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Stephanie Miller Pierce, BNY Mellon

Newton to sub-advise BNY Mellon IM’s new sustainable ETF suite

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BNY Mellon Investment Management has drawn on in-house expertise, filing its first active ETFs, sub-advised by ESG specialists Newton Investment Management. The initial suite is comprised of three sustainable funds, BNY Mellon Sustainable US Equity ETF, BNY Mellon Sustainable International Equity ETF, BNY Mellon Sustainable Global Emerging Markets ETF. 

BNY Mellon Investment Management has drawn on in-house expertise, filing its first active ETFs, sub-advised by ESG specialists Newton Investment Management. The initial suite is comprised of three sustainable funds, BNY Mellon Sustainable US Equity ETF, BNY Mellon Sustainable International Equity ETF, BNY Mellon Sustainable Global Emerging Markets ETF. 

Stephanie Pierce, CEO of BNY Mellon Investment Management’s ETF, Index, and Cash Investment Strategies businesses, confirms that in close to the first year of the firm offering its own ETFs, their initial range, launched last April, has reached USD659 million (as of 22 March 2021). “It’s been an exciting year, not just in terms of assets raised but also how well they have tracked the benchmarks with tight bid-offer spreads,” she says.  

For USD62.9 billion (as of 31 December 2020) Newton, this is its first foray into ETFs. In February, BNY Mellon Investment Management, in partnership with its investment firms, announced its intention to realign certain of its investment firm specialist capabilities, which will result in Newton becoming a USD140 billion global equities and multi-asset investment firm.

Julian Lyne, Chief Commercial Officer of Newton Investment Management, says that Newton has been investing sustainably since 1978, through their active management approach. “We are an active house that fundamentally believes in the importance of active investment,” he says, citing the need and pent-up demand from US investors, 75 per cent of whom have expressed an interest in ESG investing but less than half understand how to do it. 

Lyne lists three key areas where they think Newton’s belief in integrated ESG is fundamental: identifying the economic durability of firms; taking into account material externalities, and an effective evaluation of sustainability risks and opportunities. 

Pierce comments that the growth in ETF assets in sustainability has been one of the fastest growing areas in ETFs. “We believe that sustainable active investment has a role to play in meeting client needs,” she says. 

“Active fund management is so important to us,” Lyne says, and Newton has 30 dedicated research analysts and do not rely on external market data. 

The ETFs will follow a portfolio rather than an index, seeking to outperform that portfolio. 

“It’s Newton doing what it does well,” Lyne says. “Sustainable, active fundamental fund management.” 

Pierce says that BNY Mellon Investment Management plans to continue down the path of leveraging expertise across Mellon affiliate firms. 

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