BNY Mellon Investment Management's decision to shift the active units of its Mellon Investments Corp. business to its affiliate managers is not of particular concern for industry players.
The $2.2 trillion money manager said this month that Mellon's $105.2 billion fixed-income unit, covering stable value, municipal, efficient beta and taxable fixed-income strategies, will move to global fixed-income and liability-driven investment firm Insight Investment, bolstering AUM to $1.1 trillion.
Mellon's equities and multiasset capabilities will move to Newton Investment Management, which will also get the Japanese equities team from BNY Mellon Investment Management Japan, creating a $140 billion firm. Newton had $62.8 billion in AUM as of Dec. 31.
And Mellon's cash capabilities will move to Dreyfus Cash Investment Strategies, creating a $300 billion firm, up from Dreyfus' $259.5 billion as of Dec. 31.
The moves should be completed by the end of the third quarter, leaving Mellon Investments as a $390 billion firm focused on running institutional index strategies — "which is really what created Mellon so many decades ago," said Hanneke Smits, CEO at BNY Mellon IM based in London.
Mellon CEO Des Mac Intyre will leave at the end of February. Michael Germano, chief operating officer, will take on responsibilities as CEO of active management during the transition. Stephanie Pierce will remain CEO of the index business.
While the decisions were made in collaboration with the respective managers, it also marks the first major change under Ms. Smits, who replaced Mitchell Harris in October.
"It's a very exciting opportunity to realign a number of the key components of Mellon, in particular in Insight and Newton," Ms. Smits said in an interview.
The rationales for the changes include strengthening each affiliate manager, increasing the global footprint of Insight and Newton and also ensuring that each firm could keep up with the demands of increasingly outcome-oriented clients, Ms. Smits said.
Clients are "increasingly looking for outcome-oriented investing, moving away from the traditional benchmarks. They've also been moving more into alts," she said.
The firm's other affiliates, including high-conviction equities manager Walter Scott & Partners Ltd. and private credit manager Alcentra Ltd. round out "quite a nice lineup of specialties that we can start to deliver more at scale to our clients," Ms. Smits said.
For those in the market who keep an eye on the manager and its boutiques, there are no particular qualms about the changes — particularly given that BNY Mellon IM is no stranger to shifting capabilities around.
"I certainly don't expect any material change to the company's financial results as a result of the realignment," Rajiv Bhatia, equity research analyst at Chicago-based Morningstar Inc., said in an email. "It seems to me they are taking the active part of Mellon … and moving it to their respective specialists leaving Mellon to be an index player."
Mr. Bhatia said realignments — particularly with an industry backdrop of consolidation and fee pressure — "are nothing new for BNY Mellon's investment management unit with its multiboutique model," noting that the firm had 27 boutiques at the end of 2007 but now has eight.
The industry backdrop was also highlighted by Portland, Ore.-based consultant RVK Inc. A statement provided by a spokeswoman said the move is one of several restructurings and M&A moves in money management that it is tracking and assessing for clients.
RVK's sole concern is whether the change "adversely affects our clients and we look for signs of a weakening organizational culture, distractions that take attention away from investing, higher turnover among key investment professionals, reduced focus on innovation, and performance in favor of simply building scale to cite just a few examples," the statement said.