BNY Mellon Multi-Asset Balanced: July 2025 fund update

• Simon Nichols has built a strong track record in multi-asset investing and took over as lead manager of this fund in 2017

• The fund focuses on investing in companies with good long-term prospects from across the globe, with some bonds and cash to act as diversifiers

• We think this is a good option for a portfolio in need of a multi-asset fund with a typically high proportion invested in shares

• This fund is on our Wealth Shortlist of funds chosen by our analysts for their long-term performance potential

How it fits in a portfolio

The BNY Mellon Multi-Asset Balanced fund aims to achieve a balance between capital growth and income over the long term (at least five years). It uses the IA Mixed Investment 40-85% Shares sector average as a performance comparator.

The fund invests in larger companies from across the globe, typically based in developed markets, with the potential to grow over the long term. The fund also invests in bonds, usually those issued by developed market governments, and cash.

The fund could help diversify an investment portfolio focused on growth, or a portfolio focused on company shares. It could also provide some global exposure to a UK focused portfolio or some growth potential to a defensively invested portfolio.

Manager

Simon Nichols has over 25 years’ experience in the industry and joined Newton Investment Management (Newton) in 2001. Newton is now owned by BNY. He began managing funds in the mid-2000s and took over management of the BNY Mellon Multi-Asset Global Balanced fund in 2013, before becoming lead manager of the BNY Mellon Multi-Asset Balanced fund in 2017.

Nichols manages multi-asset funds and a global equity fund. When he finds a company he likes, he tends to invest in it across all his funds, which reduces the workload associated with managing a number of funds.

Nichols works closely with the mixed-asset and charities team at Newton. Paul Flood, Head of Mixed Assets, and Bhavin Shah are co-managers for this fund. Flood joined the industry and Newton in 2004, while Shah joined the industry in 2004 and Newton in 2011. Both manage a number of multi-asset funds.

Nichols is the main decision maker in terms of what investments end up in this fund, and how much is invested in each idea.

Nichols uses the wider analyst teams at BNY Mellon which help to provide ideas around which companies to invest in.

We rate Nichols highly and our conviction in this fund is based on his continued involvement in his role as lead decision maker.

Process

Nichols invests in a combination of shares, bonds and cash. Most of the fund invests in shares though, with typically 70-80% of the fund invested there.

Nichols favours the shares of large, established companies with competitive advantages, that are cash generative, don’t have lots of debt and that often pay a dividend. While there’s no income target for the fund, Nichols likes companies that pay a dividend because of the discipline that this puts on company management teams.

Company share ideas initially come from BNY’s wider analyst team. The mixed-asset team reviews all recommendations put forward and when they find one of interest, they also complete their own analysis on the company and then decide whether it should be added to the fund.

The rest of the fund is made up of bonds and cash. The bonds are usually from developed market governments, but Nichols could invest in company bonds too. The bonds and cash act as a diversifier when stock markets fall.

The amount invested in company shares is partly based on valuations (whether the share price fully reflects future potential or not). When Nichols thinks valuations are high he will reduce the amount in shares and hold more cash and bonds, while the reverse is also true.

At the end of May 2025, the fund invested 73% in shares, 18% in bonds and 8% in cash. Within shares, around 28% of the fund invests in US companies, and around 38% in the UK and Europe. In terms of sectors, the three largest ones are Technology, Industrials and Financials at 14.40%, 14.20% and 12.10% invested, respectively. The bond section is mainly made up of UK government bonds, with some overseas government bonds.

Within the shares part of the fund, Nichols has recently added BJ’s Wholesale Club, an American membership-only wholesaler. He thinks its shares look better value compared with competitors such as Costco. He’s also invested in Yum China, the spin-off of the US-based Yum! Brands business, owner of well-known brands such as KFC and Pizza Hut.

Nichols has sold global drinks business Diageo, following a challenging period during and after Covid. He also sold Eli Lilly after a period of strong performance, taking profits on the shares he owned to invest elsewhere.

The fund’s universe of potential investments is large and includes emerging markets, high yield bonds and derivatives, which add risk if used. While Nichols can invest in these areas, he prefers to invest in large companies from developed markets, government bonds and cash.

Culture

BNY is a large, US-based firm so the managers have a lot of resources at their disposal. Until mid-2019 the team was part of the Newton brand, but even though the name has now changed to that of the parent company, the way Nichols runs the fund remains the same.

In September 2021, Mellon Investments merged its equity and multi-asset teams into Newton. While this has not impacted the way Nichols invests for this fund, it has given the team access to a larger pool of research analysts that help with idea generation.

The managers are incentivised in a way that aligns their interests with those of long-term investors, which we like. However there have been some significant fund manager departures from the wider Newton business in recent years.

More recently within the Newton part of the business, previous Chief Executive Officer, Euan Munro, and Co-Chief Investment Officer, Mitesh Sheth, have left. We continue to monitor these people changes closely for potential impacts on the company culture.

ESG Integration

The team at BNY believes responsibly managed companies are better placed to achieve a sustainable competitive advantage and provide strong long-term growth. They’ve invested a significant amount of time and resource into their Responsible Investment proposition in recent years.

All fund managers have access to a Responsible Investment app which centralises a variety of research providers’ data, as well as their own, to help identify material ESG and sustainability issues for a single company. It also includes a quantitative net-zero assessment tool to support their analysis of each company’s net zero transition plans. The firm has also launched a Stewardship app, a database which allows the team to better track progress on their engagement objectives, as well as outcomes from their engagement and voting activities.

In recent years, the firm has launched a sustainable range of funds which take ESG analysis further. They utilise the firm’s thematic research framework to identify and exploit sustainable investment themes. Within the Sustainable range, the Responsible Investment team has power of veto over companies held in the portfolios. This means the final decision is separated from the managers and provides an additional layer of challenge.

Overall we think ESG risks are considered in a meaningful way by the investment team for this fund. However, this fund isn’t part of their Sustainable range and may invest in companies that some would consider to be ‘sin stocks’, including those involved in tobacco, alcohol and gambling.

Cost

This fund is available at an annual ongoing fund charge of 0.69%, but HL clients benefit from an ongoing saving of 0.13%. This means you pay a net ongoing charge of 0.56%. Part of the fund discount is achieved through a loyalty bonus, which could be subject to tax if held outside of an ISA or SIPP.

The HL platform fee of up to 0.45% per year also applies, except in the HL Junior ISA, where no platform fee applies.

The fund takes its charges from capital which can increase the yield, but reduces the potential for capital growth.

Performance

Nichols has performed well as a multi-asset investor over the long term. Since taking over responsibility for this fund at the end of November 2017, it’s returned 75.30%* to the end of June, which compares to the IA Mixed Investment 40-85% Shares sector average return of 40.38%. Past performance is not a guide to future returns.

Nichols is a naturally conservative investor, which typically leads his multi-asset funds to not fall as much as peers when the market falls. Since he’s taken over managing this fund its kept pace with the market when it grows, but it’s reasonable not to expect this with a strongly rising market due to the cash and bond investments that provide balance. Nichols’ multi-asset funds have typically experienced lower volatility than company shares and multi-asset peers over time, although this hasn’t always been the case.

Over the 12 months to the end of June, the fund’s returned 6.32% compared to the IA Mixed Investment 40-85% Shares sector average return of 5.57%. Shares added the most value for the fund, which is expected given the large amount invested in them. In particular, investments in GE Vernova Inc, SAP and BAE Systems all added positively to fund performance. That said, some of the shares lost value, including Danaher Corporation and Applied Materials.

Investments in government bonds and cash also added to positive returns for the fund over the year.

At the end of May 2025, the fund had a historic yield of 2.13%. Please note that yields are not guaranteed and could fall as well as rise over time.

**These figures show performance of the T share class, which is available to HL clients. This share class was launched in November 2021 and so only has a three year history for the table above. The remaining figures reflect performance of the W share class, which has a higher ongoing charges figure.