BNY Mellon first active ETF to invest in international equities

BNY Mellon Investment Management has unveiled its inaugural active exchange traded fund, focusing on international equities to leverage market demand and address product gaps outside the US, according to executives.

The Concentrated International ETF, set to be launched, will offer full transparency and target 25 to 30 companies in developed markets globally, excluding the US. Walter Scott, a subsidiary of BNY Mellon, will provide subadvisory services for the portfolio.

Specifics on fees were not disclosed, but company representatives highlighted the compatibility of low-cost passive products with their active strategy ambitions, emphasizing the synergy in managing portfolio costs.

Matthew Camuso, ETF strategist at BNY Mellon Investment Management, emphasized the strategic balance between low-cost and zero-fee ETFs, freeing up resources for areas such as international equities within the enterprise.

BNY Mellon entered the ETF arena last year with a suite of ultra-low-cost ETFs, including zero-fee offerings for Large Cap Core Equity and Core Bond. These funds amassed $845 million in assets under management by June's end, with substantial inflows during the first half of 2021.

Despite growing investor interest in international equities, particularly among ETF investors, the availability of active strategies remains limited, noted executives. Camuso highlighted significant white space in this market segment, with a scarcity of active international ETF options compared to US equities.

While the appetite for actively managed ETFs, especially in global equities and fixed income, is evident, regulatory constraints mandate daily portfolio disclosure for international equity products, restricting nontransparent strategies to US equities or select international securities.

BNY Mellon's ETF lineup adheres to full transparency, allowing investors insight into portfolio holdings.