It's been an interesting year for Hanneke Smits, who has been chief executive officer of BNY Mellon Investment Management with its $1.8 trillion in assets under management since October 2020.
As CEO, she leads the efforts of seven specialist investment firms: Insight Investment, Mellon, Dreyfus, Newton Investment Management, Walter Scott, ARX and Siguler & Guff. Together, these companies offer investment solutions across every major asset class.
"It's been a year of resilience," Smits said. It began with volatile markets — "all over the map," that saw equity and fixed income both below their 2022 levels. A historically long period of low interest rates came to an end when a series of ten rate hikes from the Fed saw rates rise from 0.25 percent to 5 percent.
In Britain, where Smits is based, investors felt the pain of the mini-budget, which Prime Minister Liz Truss's short-lived government announced late last September. It contained tax cuts for individuals and reversed an earlier plan to raise tax rates for businesses, as well abandoning plans to raise funds for public health care. Delivered against a background of a cost-of-living crisis, the mini-budget pushed down the value of the British pound and garnered criticism from the International Monetary Fund. Gilt prices dropped by half.
BNY Mellon's Investment Management's income is linked to the value of its assets under management, so when these issues sent revenues down, BNY Mellon IM's income followed suit and it reduced its spending. Smits said her group cut costs by focusing on core priorities, setting extras aside for the time being. While the business continued to invest in infrastructure, it handled much of that work in house, spending less on consulting services.
"I think that we've come out of it well," Smits says. "I pride myself on being resilient, and I think resilience is important both personally and in business." Like other industry investment managers, BNY Mellon IM worked to keep client portfolios strong as interest rates went up. It also started a new floating credit-rate fund in the U.K. and a new range of retirement products, plus two ETFs in the U.S.
Smits found that her colleagues and reports also needed support, especially after the deaths of two portfolio managers and a longtime senior colleague who died a week after taking a new job. She checked in with employees, especially direct reports, to ask how they were and make sure they understood the resources that are available to them when they're feeling particularly challenged. "It's good to show that you care and to show your own vulnerability," Smits says.
The year has also had bright spots, Smits added. In May 2023, BNY Mellon IM sold Alcentra, a European credit and private debt manager with $38 billion in assets under management, to Franklin Templeton. "That's a success," Smits said. "It's good for everyone involved."
BNY Mellon IM asked employees to return to their physical offices once the U.S. and Britain were no longer under government-imposed lockdown. "We emphasized positive reasons to come together. It's important to our culture, training and development," Smits says. The bank adopted a hybrid model that has workers together in the office three days a week. Time to recharge is important, said Smits, and she took time off during the December holidays to spend with family.
In addition to her work running BNY Mellon's investment management group, Smits is the global chair of the 30% Club, an organization that launched in 2010 in the U.K. to work for gender diversity on company boards of directors. It now has twenty groups all over the world.
When the group began, women held 12.5% of roles on boards, Smits explains. "We learned that women needed 30 percent of board roles in order to have their views heard." That thirty percent was an initial target that many of the 30% Club groups have met or exceeded for women in nonexecutive roles.
Now, both Smits and the club are looking for a new goal. "We'd like to see more female CEOs, chairs and CFOs," Smits said, noting that this is an area where women have not made much progress. In 2023, for instance, just 53 of Fortune 500 companies are headed by women. That 10% figure for 2023 is a milestone; for decades the number hovered at one or two percent.
Also, in addition to her work around gender diversity, Smits advocates for the LGBTQ+ community through her role as executive sponsor of PRISM, BNY Mellon's LGBTQ+ employee group. She chairs Impetus, a venture capital organization that backs charities working to improve the lives of disadvantaged young people. As part of her role with Impetus, she is a trustee of the Education Endowment Foundation, a British charity dedicated to breaking the link between family income and educational achievement.
Smits's past philanthropy work includes co-founding and serving as the first chair of Level 20, a group that began in 2015 to encourage women to succeed in the private equity industry. She championed Newton Investment Management's work with the Diversity Project to help female portfolio managers returning to work maintain their investment track records, and was executive sponsor of BNY Mellon IM's 2022 partnership with Inspiring Girls and The Pathway to Inclusive Investment. She was an early supporter of Britain's Ten Thousand Black Interns program. "It's critical to help these underrepresented groups advance," Smits says.
