BNY Mellon concede mistake to bet on gold instead of Bitcoin

Sive Morten

Special Consultant to the FPA
BNY Mellon provides regular SEC report where it explains the performance lag comparing to Russel 2000 index benchmark.

The financial holding Bank of New York Mellon (BNY Mellon) with $ 2 trillion in assets under management explained the unsatisfactory dynamics of the BNY Mellon Opportunistic Small Cap Fund, including the lack of shares of MicroStrategy, which invests in bitcoin.

The BNY Mellon Opportunistic Small Cap Fund (DSCVX), focused on investing in small-cap stocks, grew 35% from September 1, 2020 to February 28, 2021. Its benchmark, the Russell 2000 Index, gained 41.7% over this period.

Thus, by BNY Mellon explanation - Performance Hindered by Two Sector Allocations and Certain Stock Selections

"The fund’s outperformance versus the benchmark stemmed primarily from allocation in two sectors and from a few stock selections. An underweight position in the regional banking industry hindered returns, as this industry benefited from the approval of COVID-19 vaccines and from higher interest rates. In addition, an underweight position in the consumer discretionary sector also detracted when this sector surged in response to the approval of COVID-19 vaccines.

"As for stock selection, a position in Alamos Gold, a gold mining company, hampered performance as shares were hurt by weak gold prices. Shares of Palomar Holdings also contributed negatively to returns as this company was hurt by rising costs. Shares of certain companies were hurt by the market’s rotation from growth-oriented companies to cyclical and value-oriented companies. These included Clarivate, a provider of data related to intellectual property, and Everbridge, a software company. Fund performance was hurt as well by a decision not to own MicroStrategy, whose stock surged when it announced it had invested in bitcoin."