HEAD-TO-HEAD: BNY Mellon IM versus Ninety One

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INVESTMENT PROCESS

Both the BNY Mellon Global Leaders and Ninety One Global Equity funds are highly rated global equity offerings. Their retail share classes receive a Morningstar analyst rating of Bronze and Silver, respectively, according to Morningstar Direct.

The funds have consistently provided positive returns to investors, according to McDermott, but noted that they are very different products.

Perhaps the most noticeable difference is their style: the BNY Mellon fund is a traditional bottom-up strategy that focuses on high quality growth companies, while the Ninety One fund follows a quant methodology and has a blended-approach to investing.

“Given the growth focus on the BNY Mellon fund, it is unsurprising to see the likes of technology, media and telecoms (TMT), healthcare and consumer products sectors account for the majority of its holdings.

“While the Ninety One fund has also typically had its largest sector exposure in TMT, it also has traditionally held reasonable holdings in the likes of consumer products, financials, healthcare and industrials sectors,” McDermott said.

Sector allocation

Source: Fund factsheets. As of the end of January 2021.

McDermott explained that the BNY Mellon fund has a strong emphasis on capital growth by targeting companies capable of 20% wealth generation per annum over the long-term.

“For a stock to be selected for the fund, it is first opened to the scrutiny of all members of the investment team. Its inclusion must then be agreed upon by that entire team, and not simply by one or two individuals.

“When a member of the investment team comes across a stock they believe should be included in the portfolio, they become the ‘stock champion’ and will typically continue to have responsibility for following and monitoring that stock for the duration of that investment,” he said.

Meanwhile, the Ninety One offering makes use of the “4Factor” model – a methodology that combines quantitative and qualitative analysis that is also used in their other strategies, including its Asia-focused equity fund. The factors in the model include value, quality/strategy, earnings momentum and share momentum.

Another noticeable difference is the number of each funds’ holdings. The BNY Mellon fund is more concentrated with just 25-30 stocks, while the Ninety One offering has around 80 names.

“The focus of the BNY Mellon fund is purely on stock selection without any reference to sector or benchmark weights.

“The Ninety One fund does appear to have some semblance to its index in terms of underlying sector exposure,” McDermott said.

Top 10 holdings

Source: Fund factsheet. As of the end of January.

In terms of geographic allocation, while both funds have more than half of their exposure in US equities, the BNY Mellon fund has traditionally had greater exposure to European companies, McDermott added.

Geographic allocation

Source: Fund factsheets. As of the end of January.

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