BNY Mellon confirms "difficult" withdrawal from SMA

The firm admitted the market for its separately managed accounts business was slower than it expected, even as one Malaysian private bank announced the launch of the platform.
BNY Mellon confirms "difficult" withdrawal from SMA

BNY Mellon Investment Management released a short statement late last night confirming the withdrawal of its separately managed accounts (SMA) business in Asia, even as a Malaysian private bank became the first to announce it was rolling it out.

BNY Mellon IM expressed disappointment at the slow take-up of this offering in the region and said the decision to shelve the platform had been a difficult one to take.

It comes after AsianInvestor broke news of BNY Mellon IM’s withdrawal from the SMA platform Spectrum early yesterday morning, as reported.

“BNY Mellon confirms its recent decision to withdraw from our separately managed accounts business, Spectrum, in Asia,” the statement read. “We are actively working with our counterparties to manage this matter.”

It stated that the decision had no impact on BNY Mellon’s other asset management, wealth management and investment services offerings or its clients, and that it remained fully committed to the Asia-Pacific region.

“Unfortunately the development of the market has been slower than we anticipated,” it said. “The business decision to withdraw Spectrum from the market was difficult.”

It added: “We are working closely with our clients to ensure a smooth transition and to identify the best options.”

The Spectrum scheme was driven by Asia-Pacific chief executive Alan Harden. It was designed to offer high-net-worth individuals access to SMAs for as little as $1 million, well below the typical $100 million minimum for institutions globally.

However, it failed to take off with third-party distributors. One source had described it to AsianInvestor as ahead of its time. “It is a bit of a shame, it is the sort of thing I would have liked to have used,” he said.

Interestingly, shortly before AsianInvestor broke the news of BNY Mellon IM’s withdrawal, CIMB Private Banking announced it had launched a global SMA platform in partnership with UOB Asset Management and BNY Mellon Managed Investments.

In other words, even as BNY Mellon was acting on its decision to withdraw, CIMB was in the process of becoming the first to launch the service.

Carolyn Leng, head of CIMB Private Banking Malaysia, described it as a major breakthrough for the country’s wealth management industry.

“Now, high-net-worth investors will have access to global strategies typically reserved for institutional investors,” she told a media roundtable to announce its launch of SMA, as reported in The Edge newspaper.

CIMB described the SMA platform as a private mandate service done via a combination of direct ownership of portfolio securities and a fully disclosed and customised portfolio. Investors were given options to exclude certain industries and view their securities and respective performances, The Edge reported.

The platform’s strategies were global equity provided by Capital International; Japan active equity from BNY Mellon Japan; US large-cap growth by The Boston Company; and pan-European equity alpha by Lazard Asset Management.

Leng said the platform aimed to deliver absolute returns of 5-10% annually, depending on risk profile. The minimum investment amount was $500,000, with additional investments starting from $50,000. The annual management fee ranged from 1.8-2% of the portfolio’s NAV.

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