BNY Mellon moving forward with diversity fund despite ‘anti-Semitic’ backlash

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BNY Mellon’s investment management arm is turning to funds that donate some of their revenue to diversified charities, even as US financial conglomerates face attack from “anti-semitic” politicians .

Custody Bank’s Dreyfus Government Cash Management Fund recently filed with the Securities and Exchange Commission to launch a share class allowing clients to donate a portion of net revenue to a charity of their choice.

It is based on the existing BOLD class of shares that contribute 10 percent of net revenue to a scholarship fund at Howard University, a historically black university. A separate BNY Mellon-branded exchange-traded fund launched last month invests in companies that promote “opportunities for women” and donates 10 percent of management fees to charities with similar goals.

The new funds come as Republicans and Democrats are drawing a battle line over the use of environmental, social and governance factors in investments. While red state politicians aim for what they call “conscious” investing, blue states are demanding that asset managers address climate change problems.

“We have some clients who really like the idea that they can do well financially and do well at the same time,” said Haneke Smits, chief executive of BNY Mellon Investment Management. “It is not for every customer so we have a wide range of capabilities.,

BNY Mellon runs its investment arm as a group of separate boutiques, each of which has a different approach to money management and even the decor of its own office. Smits and the bank’s new chief executive, Robin Vince, are looking for ways to work together without sacrificing their distinct brands.

“We have historically been very silent. It is very important to us and our clients that we continue to give (individual) companies freedom over their investment processes. Our companies are very different, Smits said.

Several BNY brands, including Newton and Insight, emphasize their ESG credentials and have joined the Net Zero Asset Managers initiative, but others have not.

“We’re just not set up in a way that we’re dictating things, at least through the investment management lens, of what each company should be doing., Smuts said.

That hasn’t saved BNY Mellon from being among the financial institutions that have been the target of “antiwar” critics. Texas controller included 30 BNY Mellon and Dreyfus funds List Investment products that the state considers a “boycott” of fossil fuels.

BNY Mellon, like many managers, is under pressure to cut costs as its assets under management decline sharply with the markets in 2022 and because the growth of passive funds has driven down fees more broadly. “Customers want to do things more cheaply. , , There is pressure on fees, there is pressure on delivering results as well,” she said.

In the first quarter, the group’s assets under management rose 4 percent to $1.9 trillion, as strong inflows into its fixed income and liability-driven investment strategies were partially offset by outflows from equities and other sectors.

Smits was recently named global head of the 30 percent club, which has pushed for the inclusion of more women on public company boards. She said she plans to broaden her focus: “A lot of corporates are making progress in terms of diversity in their workforce, but it’s still not coming through at the senior level.”

“There are not enough women in CEO, CFO roles or president roles. So I think we need to focus on 30 percent in executive roles and, as part of that, front office roles. “There’s also an intersectional piece, and it’s different for women of color and women in the LGBTQ community,” she said.