Domestic Focus Inappropriate in Terms of Managing Risk Says BNY Mellon Firm
NEW YORK and LONDON, October 17, 2012 — Despite the outperformance of U.S. equities versus other major regions in 2011 and 2012 to date, BNY Mellon's Newton* asserts that the case for a global approach to investing is as strong as ever in its most recent report on investing globally.
"A global investment manager typically has 'real-time' flexibility in asset allocation," said Paul Markham, global equity portfolio manager at Newton. "If market conditions change, the active global manager can make asset allocation adjustments immediately on behalf of a client. In hindsight of the recent past, the argument for a U.S. domestic approach has appeared to be strengthened as U.S. equities have done well in a highly uncertain environment. However, in studying a global approach over a longer timeframe, we conclude that a U.S. domestic focus is inappropriate in terms of managing/harnessing risk," he continued.
The paper states that by introducing global exposure to their bond portfolios, investors would have generated stronger returns over the last 10 years than they would have achieved from a portfolio of U.S. government bonds alone.
Newton anticipates that some developing markets will provide highly attractive opportunities to U.S.-based investors in the years ahead. By contrast, Newton believes that a number of developed world markets are likely to face some significant structural (debt-related) challenges.
"We believe a multi-asset approach enables a full realization of the benefits of a global investment perspective," Markham concluded. A single portfolio vs. a segmented fund-of-funds approach can allow the manager to be aware of all the investment risks in the portfolio, as well as to compare the relative attractiveness of different regions, sectors, and asset classes in a dispassionate and timely manner not always available to the specialist manager, the Newton study says.
The complete Newton report is available at www.newtoncapitalmanagement.com/caseforglobal
Newton* is a London-based global asset management subsidiary of The Bank of New York Mellon Corporation and part of BNY Mellon. With assets under management of more than £47.5 billion, including assets managed by Newton Investment Management Limited as dual officers of Newton Capital Management Limited and The Bank of New York Mellon, Newton's group of affiliated companies provides a broad range of award-winning investment products and services to individuals, pension funds, charities and corporations. News and other information about Newton is available at www.newton.co.uk or follow us on Twitter @NewtonIM.
'Newton' refers to the following group of affiliated companies: Newton Investment Management Limited, Newton Capital Management Limited, Newton International Investment Management Limited, Newton Capital Management LLC and Newton Fund Managers (C.I.) Limited. Assets under management include assets managed by all of these companies except Newton Capital Management LLC, which provides marketing services in the U.S. for Newton Capital Management Limited. Except for Newton Capital Management LLC and Newton Capital Management Limited, none of the other Newton companies offer services in the US and Canada. Newton Capital Management Limited is registered in the United States as an investment adviser under the Investment Advisers Act of 1940.
BNY Mellon Investment Management is one of the world's leading investment management organizations and one of the top U.S. wealth managers, with $1.3 trillion in assets under management. It encompasses BNY Mellon's affiliated investment management firms, wealth management services and global distribution companies. More information can be found at www.bnymellon.com.
BNY Mellon is a global financial services company focused on helping clients manage and service their financial assets, operating in 36 countries and serving more than 100 markets. BNY Mellon is a leading provider of financial services for institutions, corporations and high-net-worth individuals, offering superior investment management and investment services through a worldwide client-focused team. It has $27.9 trillion in assets under custody and administration and $1.4 trillion in assets under management, services $11.6 trillion in outstanding debt and processes global payments averaging $1.4 trillion per day. BNY Mellon is the corporate brand of The Bank of New York Mellon Corporation (NYSE: BK). Additional information is available on www.bnymellon.com or follow us on Twitter@BNYMellon.
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