BNY Mellon launches active global infrastructure ETF

Nov 9th, 2022 | By | Category: Equities

BNY Mellon Investment Management has launched a new actively managed equity ETF targeting opportunities in the global infrastructure asset class.

James Lydotes, Head of Equity Income at Newton Investment Management

James Lydotes, Head of Equity Income at Newton Investment Management.

The BNY Mellon Global Infrastructure Income ETF (BKGI US) has been listed on Cboe BZX Exchange with an expense ratio of 0.65%.

The fully transparent fund is sub-advised by Newton Investment Management, a BNY Mellon affiliate specializing in theme-based equity and multi-asset investing.

Day-to-day management of the ETF is headed up by James Lydotes, Newton’s Head of Equity Income; and Brock Campbell, the firm’s Head of Global Equity Research.

Investment in infrastructure assets offers investors key benefits such as the ability to diversify their equity allocations while adding key features such as regular income (the fund targets a forward-looking 12-month yield of 6% or more), inflation protection, and a focus on defensive business models.

The fund’s debut is timely, launching amid a largely downbeat macroeconomic outlook and heightened inflation in the US, as well as globally, with the US Consumer Price Index increasing 8.2% year-over-year in September, according to data from the Bureau of Labor Statistics.

According to Newton, the ETF provides a differentiated approach to most existing infrastruture-focused investment products, offering exposure to both traditional (energy, industrials, and utilities) and non-traditional (communication services, health care, and real estate) infrastructure assets to capture a broader opportunity set within the segment.

Newton utilizes quantitative and fundamental research to select infrastructure companies with favorable combinations of cash flow stability, dividend payment potential, and valuation metrics (such as price-to-earnings ratio, price-to-book ratio, and price-to-cash flow ratio). Newton’s fundamental research includes evaluating key areas such as balance sheet strength, competitive landscape, stock-price valuations, liquidity, and an analysis of the regulatory environment.

James Lydotes, Head of Equity Income at Newton Investment Management, said: “A key differentiator for infrastructure assets compared to other assets is their historic predictability and stability through market cycles as there is a constant need for these services such as water, electricity, hospitals, and telecommunication. Infrastructure is a diverse asset class that aligns with global societal trends and growth demands such as increasing broadband access via 5G, energy transition, and supporting an aging population through senior living and acute care. We believe infrastructure assets can provide growth potential as well as regular income and potential equity diversification for clients.”

Andy Provencher, Head of North America Distribution at BNY Mellon Investment Management, added: “We are pleased to offer our clients the BNY Mellon Global Infrastructure Income ETF as the newest offering in our growing suite of ETFs. This addition highlights our continued commitment to providing innovative, outcome-orientated strategies through versatile vehicles. Through leveraging the capabilities, knowledge, and expertise of Newton in equity investing, we’re able to provide a differentiated infrastructure approach for our clients.”

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