from static allocation
to adaptive portfolios
The BNY Mellon FutureLegacy funds support retirement portfolios through a disciplined, risk-targeted approach that adapts to changing market conditions, helping to deliver more resilient long-term outcomes.
Jennifer Hill
Investment writer
Markets are unlikely to return to the unusually benign conditions that characterised much of the decade following the global financial crisis. Higher inflation, shifting monetary policy, geopolitical uncertainty and more frequent market shocks have created an environment in which volatility is no longer an occasional disruption but a persistent feature of investing.
For advisers, this poses a challenge. Traditional portfolio construction often assumes that risk can be managed through strategic asset allocation and periodic rebalancing alone. Yet when market conditions can change rapidly, building resilience may require a more dynamic approach.
This is particularly relevant for clients investing for and during retirement, where portfolios must support long-term objectives through different market environments.
Managing risk within a defined range
This is the challenge that FutureLegacy is designed to address. The range of multi-asset investment solutions is actively managed within defined risk parameters, adapting dynamically as markets evolve.
For retirement clients, this provides a more flexible framework for supporting income withdrawals while remaining resilient enough to recover from periods of market volatility.
The funds can be used on a standalone basis or alongside a simple cash buffer, helping to provide clients with reassurance around income needs while supporting resilient long-term outcomes.
Creating the portfolio template
Each of the five FutureLegacy funds is aligned to a specific risk level within the 3-7 range of the Dynamic Planner framework. This allows advisers to directly align client portfolios with the risk profile identified during the advice process.
The investment approach begins with strategic asset allocation to determine the optimal mix of equities, fixed income and cash, anchoring each portfolio to its intended risk profile.
Developed through extensive modelling, analysis and forecasting, the team at BNY Investments Newton uses this framework as the foundation for all subsequent investment decisions.
Embedding sustainability in portfolios
The FutureLegacy funds are invested globally for long-term capital growth and income, drawing on a diversified opportunity set across markets.
Within this opportunity set, security selection integrates financial analysis with sustainability considerations, focusing on companies whose activities or transition pathways support more sustainable long-term economic outcomes.
Drawing on Newton’s longstanding sustainable investment framework, at least 70% of each portfolio is invested in corporate and sovereign securities with positive environmental or social characteristics.
Adapting within the framework
Day-to-day portfolio management is overseen by an experienced team of portfolio and risk specialists, using tools such as currency hedging, derivatives and cash management to help manage volatility and maintain alignment with each fund’s risk profile.
Risk is assessed continuously rather than at set points in time, using a range of market indicators and forward-looking inputs across asset classes. These insights help identify risks and opportunities as they emerge.
Rather than relying solely on periodic rebalancing, portfolio exposures can be adjusted as market conditions evolve, while remaining aligned with each fund’s intended risk profile and long-term objectives.
Building resilience in retirement portfolios
For advisers, the challenge is ensuring retirement portfolios can support sustainable income while remaining resilient through changing market conditions.
For clients drawing an income, managing risk is not simply about limiting losses. Portfolios also need to remain positioned to participate in market growth and recover effectively from periods of weakness, helping to sustain income needs over time.
By maintaining a consistent approach to risk while adapting to market conditions, FutureLegacy aims to help retirement portfolios remain invested through the cycle, supporting more resilient long-term outcomes.
