BNY Mellon Global Stock Fund Q2 2024 Review and Analysis
Global equity markets experienced a rise this quarter, but beneath the surface, there was significant variance in country and sector performance. The BNY Mellon Global Stock Fund, however, did not meet expectations as it underperformed its benchmark, the MSCI World Index, for the second quarter of 2024.
Market Review
The global equity markets showed a mixed picture this quarter, with expectations of interest rate cuts giving way to concerns about inflation. While the US Federal Reserve and the European Central Bank remained watchful, the latter did offer a modest rate cut in June. The narrative of ‘muddling through’ global growth persisted, although political tensions began to impact investor sentiment in some markets. Cyclical sectors faced pressure, while long-duration growth names, especially in the technology sector, garnered investor interest.
The MSCI World Index performance was heavily influenced by what has been dubbed the “Magnificent Seven,” a group of mega-cap tech stocks driving the market surge. The artificial intelligence theme continued to play a significant role in this group’s performance, leading to discussions about market health given the concentration of these stocks within the index. However, the focus for the BNY Mellon Global Stock Fund remains on the health and earnings generation capability of the companies it invests in, believing this to be the primary driver of long-term share prices.
Performance Summary
For the second quarter of 2024, the BNY Mellon Global Stock Fund reported the following average annual total returns:
– Class A (NAV): -0.37% (3 Month), 6.72% (YTD), 10.44% (1 Year), 4.08% (3 Year), 9.47% (5 Year), 9.10% (10 Year)
– Class A (5.75% max. load): -6.08% (3 Month), 0.56% (YTD), 4.09% (1 Year), 2.04% (3 Year), 8.19% (5 Year), 8.46% (10 Year)
– Class I (NAV): -0.31% (3 Month), 6.85% (YTD), 10.74% (1 Year), 4.39% (3 Year), 9.79% (5 Year), 9.41% (10 Year)
– MSCI World Index: 2.63% (3 Month), 11.75% (YTD), 20.19% (1 Year), 6.86% (3 Year), 11.78% (5 Year), 9.16% (10 Year)
The fund’s total expenses as of 6/30/24 were as follows:
– Class A: Gross 1.22%, Net 1.22%
– Class I: Gross 0.91%, Net 0.91%
Performance Review
The top 10 holdings of the BNY Mellon Global Stock Fund as of 6/30/24 included Novo Nordisk, Microsoft, Taiwan Semiconductor Manufacturing, Alphabet, Mastercard, Amphenol, Linde, Adobe, Edwards Lifesciences, and Texas Instruments. While technology and communications services holdings made significant contributions, industrials stocks and technology holdings underperformed, impacting relative performance. The fund’s sole emerging markets holding stood out positively, while US securities trailed compared to their benchmark peers.
Top contributors to relative performance were Taiwan Semiconductor, Alphabet, Novo Nordisk, Amphenol, and Costco Wholesale, while top detractors included Old Dominion Freight Line, Fastenal, LVMH, Nike, and West Pharmaceutical.
Market Outlook
Looking ahead, the focus on artificial intelligence (AI) beneficiaries continues, but the evolution of the AI journey is expected to be a long one. Companies are investing in AI infrastructure to explore its potential benefits, although the pace of adoption and monetization may vary. As long-term investors, the BNY Mellon Global Stock Fund will analyze how companies utilize AI to enhance customer reach, efficiency, and profitability, ultimately driving better products and services.
In conclusion, the BNY Mellon Global Stock Fund’s performance in the second quarter of 2024 highlighted the importance of staying focused on company fundamentals and earnings generation capability amid market fluctuations. As the investment landscape evolves, keeping a close eye on emerging trends like AI will be crucial for long-term success.
Investors should carefully consider the risks and potential rewards of investing in equities, especially in foreign markets and small to mid-sized companies. Past performance is not indicative of future results, and it’s essential to consult with a financial professional before making investment decisions.
Overall, the market trends observed in the second quarter of 2024 underscore the need for a strategic and diversified approach to investing, taking into account both short-term market movements and long-term growth prospects. With a focus on fundamental analysis and a keen eye on emerging technologies like AI, the BNY Mellon Global Stock Fund aims to navigate the ever-changing investment landscape effectively.
