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Performance Summary
International equities declined over the review period. This more muted outcome was partially attributable to the drawdown experienced in April, when risk assets faced challenges on two fronts. Geopolitics returned to the fore as tensions in the Middle East, between Israel and Iran, briefly escalated, driving a spike in energy prices. This coincided with disappointing US inflation data, as several different measures exceeded expectations, undermining the disinflation narrative that had buoyed expectations of a series of interest-rate cuts over the remainder of 2024. However, as the quarter progressed, subsequent inflation reports proved more encouraging, enabling international equity investors to regain their appetite for risk, at least temporarily. European, and notably French, markets subsequently saw some weakness in the wake of President Emmanuel Macron's decision to call snap parliamentary elections after his centrist alliance was comprehensively beaten by Marine Le Pen's far-right movement in the European parliamentary vote.
Following a challenging start to the quarter, the fund underperformed despite regaining ground towards the latter stages of the period. Stock selection was weak in financials, while underweight positioning in the sector also proved disadvantageous. Negative stock-selection effects also materialized in information technology and materials. On the other hand, stock selection was strong in consumer discretionary. An overweight in health care contributed positively, while a zero weighting in real estate was also supportive of relative performance.
BNY Mellon International Equity Fund underperformed its benchmark index, the MSCI EAFE ("the index"), during the second quarter of 2024.
Average Annual Total Returns (6/30/24)
Share Class / Inception Date | 3 Month | YTD | 1 Year | 3 Year | 5 Year | 10 Year |
Class A (NAV) / 12/29/06 | -1.58% | 4.15% | 7.36% | -0.95% | 4.55% | 2.87% |
Class A (5.75% max. load) | -7.22% | -1.84% | 1.16% | -2.89% | 3.32% | 2.26% |
Class I (NAV) / 12/29/06 | -1.55% | 4.24% | 7.56% | -0.71% | 4.81% | 3.14% |
MSCI EAFE Index | -0.42% | 5.34% | 11.54% | 2.89% | 6.46% | 4.33% |
The performance data quoted represents past performance, which is no guarantee of future results. Share price and investment return fluctuate, and an investor's shares may be worth more or less than original cost upon redemption. Current performance may be lower or higher than the performance quoted. Performance for periods less than 1 year is not annualized. Go to im.bnymellon.com for the fund's most recent month-end returns. Returns assume the reinvestment of dividends and capital gains, if any. |
Total Expenses (6/30/24)
Share Class | Gross1 | Net2 |
Class A | 1.20% | 1.07% |
Class I | 0.92% | 0.82% |
| [1] Gross expenses is the total annual operating expense ratio for the fund, before any fee waivers or expense reimbursements. [2] Net Expenses is the total annual operating expense ratio for the fund, after any applicable fee waivers or expense reimbursements. The Net Expenses is the actual fund expense ratio applicable to investors. Not all classes of shares may be available to all investors or through all broker-dealer platforms. The fund's investment adviser, BNY Mellon Investment Adviser, Inc., has contractually agreed, until February 1, 2025, to waive receipt of its fees and/or assume the direct expenses of the fund so that the direct expenses of none of the fund's share classes (excluding Rule 12b-1 fees, shareholder services fees, taxes, interest expense, brokerage commissions, commitment fees on borrowings and extraordinary expenses) exceed .82%. On or after February 1, 2025, BNY Mellon Investment Adviser, Inc. may terminate this expense limitation agreement at any time. |
Although relative performance improved as the period progressed, the fund was unable to fully recover the ground lost over the early stages of the quarter. Stock selection in financials weighed most heavily as French reinsurer SCOR (OTCPK:SZCRF) struggled. Underweight positioning in the sector also detracted. On the other hand, stock selection was a source of relative strength in consumer discretionary. Not owning sizeable index constituent Toyota Motor proved of particular benefit. Meanwhile, fellow Japanese business Recruit Holdings (OTCPK:RCRRF) registered as the portfolio's top contributor on this occasion.
Top 10 Holdings (6/30/24) | |
Novo Nordisk (NVO) | 3.88% |
Novartis (NVS) | 3.74% |
ASML (ASML) | 3.68% |
Nestle (OTCPK:NSRGY) | 3.43% |
Unilever (UL) | 2.87% |
LVMH (OTCPK:LVMHF) | 2.83% |
Siemens Aktiengesellschaft (OTCPK:SIEGY) | 2.68% |
Sanofi (SNY) | 2.65% |
AstraZeneca (AZN) | 2.48% |
Experian (OTCQX:EXPGF) | 2.33% |
The holdings listed should not be considered recommendations to buy or sell a security. Large concentrations can increase share price volatility. | |
Top Contributors
Recruit Holdings continued to enjoy a strong start to the year, having announced a solid set of fourth quarter results and new capital allocation policy. The potential for margin improvement in the human resources Technology and Matching and Solutions businesses encouraged investors.
Investors reacted positively to the strong organic growth displayed by credit bureau Experian over the fourth quarter. The company also encouraged with its new medium-term outlook. Shares in semiconductor foundry TSMC received a boost, as did the artificial intelligence theme more broadly.
AstraZeneca contributed positively to relative performance, aided by a well-executed first quarter. The pharmaceutical giant reported a strong start to the year, in which revenue and earnings comfortably surpassed expectations.
Not owning Toyota Motor, a sizeable index constituent, proved beneficial as the shares struggled.
Top Detractors
French reinsurer SCOR underwhelmed investors with its first quarter results as Life & Health performance was negatively affected by US mortality and claims reporting trends. The prospect of a far-right government in France following President Macron's shock decision to call snap parliamentary elections also unnerved investors.
With the luxury sector witnessing a moderation in demand and growth expectations, LVMH underperformed. Despite limited near-term visibility, first quarter sales for the group were broadly as expected.
Shares in medical-technology company ConvaTec (OTCPK:CNVVF) were weak over the quarter, hampered by proposed changes to reimbursement for part of its wound biologics business.
Advantest (OTCPK:ATEYY) shares continued to retreat following a strong initial start to 2024. Full-year sales, operating income and net income all registered as down year-on-year, with management flagging a softening semiconductor market for major consumer applications.
Japanese technology-focused staffing and servicing company TechnoPro (OTCPK:TCCPY) detracted. With investors wary of shifting conditions in Japan's labor market, notably in terms of wage-hike momentum, quarterly operating profit was broadly in line with consensus expectations.
Market Outlook
In the shorter term, investors will be alive to any data points challenging the prevailing narrative of a soft economic landing, with labor markets, inflation and growth numbers keenly analyzed. Politics may yet have an outsized impact on financial markets as we move into the latter part of the year. In particular, the US election could affect the outlook for the US economy, to the extent that policy shifts affect growth, corporate profitability or geopolitical relations. We continue to seek out those businesses with durable returns and enduring financial resilience. We believe businesses that display these characteristics should be well-placed to outperform wider equity markets over the longer term, regardless of the short-term vagaries of the macroeconomic and political backdrop.
| Investors should consider the investment objectives, risks, charges and expenses of a mutual fund carefully before investing. To obtain a prospectus, or a summary prospectus, if available, that contains this and other information about a fund, contact your financial professional. For more information, call 1-800-373-9387 or visit BNY Mellon Investment Management - Global Home - English. Read the prospectus carefully before investing. Investors should discuss with their financial professional the eligibility requirements for Class I and Y shares, which are available only to certain eligible investors, and the historical results achieved by the fund's respective share classes. Past performance is no guarantee of future results. Risks Diversification cannot assure a profit or protect against loss. Equities are subject to market, market sector, market liquidity, issuer, and investment style risks, to varying degrees. Currencies are subject to the risk that those currencies will decline in value relative to a local currency, or, in the case of hedged positions, that the local currency will decline relative to the currency being hedged. Each of these risks could increase the fund's volatility. Investing in foreign denominated and/or domiciled securities involves special risks, including changes in currency exchange rates, political, economic, and social instability, limited company information, differing auditing and legal standards, and less market liquidity. These risks generally are greater with emerging market countries. Index Definitions The Morgan Stanley Capital International Europe, Australasia, Far East (MSCI EAFE®) Index is a free float-adjusted market capitalization weighted index that is designed to measure equity performance in developed markets excluding the United States and Canada. The index consists of select designated MSCI national developed market indices. Investors cannot invest directly in any index. Definitions Q is quarter. NAV is Net Asset Value. YTD is Year to Date. FDIC is Federal Deposit Insurance Corp. As of 6/30/24 the companies mentioned represented 13.16% of the fund's portfolio in the aggregate. The holdings listed should not be considered recommendations to buy or sell a particular security. Other holdings may not have performed as well as some of those listed herein. Portfolio composition is subject to change at any time. This material has been provided for informational purposes only and should not be construed as investment advice or a recommendation of any particular investment product, strategy, investment manager or account arrangement, and should not serve as a primary basis for investment decisions. Prospective investors should consult a legal, tax or financial professional in order to determine whether any investment product, strategy or service is appropriate for their particular circumstances. Views expressed are those of the author stated and do not reflect views of other managers or the firm overall. Views are current as of the date of this publication and subject to change. This information contains projections or other forward-looking statements regarding future events, targets or expectations, and is only current as of the date indicated. There is no assurance that such events or expectations will be achieved, and actual results may be significantly different from that shown here. The information is based on current market conditions, which will fluctuate and may be superseded by subsequent market events or for other reasons. References to specific securities, asset classes and financial markets are for illustrative purposes only and are not intended to be and should not be interpreted as recommendations. Information contained herein has been obtained from sources believed to be reliable, but not guaranteed. No part of this material may be reproduced in any form, or referred to in any other publication, without express written permission. "Newton" and/or the "Newton Investment Management" refers to Newton Investment Management Limited. Newton is incorporated in the United Kingdom and is authorized and regulated by the Financial Conduct Authority in the conduct of investment business. Newton is registered with the U.S. Securities and Exchange Commission (SEC) as an investment adviser. The fund's investment adviser is BNY Mellon Investment Adviser, Inc. (BNYM Investment Adviser). BNYM Investment Adviser has engaged its affiliate, Newton Investment Management Limited (NIM), to serve as the fund's sub-adviser. NIM has entered into a sub-sub-investment advisory agreement with its affiliate, Newton Investment Management North America, LLC (NIMNA), to enable NIMNA to provide certain advisory services to NIM for the benefit of the fund. BNY Mellon Investment Adviser, Inc., Newton Investment Management Limited, Newton Investment Management North America and BNY Mellon Securities Corporation are companies of BNY. BNY is a corporate brand of The Bank of New York Mellon Corporation. © 2024 BNY Mellon Securities Corporation, distributor, 240 Greenwich Street, 9th Floor, New York, NY 10286 |
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