Lonsec assigns ‘Recommended’ rating to AllianceBernstein Managed Volatility Equities Fund

Global asset manager AllianceBernstein said yesterday that its low-volatility offering for Australian investors, the AllianceBernstein Managed Volatility Equities Fund, had received a ‘Recommended’ rating from investment research house Lonsec.

“This is a strong endorsement of our capability in helping investors—particularly those who are in or close to retirement—not only to weather today’s market volatility, but also to maintain positive risk-adjusted returns over the long term,” said Jen Driscoll, Chief Executive Officer of AllianceBernstein Australia.

The Fund invests primarily in Australian equities and is designed for investors seeking lower volatility, reduced downside risk in falling equity markets and the potential for long-term capital growth and some income, including franked Australian dividend income. From inception in April 2014 to December 31, 2014, the Fund returned 14.97% after fees[1]. This compared to a benchmark[2] return of 4.40%.

Lonsec said that the rating reflected its “strong conviction” that the Fund could generate risk-adjusted returns in line with its objectives. It added that it considered the Fund to be “an appropriate entry point to this asset class or strategy”.

“Australian investors, and retirees in particular, require high returns over the long term to reduce the chance of outliving their savings but they also need protection from market losses, the recovery from which is made harder by the fact that they are using their savings to pay their living costs,” said Driscoll. “The Fund has been designed to be a very direct and effective response to that retirement conundrum.”

Roy Maslen, Chief Investment Officer—Australian Equities, said that AllianceBernstein’s research hadshown there was more to low-volatility investing than simply buying shares whose prices don’t fluctuate significantly.

“We believe that a low-volatility equity strategy has a greater chance of success if it also focuses on three other factors: total return—that is, ignoring benchmarks and being alert to the potential of franking credits to produce after-tax returns; quantitative research to identify stocks that work well in down markets, and fundamental research to identify stock-specific risks.

“This approach really comes into its own during a market downturn, as shown by the fact that some of our best relative returns since inception have been during months when the index fell sharply, but returns on the Fund fell significantly less.”

The Fund, which is managed as part of AlllianceBernstein’s globally integrated equities platform, can hold up to 20% of its net asset value in global stocks and, in times of market stress, can allocate up to 20% in cash.

———

1 http://web.alliancebernstein.com/APAC/AU/Managed-Volatility-Equities.htm

2 FTSE ASFA Australia 300 Index—Tax Exempt