Newton Investment Management is set to become a $140bn (£101.2bn) investment business following its parent company’s decision to break off multi-asset and equities assets from its Boston-based investment arm.
BNY Mellon IM announced on Wednesday plans to distribute $222.3bn (£161.2bn) worth of assets from Mellon Investment Corporation to its UK-based businesses Insight Investment, Newton and Dreyfus Cash Investment Strategies.
The $2.2trn asset manager said the transfer, which is expected to complete in Q3, would enhance the trio of firms’ “respective specialist capabilities and strengthen their research platforms and global reach”.
Newton will absorb $77.1bn of equities and multi-asset strategies from Mellon as well as Japanese equities from BNY Mellon IM Japan, as per an existing collaboration. Insight will take on $105.2bn of fixed income assets from Mellon, while Dreyfus will receive $40bn from its liquidity management strategy.
“In the face of a rapidly changing investment environment, well-resourced specialist expertise with global research capabilities are needed to deliver the outcome-focused solutions clients expect,” said BNY Mellon IM boss Hanneke Smits.
“The realignment of Mellon’s investment capabilities with Insight, Newton and Dreyfus CIS is part of our commitment to providing our clients with a range of investment strategies that meet their current and evolving objectives.”
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Newton investment professionals to triple
Following the transfer Newton’s assets will more than double from $62.9bn to $140bn. Headcount at the firm will spike from 350 to 525, with the number of investment professionals tripling to 150.
The BNY Mellon IM subsidiary has already seen massive change this year with Aviva Investors boss Euan Munro (pictured) stepping up to become its chief executive in June.
Munro joins at a precarious time for the asset manager which in 2020 lost a number of heavy hitting managers, including the face of its £10bn global income franchise Nick Clay, and has generally been accused of falling off the radar in the retail space.
Newton COO and interim CEO Andrew Downs said the goal of the reshuffle was to create a “global investment firm with a deep and differentiated research platform … for the modern investor”.
“We are fundamental investors at heart and the benefits of adding Mellon’s leading research capabilities, along with BNY Mellon IMJ’s highly regarded Japanese equities capabilities, will strengthen our idea generation and investment decision-making,” Downs said.
Realignment should help Newton brand identity
Willis Owen head of personal investing Adrian Lowcock said the Mellon restructure should help the subsidiaries under the BNY Mellon IM umbrella develop their own brand and corporate identities and feed down into new business activity.
“For me this is more about streamlining the Mellon organisation and ensuring that investment management is held with each specialist brand,” Lowcock said.
“Brands such as BNY Mellon IM’s have lots of potential. What it needs to do is raise the profile of some fund managers and its investment strategy.”
Aligning its fixed income, equities and multi-asset strategies with specific subsidiaries will help ensure the right skillset sits in the right area and avoid duplication of expertise in different parts of the business, said AJ Bell head of active portfolios Ryan Hughes.
“Looking ahead, it is perhaps what might happen next that is more relevant for UK investors as the people and products that sits beneath the Insight, Newton and Dreyfus businesses are where their interaction is.
“With Newton recently appointing Euan Munro as CEO of Newton, I’m sure we can expect further changes once he has bedded in as they look to get the business firing on all cylinders again.”
Insight assets to hit $1.1trn
After absorbing Mellon’s fixed income assets and research capabilities Insight will have $1.1trn in AUM and over 1,000 staffers, including 300 investment professionals, across the UK, Ireland, Germany, US, Japan and Australia.
Dreyfus’ total assets will surge to $300bn and headcount will lift to 60.
Mellon will continue to look after $390.3bn of equity and fixed income index strategies on behalf of institutional investors, BNY Mellon IM said.
But due to the changing structure it said Mellon’s current CEO Des Mac Intyre had decided to leave the firm at the end of February and would be replaced by COO Michael Germano during the transition period. Stephanie Pierce will remain on as CEO of the index business.
