The Bank of New York Mellon is to acquire Insight Investment Management from Lloyds Banking Group in a deal worth £235 million.

With this acquisition BNY Mellon will have over $1 trillion in assets under management (AUM). The acquisition is expected to close in the fourth quarter of 2009.

Based in London, Insight Investment specialises in liability driven investment solutions, active fixed income and alternatives. Its clients include some of the UK's largest pension schemes, corporates, insurance companies and local authorities as well as a growing number of non-UK financial services and intermediary companies.

AUM of Insight Investments, net of identified internal assets that will be retained by another part of the Lloyds Banking Group, are approximately £80 billion.

Insight Investment will join the other investment boutiques at BNY Mellon Asset Management.

Founded in 2002 Insight Investment has delivered year on year organic growth in AUM. Insight Investment is the third largest manager of UK pension funds.

Despite a difficult market environment in 2008, Insight Investment was the fastest growing institutional asset manager in the UK with strong growth in AUM, revenue and profitability. These positive trends continued in 2009 as Insight Investment has expanded its external client franchise and sustained growth in fixed income, absolute return and liquidity strategies.

Earlier this year Insight Investment launched another fund to join its existing funds offering. As a specialist provider of innovative investment solutions to the pension and insurance industry, it has £119.2 billion under management and is the third largest manager of UK pension assets. The Absolute Insight funds invest in a range of uncorrelated absolute return strategies.

There is a combination of sub-strategies with five funds in the range: Europe Equity Market Neutral Fund, UK Equity Market Neutral Fund, International Equity Market Neutral Fund, Emerging Market Debt Fund and Currency Fund. These are to be joined by another a credit long/short fund expected to launch later this year.

At March 31, 2009 assets under management in the fund of funds structure totalled over £500 million with £247 million in the NURS (non-Ucits retail schemes) vehicle, £100 million in the qualified investment fund of funds and £282 million in the Cayman fund of funds.

The latest to join this list is the Absolute Insight Credit Fund, launched June 2, as a Ucits III, Irish domiciled fund. A Cayman Islands offshore version of the fund is expected to be launched later. At launch the fund size was about £60 million. The Insight funds team expected "a huge amount of interest from potential investors who want access to a flexible credit strategy".

The management fee is between 0.75% -1% for the institutional classes. Depending on the share class minimum investment in the fund varies with the lowest £3,000. The performance fee is 10% above hurdle rate and subject to high water mark.

The fund management team has been running a paper portfolio since March 2008. The paper portfolio reflected selected positions actually traded in other Insight funds and was considered a reasonable representation of the fund's expected performance as it incorporated actual trading costs and mark-to-market values. The paper portfolio was up 15.9% for the 15 months since its launch to May 31, 2009.

The Absolute Insight fund of funds three different structures have all invested into the credit fund. This includes the Absolute Insight Plus (Cayman) Fund, the Absolute Insight (UK domiciled) Non-Ucits Retail Scheme and the Absolute Insight (Irish domiciled) qualified investment fund.

The fund follows a multi-strategy investment approach looking for opportunities across the credit spectrum. Its broad investment universe includes investment grade and high yield corporate debt, structured credit such as asset backed securities, loans and cash instruments, along with a full range of derivatives such as credit default swaps on single names and indices, interest rate and inflation swaps, futures, forwards and options.

The Absolute Insight range of funds is part of the BNY Mellon deal.

BNY Mellon Asset Management is a global provider of investment management products and services offering a broad range of equity, fixed-income, hedge and liquidity management products through individual asset management companies and multiple distribution channels. Its investment boutiques include the Alcentra Group, Ankura Capital, Blackfriars Asset Management, BNY Mellon ARX Capital Management, The Boston Company Asset Management, EACM Advisors, Ivy Asset Management, Mellon Capital Management, Mellon Global Alternative Investments, Newton Investment Management, Pareto Investment Management, Standish Asset Management, Urdang, Walter Scott and Hamon Investment Group.

The Dreyfus Corporation serves mutual fund and retail intermediary clients in the US. BNY Mellon Asset Management International serves non-US clients.