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Newton Announces Changes to Investment Offering

Dec 10, 2012

LONDON, 10 December 2012 — Newton Investment Management Limited, BNY Mellon’s global thematic investment boutique, announced today changes to a number of its investment strategies to position the firm for continued growth and in light of the current market environment. The firm plans to consolidate a number of funds and is making adjustments to how it manages the Newton Higher Income Fund.

In early 2012, and following a significant shift by investors away from UK equities and towards global equities, fixed income, and absolute return in the last few years, Newton consolidated its product offering in UK equities. The firm merged the Newton Income, Newton Growth and Newton UK Equity funds into a single fund and also redeployed resources to other areas of the firm.

Today, and in line with its continued view of a secular shift by investors, Newton is introducing further changes related to its UK equities team. Richard Wilmot (Investment Leader, UK Equities) has been named the new lead manager of the Newton Higher Income Fund. Wilmot, who also manages the Newton UK Equity Fund, has over 13 years’ investment experience with Newton and has a strong track record of delivering investment performance for clients. Specifically, Wilmot has delivered outperformance across the market cycle, producing top decile returns for investors in the Newton Growth Fund. The Newton Growth Fund has returned 51.0% against 25.0% sector average, placing it 24/281 funds in the sector from 31/12/05 to 31/3/12, at which point it was merged into the Newton UK Equity Fund, which has returned 5.2% against 4.9% sector average from 31/3/12 to 6/12/12*. Wilmot replaces Tineke Frikkee, who is in discussion with the company about her role at the firm.

Simon Pryke, Chief Investment Officer at Newton said, “We believe that the UK Equity team, under Richard’s leadership and working closely with our 17-strong global sector research analysts, will be well positioned to continue to successfully manage our UK equity portfolios going forward.”

The environment for investing in higher yielding stocks in the UK equity market has become more challenging in recent years, with a decreasing number of attractive higher yielding equities available to investors. As a result, Newton also intends to make changes to the way it manages the Newton Higher Income Fund. To enable the Fund to generate continued growth in both income and capital for investors, Newton is to broaden the buy and sell discipline of the Fund from buying at 115% of market yield and selling at the market yield, to buying at 75% of the market yield and selling at 50% of the market yield. Secondly, the firm intends to reduce the Fund’s yield progressively over the next 18 months, with the aim of meeting at least a 10% premium per annum to the FTSE All Share yield over rolling three year periods. Newton believes these changes will enable the dividend to grow over the long-term from this new level and provide an attractive total return to investors.

Pryke added: “Newton has developed a strong capability and reputation in equity income investing, with close to 20% of our firm-wide assets now being managed in this manner. Performance of our equity income suite has remained strong overall and we have a positive track record in managing change. We are confident that going forward the Newton Higher Income Fund will achieve both a premium income and an attractive total return in the long run, in line with what we aim to achieve with the rest of our equity income funds.”

Newton also plans to make a number of changes to a range of its investment strategies that are sub-scale and non-viable in the longer term. Subject to shareholder and regulatory approval, the Newton Cautious Managed Fund will be merged into the Newton Managed Income Fund. The firm will also, subject to regulatory approval, close several small funds as follows: the Newton Discovery Fund, Newton Pan-European Fund and the Dublin-domiciled BNY Mellon UK Equity, BNY Mellon Sterling Bond and BNY Mellon Continental European Funds.

Scott Goodsir, Head of UK Wholesale at BNY Mellon Investment Management, concluded: “With the onset of the Retail Distribution Review (RDR) and increased regulatory demands, we will see a more empowered investor as we look to 2013 and beyond. We believe that it is those firms who ensure their investment offering is focused on delivering continued outperformance that will strengthen their position in this dynamic market environment. Newton has a strong history of ensuring that it is successfully positioned for change, and we are confident these enhancements will ensure the firm remains at the leading edge of the global investment industry.”

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 £49 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.

BNY Mellon Investment Management is one of the world's leading investment management organizations and one of the top U.S. wealth managers, with $1.4 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. Additional information is available on www.bnymellon.com or follow us on Twitter @BNYMellon 

The Newton Higher Income Fund is a sub-fund of BNY Mellon Investment Funds (BNY MIF), a UK UCITS umbrella investment company with variable capital. The Newton Income, Newton Growth, Newton UK Equity funds and the Newton Pan-European Fund are sub-funds of BNY MIF. The Newton Managed Income Fund is a sub-fund of BNY Mellon Managed Funds I, a UK UCITS umbrella ICVC. The Newton Discovery Fund is a UK UCITS unit trust. The Dublin-domiciled BNY Mellon UK Equity, BNY Mellon Sterling Bond and BNY Mellon Continental European Funds. are sub-funds of BNY Mellon Global Funds, an Irish UCITS umbrella open-ended investment company with segregated liability among sub-funds.

*Sector – Investment Management Association UK All Companies;
Source - Lipper, net income re-invested, net of fees, Sterling terms. This does not include initial charges which can have a material effect on performance.

All information source BNY Mellon as of September 30, 2012. This press release is qualified for issuance in the UK and is for information purposes only. It does not constitute an offer or solicitation of securities or investment services or an endorsement thereof in any jurisdiction or in any circumstance in which such offer or solicitation is unlawful or not authorized. This press release is issued by BNY Mellon Asset Management International Limited (ex-US) to members of the financial press and media and the information contained herein should not be construed as investment advice. Past performance is not a guide to future performance. The value of investments and the income from them is not guaranteed and can fall as well as rise due to stock market and currency movements. When you sell your investment you may get back less than you originally invested. Registered office of BNY Mellon Asset Management International Limited: BNY Mellon Centre, 160 Queen Victoria Street, London, EC4V 4LA. Registered in England no. 1118580. Authorized and regulated by the Financial Services Authority. A BNY Mellon Company