After 25 years in a mutual fund wrapper, a familiar BNY Mellon income strategy made the ETF stage.

BNY Investments launched the BNY Mellon Enhanced Dividend and Income ETF (NASDAQ:BEDY) on Dec 11. The firm converted its long-running, actively managed, income-focused mutual fund into an ETF to provide both income and capital appreciation.

The fund comes with a net expense ratio of 0.50%.

BEDY is designed for investors seeking to enhance portfolio income beyond traditional fixed income sources. In this regard, it invests most of the fund’s net assets in dividend-paying equities and other instruments that generate distributable income. The opportunity set includes traditional dividend stocks, real estate investment trusts, and equity-linked notes, all of which enable managers to pursue multiple sources of distributable income.

The portfolio construction process intra-blends quantitative tools with fundamental judgment. BNY Mellon’s investment team uses a proprietary model to position securities across industries and sectors based on metrics such as intrinsic value, business quality, and positive momentum.

Fundamental analysis is then applied to select the highest-ranked names fitting the fund’s overall objectives.

Risk management is another key pillar of the strategy. BEDY seeks to maintain diversified exposure across sectors and industries, rather than concentrating income bets in a narrow slice of the market. The fund may invest up to 10% of its net assets in equity-linked notes, typically favoring structures designed to generate steady income.

Why Now?

Advisors and investors continue to gravitate toward derivative income ETFs as a way to enhance yields while maintaining diversified return streams.

These strategies have remained in favor this year amid shifting rate expectations and ongoing equity volatility.

BEDY taps a long operational history, having evolved from the BNY Mellon Income Stock Fund that launched in October 2000.

Under active management and with its fresh ETF wrapper, the strategy seeks to import its rich heritage of income generation to a format investors are increasingly embracing.

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