Overall approach & conclusions
In this Assessment of Value report we examined the 40 funds in the BNY Mellon Investment Funds (BNY MIF) range. Of these, seven were not given a rating due to insufficient track record in all assessment areas.
In analysing the funds we followed the seven-factor criteria as outlined by the UK regulator, the Financial Conduct Authority (FCA). We used a variety of data in each of these areas including inputs, data and opinions from several different independent consultants. This included a London-based fund research group specialising in the calculations of fund fees and expenses, a direct-to-consumer research firm and a specialist asset servicing cost and quality of services provider.
We used a matrix of more than a hundred different data sets to arrive at our conclusions.
This data covered different time frames, according to what was being measured. Non-performance-related data was assessed as at 30 June 2020. All performance-related data covers the varied time periods stated in each of the fund’s individual objectives, as outlined in the prospectus. All had an end date of 30 June 2020.
To make this analysis easier to understand we grouped the FCA’s criteria into four areas: cost, performance, quality of service and fair treatment of investors.
There were seven funds in the BNY MIF range with an insufficient performance track record for full analysis.
Like most investment funds, ours have multiple share classes. This is because there are different types of investors – retail, institutional and platforms – and varying ways to invest. By the latter we mean accumulation or income. Typically if you’re looking to grow your capital you may re-invest your income and as such you are likely to invest in accumulation shares. If you invest via the income shares, you will receive the income in the form of dividends.
In this report you will see us refer to various share classes. Here is what they mean and how we colloquially refer to them in the text of this report. All are in sterling.
A shares = Bundled or legacy retail share class Legacy direct share class. Commissions paid to advisers are included in the price.
B shares = Contemporary retail share class No commissions paid to advisers are included in the price.
W shares = Platform share class Introduced post RDR (Retail Distribution Review). Has high minimum investment threshold but no advisory commissions. By platforms we mean fund centres often used by financial advisers buying on behalf of their clients.
Institutional = Institutional share class Share class designed for institutional investors with high minimum threshold.
Out of the 33 funds in the BNY MIF range with sufficient track record for rating, 26 (79%) were rated green by the board – showing value for money. Seven (21%) of the eligible range – were rated amber, showing some value. There were none the board felt offered no value to investors.
For more details on the ratings of the seven amber-rated funds in the BNY MIF range – and our intended actions to address any failings – please click on the names below.
Across the range, there were six funds in which we found the costs to be too high. In some cases they were very high relative to their respective peers for retail investors.
In four funds, we found the cost gap between institutional and retail shareholders to be disproportionately wide versus similar funds. You’ll see in the following summary table that in these cases we split the sub-ratings in these funds.
We are now examining a range of options in order to lower costs in these funds. In the six funds failing to meet some of their performance objectives, we are reviewing the situation for each, taking action to address any failings. For some, the impact of the Covid-19 pandemic market volatility in the spring was the main reason for the failure.
For others, underperformance has been a feature for some time and even ahead of this review we started to look at ways to redress this.
We had one fund with an overall green rating but with amber ratings in two underlying categories. These were merited based on the quantitative criteria we used. However, the more qualitative analysis led us to still view the fund as offering value.
Please click on fund name for more details.
There were also the seven funds in the BNY MIF range with an insufficient performance track record for full analysis. As we could not assess all metrics, we rated what criteria we could and left the overall rating as undecided (marked as grey on the table).
Summary ratings table (in alphabetical order) : A to L
Summary ratings (in alphabetical order): L to U