The three-year anniversary of BNY Mellon Investment Management’s launch of ETFs was marked by the quarter one growth of 172 per cent, making it the fastest growing ETF issuer in US equity ETFs and in the top 40 issuers overall.
The firm’s ETF range now has USD3.77 billion in assets in 17 products. Stephanie Pierce, Chief Executive Officer of ETF, Index, and Cash Investment Strategies for BNY Mellon Investment Management says: “What’s happened is that interestingly on a trailing three year basis back from the end of April, the fastest growing categories were those that we have zero fees on, the BNY Mellon US Large Cap Core Equity ETF and BNY Mellon Core Bond ETF, so we have been in the right place at the right time.”
Last week saw the firm launching two actively managed thematic BNY Mellon ETFs run by Newton Investment Management – Women’s Opportunities and Innovators, BKWO and BKIV.
“These were really fun launches to do,” Pierce says, explaining that the Innovators’ fund represents companies that “are disrupting the way we live work and play. Everyday, we experience companies that are disrupting.”
The thesis behind this portofolio is that 52 per cent of the companies in the S&P 500 have disappeared in the last 15 years. “What that tells you is that there is a constant reinvention of companies that are disrupting with better ways to do things and this is what the fund is investing in,” Pierce says.
The UK-based sub-adviser to the fund, Newton Investment Management, has deep experience of thematic investments and these are BNY Mellon IM’s first thematic ETFs. “Our research starts with our clients and our research shows that they want to invest in themes in which they believe not just the broad markets,” Pierce says.
“We are excited to bring this to the US and the timing is good because of where markets are at the moment with all the fluff coming out so valuations are attractive.”
The women’s opportunity ETF, BKWO, has special significance for Pierce and the 50,000 employees of BNY Mellon, many of whom are women, she says.
“We are proud to step forward for this fund,” she says. This one is based on research that companies that do a good job recruiting, retaining and supporting women in the workplace do better than those that don’t.
“We are investing in companies that have two lenses supporting women – one that they are doing the right thing but also companies that enable women to do those services, providing childcare or fertility treatment or whatever it takes to allow women to do it all.”
BKWO has a philanthropic component with BNY Mellon ETF Investment Adviser LLC, the fund’s investment adviser, contributing at least 10 per cent of the management fee to Girls Inc, a non-profit organisation that aims to inspire all girls to be strong, smart, and bold through direct service and advocacy. The BNY Mellon Foundation will also provide grant funding to Girls Inc and its New York affiliate, Girls Inc of New York City, in recognition of their impactful work that equips girls and young women to reach their full potential.
“One piece of research shows that companies with more diversification, deliver more profitability,” Pierce says. “It can be as much as 25 per cent. And women, empowered by creating more value as earners, are delivering additional GDP value of as much as USD28 billion as women rise through the workplace.”
She adds that it is timely to invest in this space, as data shows that the growth of women in the marketplace, which had been growing for four decades, started to reverse around the time of the pandemic with about one million women leaving the workplace.
“Whether it’s related to the pandemic we don’t know but we felt it was timely to invest in this theme right now,” she says.
Pierce says that her firm is starting to incubate new products and is interested to see how this first foray into thematic ETFs will go down with investors. “It’s an interesting market to be in and now we have to grow what we have and deliver strong performance,” she says.
