Bringing you live news and features since 2013
Bringing you news, views and analysis since 2013

15598

BNY Mellon’s Dreyfus launches three multi-factor smart beta equity funds

RELATED TOPICS​

The Dreyfus Corporation has launched three mutual funds that seek to improve market exposure by pursuing consistent benchmark outperformance and downside protection potential relative to traditional market-weighted index products.   

Mellon Capital's proprietary systematic investment approach selects and weights stocks by economic size as well as quality and growth of earnings to focus on companies with more attractive valuations. 
 
By combining these performance factors into a single transparent investment process, the new mutual funds look to overcome some of the potential pitfalls Mellon Capital believes are inherent in traditional cap weighted approaches and single market factor strategies.  
 
The three "Dreyfus Strategic Beta" funds are Dreyfus Strategic Beta Emerging Markets Equity Fund; Dreyfus Strategic Beta Global Equity Fund; and Dreyfus Strategic Beta US Equity Fund.
 
"The addition of Strategic Beta portfolios from Dreyfus creates a suite of innovative offerings that provide investors with alternative means of gaining market class exposure that can complement passive and active approaches,” says Curtis Arledge, chief executive officer of BNY Mellon Investment Management.  "Successful active equity managers have been exploiting these inefficiencies for decades. A smart beta approach can provide an alternative option for investors who appreciate the rules-based, transparent nature of passive products such as index funds but believe that there are limitations to capitalisation-weighted index strategies.”
 
Dreyfus is the funds' investment adviser and Mellon Capital Management Corporation, an affiliate of Dreyfus, is the funds' sub-adviser. 
 
"Mellon Capital's strategic beta approach is a fundamentally weighted, quality-focused strategy that seeks to deliver consistent outperformance versus its benchmark by focusing on market inefficiencies," says Warren Chiang, one of the lead portfolio managers for the three funds. 
 
By combining what Mellon Capital believes are complementary exposures into one portfolio, the Strategic Beta funds seek to improve risk-adjusted performance relative to each fund's respective benchmark.  The funds' portfolio holdings are weighted by economic size, as well as quality and growth of earnings.  Mellon Capital de-emphasises the respective benchmark's most expensive and lowest quality stocks.  Risk is managed by diversifying across companies and industries, seeking to limit the potential adverse impact from any one stock or industry.  The fund portfolios are rebalanced semi-annually.
 
"Single-factor smart beta approaches may result in extended periods of underperformance or increased risk," Chiang says. "By combining complementary factor exposures into one approach, the Dreyfus Strategic Beta portfolios can potentially enhance risk-adjusted performance, seeking to provide a smoother stream of performance results. Our 30-year history in managing both factor-based active strategies and cap-weighted passive strategies provides Mellon Capital with a unique perspective in managing strategic beta portfolios."

Latest News

The trading and investment platform eToro has extended its proxy voting feature to all stocks..
C8 Technologies, the London-based fintech founded by former BlueCrest Capital Management partners Mattias Eriksson and..
DWS has announced the latest development in its strategic growth push in Alternative Credit with..

Related Articles

The trend of private equity firms acquiring businesses in the professional services sector continues with CVC Capital Partners eyeing a possible buyout of EY’s Italian consulting branch...
The trend of private equity firms acquiring businesses in the professional services sector continues with CVC Capital Partners eyeing a..
Pension funds
UK defined benefit (DB) pension plan sponsors could have access to GBP 1.2 trillion in surplus assets over the next decade, industry research reveals...
UK defined benefit (DB) pension plan sponsors could have access to GBP 1.2 trillion in surplus assets over the next..
Tim Crawmer, Payden & Rygel
Tim Crawmer and Frasat Shah of Payden & Rygel write that higher yields are attracting more demand from investors. Also, given that equities had a strong year last year, big funds have taken some chips off the table in equities and put them into fixed income...
Tim Crawmer and Frasat Shah of Payden & Rygel write that higher yields are attracting more demand from investors. Also,..
Lady justice
Top marks for the Pensions Regulator (TPR) whose efforts to improve resilience in the UK pension funds’ liability-driven investment (LDI) strategies received glowing commendations from the Bank of England in its March report...
Top marks for the Pensions Regulator (TPR) whose efforts to improve resilience in the UK pension funds’ liability-driven investment (LDI)..
Subscribe to the Institutional Asset Manager newsletter

Subscribe for access to our weekly newsletter, newsletter archive, updates on the site and exclusive email content.

Marketing by