Wealth Shortlist funds update: BNY Mellon Real Return and BNY Mellon Sustainable Real Return

Following the tragic passing of Suzanne Hutchins, we have conducted a review of the BNY Mellon Real Return and the BNY Mellon Sustainable Real Return’s respective places on our Wealth Shortlist of funds selected by our analysts for their long-term potential.

Hutchins was Head of the Real Return team at Newton Investment Management Limited (Newton). Newton are owned by BNY Mellon and run both funds. She had been a key member of the team since 2010 and took over as lead of the team in July 2018 following the announcement of Iain Stewart’s retirement.

Team changes

Aron Pataki and Andy Warwick have become Co-Lead managers of the real return team. The pair were already co-managers of the real return fund and had significant input into idea generation, asset allocation and portfolio construction for both funds. They have picked up a number of Suzanne’s previous responsibilities, including people management.

Pataki joined Newton in 2006 and has worked on the Real Return team since 2010. He therefore has significant experience of investing within the real return strategy framework. He will lead on bond, currency, commodity and some alternatives-related decisions within the strategy.

Warwick joined Newton and the real return team in July 2018, having previously worked at BlackRock in their multi-asset team for 12 years. He’s also an experienced investor, with 30 years’ industry experience. He will lead on the equity and the remaining derivatives strategies decisions within the strategy.

Pataki and Warwick will work together on positioning the fund, which includes decision making around asset allocation and position sizing. The rest of the team are also taking on additional responsibilities to varying degrees, dependent on their experience and areas of interest.

Phillip Shucksmith and Matthew Brown will continue as the managers of the Sustainable Real Return fund. While Shucksmith and Brown have decision making responsibility in terms of ensuring investments held in the fund meet their sustainability requirements, they feed off asset allocation decisions made by the wider team, which Pataki and Warwick now lead on.

In terms of the investment process for both funds, Pataki and Warwick have confirmed that they don’t intend to make any immediate changes and expect both funds to continue to be run in the same way.

Mitesh Sheth, Chief Investment Officer for Multi-Asset at Newton, has taken on some of Suzanne’s internal reporting and monitoring responsibilities. Sheth joined the business in March 2022, and Suzanne reported into him. He has responsibilities across a number of different teams and therefore does not get involved in the day-to-day investment decisions. Instead, his role is in oversight, challenge and the future direction of the Real Return team.

Our View

As part of our review, we have met with the team on a number of occasions in 2023 to understand how the funds may evolve going forwards and to assess changes to the responsibilities of team members. We know the team well and hold them in high regard but recognise that the unexpected loss of an experienced investor and leader in Hutchins presents a challenging situation.

The experienced Pataki and Warwick have been heavily involved in the decision making and portfolio construction process for some time. Investment ideas have always come from across the team, with the real return team also feeding off the wider BNY Mellon analyst pool for share and bond ideas. As a result, it’s clear that a lot of the inputs into the funds will remain the same as they have been historically, giving us confidence that the investment process should remain consistent.

In addition, our interactions with Mitesh Sheth throughout this process have been very positive, and we consider his leadership to be of high quality. While he’s not involved in making investment decisions, we view his involvement as important in guiding the team through this transition.

For these reasons we will retain both BNY Mellon Real Return and BNY Mellon Sustainable Real Return on the Wealth Shortlist.

This isn’t a recommendation to make any changes to a portfolio. Investors should make sure any investments match their investment goals, attitude to risk and are held as part of a diversified portfolio. If you're not sure if an investment is suitable for your circumstances, please seek personal advice.

Past performance is not a guide to the future. Source: Lipper IM to 30/04/2023.

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