FutureLegacy: Aligning outcomes with expectations

Paul Byrne, BNY Investments Newton Portfolio Manager and Quantitative Analyst, outlines how BNY’s FutureLegacy risk-targeted multi-asset funds aim to help investors stay aligned with their retirement goals in uncertain markets.

Clients approaching or living through retirement are increasingly considering the potential investment risks just as much as the rewards. Investors are facing a financial landscape shaped by uncertainty, as markets grapple with ongoing geopolitical shocks, stubborn inflation, uneven global growth and fast‑moving policy decisions. All these factors can influence both short‑term sentiment and long‑term return expectations.

This is prompting many investors to look for investment approaches that work harder to control risk without sacrificing the opportunity for meaningful returns. BNY’s FutureLegacy fund range, introduced in 2023, was developed precisely for this purpose.

These actively managed multi‑asset funds aim to deliver attractive returns while dynamically managing risk. This combination of opportunity and discipline aims to support clients who want greater confidence amid a world where the economic and market outlook can shift rapidly.

The five funds in the FutureLegacy range are each managed to a distinct risk level, with risk ratings remaining within the client risk bands 3-7, as measured by the UK’s leading risk-based financial planning system from Dynamic Planner¹. This allows the funds to align with the differing risk appetites of investors, with each fund having an appropriate mix of equities, bonds and cash.

A disciplined process for managing risk and return

Central to how the FutureLegacy funds manage the balance between risk and reward is a robust, structured and repeatable investment process developed by multi-asset specialists at BNY Investments Newton. At the heart of this process is multidimensional research that examines every asset class through multiple lenses.

Deep fundamental analysis forms the foundation of decision‑making, supported by thematic research, quantitative tools and other specialist inputs such as responsible investment and geopolitical research. Together, these elements provide valuable insights that help the team understand investment opportunities and risks at both the asset‑class and security level.

A disciplined approach to strategic asset allocation uses proprietary quantitative modelling to determine the optimal mix of equities, fixed income and cash for each fund, ensuring alignment with the appropriate risk rating. The funds are directly invested, and security selection – which is expected to be the biggest contributor to returns – gives the team full visibility of the risks and opportunities within each portfolio, allowing them to invest with conviction.

This strategic allocation approach is complemented by a tactical asset allocation overlay that focuses on near‑term market conditions. Using simple derivatives, the investment management team can implement directional positions quickly and efficiently. This flexibility helps them as they seek to capture returns in rising markets while, crucially, focusing on capital preservation during periods of market stress or drawdowns.

Each fund in the FutureLegacy range is continuously monitored and regularly rebalanced to control volatility and keep the fund within its pre-defined risk parameters.

The funds’ managers aim to ensure that the funds perform consistently as a range and against client expectations. In particular, the funds are constructed and managed so that lower-risk funds have a higher tilt towards capital preservation while higher risk-funds have a greater growth tilt. The chart below shows the risk/return profile of the five funds since their inception in February 2023.
 

Created to meet retirement income requirements

The FutureLegacy funds include several features designed to address the challenges clients face when planning for retirement income. By investing directly in individual securities, rather than adopting a fund‑of‑funds approach, the investment team can measure and manage risk more precisely. This greater transparency and control can aid  more effective downside‑risk mitigation.

Furthermore, the equity allocation within the FutureLegacy range is positioned to balance income and growth characteristics. With the expectation of a structurally higher interest‑rate and inflationary environment, we believe that income will play an increasingly important role in generating total returns for clients. Equities with reliable dividends have historically been associated with lower volatility and reduced downside risk.

On the fixed‑income side, the portfolios actively manage duration (sensitivity to changes in interest rates) and credit risk with a strong emphasis on capital preservation. This approach is particularly relevant for the lower risk portfolios, which hold a higher proportion of fixed interest. It aims to give confidence to clients who prioritise limiting downside risk, especially those seeking greater security to support near‑term income needs.

Building confidence for long-term retirement goals

As clients navigate an increasingly complex retirement landscape, the FutureLegacy fund range is designed to give them greater confidence that their investments remain aligned with their long‑term goals. By combining disciplined risk management, forward‑looking research and a dynamic, transparent investment process, the funds aim to provide a smoother journey through shifting market conditions. Ultimately, FutureLegacy seeks to help clients align outcomes with expectations, balancing protection with the potential for meaningful returns.

Past performance is not a guide to future performance. The value of investments and the income received can fall as well as rise and investors may not get back the original amount invested.

The funds can invest more than 35% of net assets in different transferable securities and money market instruments issued or guaranteed by the UK or an EEA State, its local authorities, a third country or public international bodies of which the UK or one or more EEA States are members.

Please refer to the prospectus, KID/KIID or KFS where applicable and other fund documents for a full list of risks and before making any investment decisions. Documents are available in English and in selected local languages where the fund is registered. Go to bny.com/investments.

BNY Mellon FutureLegacy funds – key investment risks

• Objective/Performance Risk: There is no guarantee that the Fund will achieve its objectives.
• Currency Risk: This Fund invests in international markets which means it is exposed to changes in currency rates which could affect the value of the Fund.
• Derivatives Risk: Derivatives are highly sensitive to changes in the value of the asset from which their value is derived. A small movement in the value of the underlying asset can cause a large movement in the value of the derivative. This can increase the sizes of losses and gains, causing the value of your investment to fluctuate. When using derivatives, the Fund can lose significantly more than the amount it has invested in derivatives.
• Changes in Interest Rates & Inflation Risk: Investments in bonds/money market securities are affected by interest rates and inflation trends which may negatively affect the value of the Fund.
• Credit Ratings and Unrated Securities Risk: Bonds with a low credit rating or unrated bonds have a greater risk of default. These investments may negatively affect the value of the Fund.
• Credit Risk: The issuer of a security held by the Fund may not pay income or repay capital to the Fund when due.
• Emerging Markets Risk: Emerging Markets have additional risks due to less-developed market practices.
• Share Class Currency Risk: Where a share class is denominated in a different currency from the base currency of the Fund, changes in the exchange rate between the share class currency and the base currency may affect the value of your investment.
• China Interbank Bond Market and Bond Connect risk: The Fund may invest in China interbank bond market through connection between the related Mainland and Hong Kong financial infrastructure institutions. These may be subject to regulatory changes, settlement risk and quota limitations. An operational constraint such as a suspension in trading could negatively affect the Fund's ability to achieve its investment objective.
• Volcker Rule Risk: The Bank of New York Mellon Corporation or one of its affiliates ("BNYM") has invested in the Fund. As a result of restrictions under the "Volcker Rule," which has been adopted by U.S. Regulators, BNYM must reduce its shareholding percentage so that it constitutes less than 25% of the Fund within, generally, three years of the Fund's establishment (which starts when the Fund's manager begins making investments for the Fund). Risks may include: BNYM may initially own a proportionately larger percentage of the Fund, and any mandatory reductions may increase Fund portfolio turnover rates, resulting in increased costs, expenses and taxes. Details of BNYM's investment in the Fund are available upon request.
• CoCos Risk: Contingent Convertible Securities (CoCos) convert from debt to equity when the issuer's capital drops below a pre-defined level. This may result in the security converting into equities at a discounted share price, the value of the security being written down, temporarily or permanently, and/or coupon payments ceasing or being deferred.

• Responsible Investing Risk: The investment policy for this Fund places restrictions on its exposure to certain sectors or types of investments to reflect its responsible investing approach. The Fund's performance may be negatively impacted due to these restrictions in comparison to funds which do not have these restrictions. The Fund will not engage in securities lending activities and, therefore, may forego any additional returns that may be produced through such activities.
• Counterparty Risk: The insolvency of any institutions providing services such as custody of assets or acting as a counterparty to derivatives or other contractual arrangements, may expose the Fund to financial loss.

Investment Objective: To achieve capital growth and potential for income over the long term (5 years or more) while being managed to a pre-defined level of risk. The Fund will aim to maintain a risk profile classification of 3 from a scale of 1 (lowest) to 10 (highest) which is assessed against the risk ratings scale provided by an external third party risk rating agency.

Performance Benchmark: The Fund is actively managed without benchmark-related constraints. The Fund will measure its performance against the Investment Association's Mixed Investment 0-35% Shares NR Sector Average as a comparator benchmark (the "Benchmark"). The Fund will use the Benchmark as an appropriate comparator because it includes a broad representation of funds with levels of equity and bond exposure similar to those of the Fund.

Effective 1 August 2025, the Fund’s benchmark changed from 15% SONIA GBP, 55% ICE BofA Global Broad Index GBP Hedged and 30% MSCI ACWI GBP NR to the Investment Association's Mixed Investment 0-35% Shares NR sector average. Benchmark performance shown for all time periods is that of the Investment Association's Mixed Investment 0-35% Shares NR sector average.
 

Investment Objective: To achieve capital growth and potential for income over the long term (5 years or more) while being managed to a pre-defined level of risk. The Fund will aim to maintain a risk profile classification of 4 from a scale of 1 (lowest) to 10 (highest) which is assessed against the risk ratings scale provided by an external third party risk rating agency.

Performance Benchmark: The Fund is actively managed without benchmark-related constraints. The Fund will measure its performance against the Investment Association's Mixed Investment 20-60% Shares NR Sector Average as a comparator benchmark (the "Benchmark"). The Fund will use the Benchmark as an appropriate comparator because it includes a broad representation of funds with levels of equity and bond exposure similar to those of the Fund.

Effective 1 August 2025, the Fund’s benchmark changed from 10% SONIA GBP, 45% ICE BofA Global Broad Index GBP Hedged and 45% MSCI ACWI GBP NR to the Investment Association's Mixed Investment 20-60% Shares NR sector average. Benchmark performance shown for all time periods is that of the Investment Association's Mixed Investment 20-60% Shares NR sector average.
 

Investment Objective: To achieve capital growth and potential for income over the long term (5 years or more) while being managed to a pre-defined level of risk. The Fund will aim to maintain a risk profile classification of 5 from a scale of 1 (lowest) to 10 (highest) which is assessed against the risk ratings scale provided by an external third party risk rating agency.

Performance Benchmark: The Fund is actively managed without benchmark-related constraints. The Fund will measure its performance against the Investment Association's Mixed Investment 40-85% Shares NR Sector Average as a comparator benchmark (the "Benchmark"). The Fund will use the Benchmark as an appropriate comparator because it includes a broad representation of funds with levels of equity and bond exposure similar to those of the Fund.

Effective 1 August 2025, the Fund’s benchmark changed from 5% SONIA GBP, 35% ICE BofA Global Broad Index GBP Hedged and 60% MSCI ACWI GBP NR to the Investment Association's Mixed Investment 40-85% Shares NR sector average. Benchmark performance shown for all time periods is that of the Investment Association's Mixed Investment 40-85% Shares NR sector average.
 

Investment Objective: To achieve capital growth and potential for income over the long term (5 years or more) while being managed to a pre-defined level of risk. The Fund will aim to maintain a risk profile classification of 6 from a scale of 1 (lowest) to 10 (highest) which is assessed against the risk ratings scale provided by an external third party risk rating agency.

Performance Benchmark: The Fund is actively managed without benchmark-related constraints. The Fund will measure its performance against the Investment Association's Mixed Investment 40-85% Shares NR Sector Average as a comparator benchmark (the "Benchmark"). The Fund will use the Benchmark as an appropriate comparator because it includes a broad representation of funds with levels of equity and bond exposure similar to those of the Fund..

Effective 1 August 2025, the Fund’s benchmark changed from 25% ICE BofA Global Broad Index GBP Hedged and 75% MSCI ACWI GBP NR to the Investment Association's Mixed Investment 40-85% Shares NR sector average. Benchmark performance shown for all time periods is that of the Investment Association's Mixed Investment 40-85% Shares NR sector average.
 

Investment Objective: To achieve capital growth and potential for income over the long term (5 years or more) while being managed to a pre-defined level of risk. The Fund will aim to maintain a risk profile classification of 7 from a scale of 1 (lowest) to 10 (highest) which is assessed against the risk ratings scale provided by an external third party risk rating agency.

Performance Benchmark: The Fund is actively managed without benchmark-related constraints. The Fund will measure its performance against the Investment Association's Flexible Investment NR Sector Average as a comparator benchmark (the "Benchmark"). The Fund will use the Benchmark as an appropriate comparator because it includes a broad representation of funds with levels of equity and bond exposure similar to those of the Fund.

Effective 1 August 2025, the Fund’s benchmark changed from 10% ICE BofA Global Broad Index GBP Hedged and 90% MSCI ACWI GBP NR to the Investment Association's Flexible Investment NR sector average. Benchmark performance shown for all time periods is that of the Investment Association's Flexible Investment NR sector average.
 

¹The BNY Mellon FutureLegacy funds are actively managed, typically by using forward-looking expectations of volatility. In doing so, the Investment Manager uses its own internal risk model, while also considering external independent risk profiling methodologies. Based on a risk profile scale of 1 (lowest) to 10 (highest), the funds target a risk profile of 3, 4, 5, 6 or 7, but this is not guaranteed. The risk profile targeted by each of these funds can be identified through the number included in the respective fund name. This risk profile is not the same as the risk and reward category shown in the KIID. The risk profiles are assessed against the risk rating scale provided by Dynamic Planner but are subject to change. Dynamic Planner Risk Ratings should not be used for making an investment decision and it does not constitute a recommendation or advice in the selection of a specific investment or class of investments.

3191251 Exp: 23 September 2026