BNY Mellon Absolute Return Equity U GBP

A global equity market neutral strategy.

  • 117.23p
    Price (Inc)

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  • -
    Price (Acc)

    These are the shares in the fund that don’t pay out an income to clients. Any dividends – the money a company can pay out to its investors – are reinvested into companies in the fund. Despite no income, the shares should be worth more over time. Good incentive, eh?

  • 0.00%

    Initial charge

    Some funds charge you when you first invest, which is aptly known as the initial charge. They’re usually between 3-5% but at Bestinvest, we usually don’t charge you a penny!

  • 0.85%
    Annual management charge

    This is how much the fund management company charges to run the fund. It’s like paying a babysitter, dog sitter or house sitter (that makes well-informed, heavily researched changes to improve your baby/dog/house when needed).

  • 0.96%
    Ongoing charges

    This stands for Ongoing Charges Figure. It’s the cost of running a fund and includes admin fees, manager fees, administration costs, etc.

  • 0.00%
    Yield

    How much the fund is currently paying out in income to investors. It’s NOT to be confused with the overall growth of a fund – a very different thing indeed. It’s also NOT a guarantee of future pay-outs, just a snapshot. This is more what it’s not than what it is…

Prices as at 22 May 2020

A daily dealt Dublin registered UCITS fund offering exposure to a global equity market neutral strategy targeting returns of LIBOR +6% before fees on a rolling 5yr basis. The fund will generally have a beta of zero, and will not take significant sector or market exposure, with underlying exposures in the form of paired positions. Stop losses are also applied to each paired position with the aim of preserving capital and managing portfolio volatility. The fund's exposure was originally focused primarily on the UK equity market, however since H2 2013 the strategy was broaden to include a more global investment universe.

Fund summary

Sector Targeted Absolute Return
Structure OFFSHORE FUND
Launched March, 2011
Size £327m
Yield 0.00%
Charging basis
Dividends paid Acc units only

Charges

Standard initial charge 0.00%
Initial charge via Bestinvest 0.00%
Additional bid/offer spread 0.00%
Annual management charge 0.85%
Ongoing charges figure 0.96%

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Investment process

The fund seeks to provide positive absolute returns in all market conditions. Since this is a market neutral strategy the performance of the strategy is generally less dependent on the direction of the market. The Fund is composed almost entirely of paired trades. Each pair consists of two units - a lead (either long or short) which drives the position, and a secondary unit which creates the market neutrality and isolates the alpha identified in the lead unit. Occasionally an outright long or short position may be taken - within the constraints of the net exposure and beta limits. The team use a proprietary screening process to identify potential trade opportunities, whether long or short, then conduct fundamental analysis before entering into trades. The screening process focuses on the cash flow return on investment. Stop-loss review triggers apply to the open profit and loss on the paired trades - not individual positions themselves. Triggers are based on predetermined falls from the peak, as well as the falls from the inception of the position. The BNY Mellon Absolute Return Equity Fund is higher risk version of its sister fund, the Absolute Insight Equity Market Neutral Fund, and as a result carries a higher return target and gross exposure levels.

A conservative, low risk, long short equity market neutral strategy. The fund's emphasis on pairs trades serves to dampen fund volatility further. The prevailing market backdrop and the amount of leverage deployed can also impact the return outcome. In recent years high intra-market correlations and more acute style rotations have acted as a headwinds for the strategy, the team have responded by cutting gross exposures and tightening stop losses, but this in turn can crimp return potential.

Manager research

Average monthly relative returns

  • 15/16 0.00%
  • 16/17 0.00%
  • 17/18 0.00%
  • 18/19 0.00%
  • 19/20 0.00%

Bestinvest MRI

  • 3 years 0.00%
  • 5 years 0.00%
  • Career -0.17%
  • 3 years 0.00%
  • 5 years 0.00%
  • Career 44.80%

Performance figures are based on the average of monthly percentage returns relative to the benchmark index.

Andrew Cawker

Cawker joined Insight in April 2003 within the UK Specialist Funds team managing the portfolios of a number of segregated and pooled pension funds. Prior to joining Insight, he was an Associate Partner at Invesco Global Asset Management (Amvescap plc) where he was involved in developing specialist UK equity business alongside the management of a range of UK and Global Equity portfolios. He was also responsible for pan-European analysis for the Retail, Food, Beverages and Tobacco sectors. He started his investment career at Prudential Portfolio Managers, moving through the ranks to Director, with responsibility for UK equities. He holds a degree in Business Studies from the City of London Polytechnic.

Track record

Andrew Cawker has 12.4 years experience of managing mutual funds in this sector. Over this period the average monthly return relative to the benchmark index has been -0.17%. During the worst period of relative performance (from December 1993 - October 2008) there was a decline of 24% relative to the index. The worst absolute loss has been 40%.

Periods of worst performance

Absolute -40.00% (May 2007 - October 2008)
Relative -24.00% (December 1993 - October 2008)

About the MRI

Our unique indicator: the Bestinvest Manager Record Index (MRI) measures the likelihood that the fund manager is adding value through their decisions. It is based on their performance record over the course of their career, adjusted for the amount of risk taken. MRI is an important contributor to our fund rating system but it is also vital to take account of qualitative factors. It is also very important to select funds to form a cohesive portfolio with an appropriate overall risk level.

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Portfolio

Broad or sector based indices may be used to hedge lead positions.

Constraints

Expected gross exposure <200%, expected net exposure <13%. Max VAR budget 10%.

Key Investor Information

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