We have added the BNY Mellon US Equity Income fund to our Recommended list.

Fund Snapshot

A US equity income strategy with a strong heritage, managed by experienced practitioners.  Alongside the search for companies with high current incomes and solid dividend growth is an unwavering focus upon valuation. The fund features in our ‘Larger-Cap, Value - Dividend Strategy’ category.

Fund Description – Key Points

• The fund is managed by John Bailer as lead manager, working closely with colleagues Brian Ferguson and Keith Howell.  Within the BNY Mellon Group, they are part of Newton Investment Management and based in Boston.  The team also works closely with the firm’s Global Research team, which incorporates specialist research, quantitative equity research and responsible investment research.
• They favour companies that have high current incomes, solid dividend growth and are on undemanding valuation multiples.  Indeed, valuation analysis resides at the heart of their work.  They also see dividend growth as an important lead indicator of the sustainability and growth of a company’s free cash flow and overall business momentum. Companies that have compelling catalysts, or are the subject of investor scepticism, are of particular interest.
• The team expresses high conviction through stock selection, with the portfolio featuring 30-60 holdings.  From a dividend yield perspective, the aim is to generate an income that is at least 50% higher than the benchmark over the long run.

Characteristics and Utility

• Style and market cap-wise, the fund has a larger-cap value profile.  The team is flexible, willing to consider value ideas from across all market segments.
• The fund is managed with high conviction, with the search for high and sustainable current incomes and dividend growth driving stock selection.
• Given this focus, the portfolio can display significant stock and sector deviations versus the benchmark.  As such, the risk/return profile can demonstrate meaningful variability compared to the index and many peers.  Inevitably, its outcome is idiosyncratic in nature.
• Performance is likely to lag the index when markets are momentum-driven and when lower quality stocks are in favour.
• The fund can be used by investors seeking income from US equities, as well as by those seeking a value-biased option.

To view our full factsheet, please visit the fund page on our website.