the two zero fee ETFs that the firm launched – the BNY Mellon US Large Cap Core Equity ETF and BNY Mellon Core Bond ETF.
“Professional buyers find it attractive from a fiduciary perspective to pass those savings along to their clients,” she says.
The ETF which has seen the most significant trading volume to date from the launch is the BNY Mellon High Yield Beta ETF (BKHY). “We have seen the most volume and creation activity in BKHY which may be the combination of cyclical interest in high yield as well as the fee, which is significantly lower than the other players out there,” Pierce says.
More products are on the blocks designed to demonstrate BNY Mellon Investment Management’s investment capabilities to the investor base and there is a plan afoot to offer model portfolios based on ETFs.
