3 min read July 2023 — Stephanie Pierce, CEO of Dreyfus, Mellon & Exchange-Traded Funds at BNY Mellon Investment Management, sat for an interview with Invest: where she discussed recent firm initiatives, product launches and research to support DEI efforts, the growing popularity of exchange-traded funds (ETFs) and BNY Mellon Investment Management’s commitment to fostering innovation within the investment sector.
What are the opportunities and the trends in the investment market and how are you looking to leverage those?
One area that I personally focus on is the intersection of doing well and doing good. We see that investors are increasingly aligning their investments with their values and as we like to say, “investors vote with their feet” and want to see how their investments contribute to society. This is where diversity, equity, and inclusion (DEI) factors come into play.
For example, we conducted a comprehensive research study called Pathway to Inclusive Investment that surveyed 8,000 women and men across 17 countries. The study explored why women aren’t investing at the same rate as men and identified barriers and potential solutions to overcome this.
It found that there are several reasons why women may hesitate to invest, such as concerns about income, perceived risk and the fear of losing money. I’m focused on bridging this gap and making investing more appealing and relevant to women. Now, we’re focusing on simplifying the language, reducing jargon and making investment concepts more understandable. In fact, if women were able to invest at the same rates as men, over $3 trillion of incremental money would flow into financial markets. Two-thirds of this amount, around $1.87 trillion, would be directed toward sustainable and responsible investments.
Another significant trend we’re observing is a shift toward ETFs. In the past five years, approximately $1 trillion has been invested in ETF strategies, and this trend continues to gain momentum.
What are some projects or initiatives that you are excited to push forward?
One exciting development that emerged from our Pathway to Inclusive Investment research is the launch of the BNY Mellon Women’s Opportunities ETF. We introduced this ETF in May 2023, and it’s managed by two female portfolio managers, one of whom is based here in Boston. Industry research suggests that companies which prioritize recruiting, retaining and promoting women tend to outperform those that don’t, and this in turn provides a solid foundation for selecting companies for our portfolio. This actively managed ETF consists of a concentrated portfolio of 30 to 50 companies, benchmarked against the S&P 500. The portfolio consists of two types of companies. First, we invest in companies that excel in championing gender equality in the workplace, supporting women through initiatives such as flexible childcare options and fertility support. Second, we invest in firms which offer products and services specifically designed to cater to the needs of women in the workplace.
What are the challenges in the market and how are you helping your clients navigate these?
One of the things I encourage my team to do is to sit on the same side of the table with our clients. We simplify investment and financial concepts in plain language and help clients understand the current state of the market by addressing their concerns directly. It’s about building trust and deepening relationships through education and transparency.
Any institutional clients have significant amounts of cash to invest which will ultimately be used to pay expenses, such as salaries and invoices. For the past 50 years, Dreyfus, which is our money market business, has been providing clients with both a competitive yield and daily liquidity on their cash investments. 2023 has been among the more complex environments for our clients to understand in the half century that we have been in business, with the sharp rise in short-term interest rates coupled with bank failures, the debt ceiling debates and the threat of an economic slowdown. Notwithstanding the attractive yields on cash investments, clients were understandably nervous about the safety and liquidity of their investments in this environment.
By sitting on the same side of the table as our clients and understanding what’s important to them, we can tailor our offerings to deliver on their goals and needs. In response to their growing interest in doing well and doing good, we’ve launched additional innovative offerings in the past year. One example is our BOLD Shares, which stands for Black Opportunity for Learning and Development, are offered on our flagship Dreyfus Government Cash Management Fund and allocate 10% of net revenue to fund scholarships at Howard University. This program, called the Dreyfus BOLD GRACE Grant, supports students who face financial challenges, ensuring they can complete their education.
We are also developing Dreyfus SPARK Shares, which will allow clients to direct their charitable contributions to causes aligned with their philanthropic goals. This customizable offering ensures that we meet our clients’ objectives and needs, both in terms of financial performance and their desire to make a positive impact on their communities.
By understanding what’s important to institutional investors, we customize our offerings to deliver a competitive yield and liquidity that aligns with their philanthropic goals, which is why our clients keep coming back to us.
What is your outlook for BNY Mellon for the next two to three years and your top priorities in that time frame?
We aim to build upon our strong foundation as leaders in our field to provide a richer and more comprehensive experience for our clients. We want to bring the best of BNY Mellon to our clients in a digestible package, making it easy for them to do more business with us. With our wide range of capabilities, we seek to identify and curate solutions that meet and anticipate their needs.
With that in mind, innovation is a key focus for us, not just in terms of investment products but also in finding ways to leverage our knowledge and expertise across the firm. One example is our recently-launched Pershing X Wove platform. Wove aims to streamline the experience for investment advisors by weaving together the many systems and technologies they need to manage their businesses into a single integrated platform. Research suggests that investors spend 70% of their time on administrative tasks and 30% with their clients, and we want to flip that equation with Wove, enabling advisors to spend more time adding value to their clients.
One of the new solutions we offer on the Wove platform is BNY Mellon Precision Direct Indexing, which allows advisors to provide tailored strategies, portfolio customization and cost-effective tax management to their clients. With this solution, advisors can exclude certain sectors or companies based on the specific preferences and values of their clients while still providing them with broad market exposure.
At BNY Mellon we strive to create a seamless and tailored client experience that simplifies complex concepts and meets their specific needs. These recently launched products exemplify our commitment to bringing the best of BNY Mellon together to deliver the most compelling outcomes for our clients.
For more information, please visit:
