Originally developed seven years ago, AllianceBernstein’s Managed Volatility Equities Fund (AMVE) was listed on the Chi-X exchange just last month leveraging the innovative dual access model.

The dual access structure enables active managers to run a single register for both unlisted and listed investments. As a result, managers can gain greater operational and investment efficiencies.

Active management strategies now make up more than 20% of the Australian ETF market^[1] .

“State Street continues to pave the way for active managers to participate in the ETF marketplace globally,” said Frank Koudelka, global ETF specialist for State Street. “This included being the first ETF service provider to support each of the semi-transparent active ETF models in the U.S. and now the ground-breaking dual access model in Australia.”

“We are very excited to expand our relationship with AllianceBernstein and to be servicing this innovative investment product.”

As part of the arrangement, State Street will provide a range of servicing solutions including ETF basket services (to provide indicative NAV or iNAV files), fund accounting, fund administration and custody.

“AB developed the Managed Volatility Equities strategy in collaboration with a major Australian superannuation fund which wanted to give its members a smoother, but still competitive, return profile in volatile markets”, said Jen Driscoll, AllianceBernstein Australia chief executive.

“We are very pleased to be working with State Street in the delivery of our active ETF.” State Street has been servicing ETFs for close to three decades and is the largest global ETF servicer. The firm is currently servicing close to 60% of ETF assets and is the only provider serving clients in all major ETF regions^[2] .

———-

[1] ETFGI Asia-Pacific ETF Insights 03/31/21
[2] ETFGI Global ETF Insights 03/31/21 and State Street research

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Vic Jokovic

Global asset manager AllianceBernstein (AB) has partnered with Chi-X Australia to make one of its leading funds available to Australian investors via the Chi-X Australia stock exchange.

The AB Managed Volatility Equities Fund (Managed Fund)—MVE Class (AMVE) joins a growing list of funds to commence trading on the Chi-X Australia platform amid strong demand for exchange-traded products.

AMVE is the first equity fund to be quoted on exchange by the AB group.

AllianceBernstein Australia Limited Chief Executive Officer Jen Driscoll said that AMVE had been designed for Australian investors who wanted actively managed equity strategies with lower volatility.

“We are excited to see AMVE now available to a wide range of investors on the Chi-X stock exchange. AB developed AMVE seven years ago in collaboration with a major Australian superannuation fund which wanted to give its members a smoother, but still rewarding, return profile in volatile markets. Our partnership with Chi-X is an opportunity to make this innovative and successful strategy more readily accessible,” she said.

“The launch of AMVE on Chi-X will give more equity investors, including retirees and those transitioning to retirement, the potential benefits of an investment approach which aims to reduce exposure to market drawdowns while participating significantly in market recoveries.”

AMVE aims to achieve returns that exceed the S&P/ASX 300 Accumulation Index after fees over the medium to long term. The Fund invests mainly in Australian listed shares, with up to 20% of its assets in global developed-market shares. It can also hold up to 20% in cash as a short-term defensive measure at times of heightened equity market volatility.

Since inception to the end of February 2021, the fund has delivered a total return after fees of 9.60% with lower volatility, compared to the 7.51% return for the S&P ASX 300 Index.^[1]

AllianceBernstein Managing Director, Australia Client Group, Ben Moore said: “AB’s focus on bringing together a wide range of insights, expertise and innovations has resulted, in AMVE’s case, in a strategy which, since inception, has delivered above market returns with lower volatility than the index and won multiple industry awards. We are pleased to be partnering with Chi-X to deliver AMVE to a broader investing public.”

Chief Executive Officer of Chi-X Australia, Vic Jokovic, said the search for more stable returns in an uncertain environment and continuing market volatility is stronger than ever.

“A challenging global investment landscape, including historically unusual policy settings and unforeseen events such as COVID-19, have added to the risks that Australian investors face,” Mr Jokovic said. “We are pleased to welcome AllianceBernstein and AMVE on to Chi-X. This adds to a growing list of Active ETFs on our platform that aim to deliver greater diversity to the portfolios of Australian investors.”

AMVE is issued by AllianceBernstein Investment Management Australia Limited (ABIMAL). While ABIMAL will be responsible for market-making, Macquarie will act as ABIMAL’s agent for market-making services.

Chi-X Funds began trading on exchange in October 2019, enabling issuers to provide investors with access to managed funds together with the convenience of daily quotation and trading.

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Lisa McCallum

Innovative investment and superannuation platform provider OneVue has boosted its International Separately Managed Accounts capability by adding renowned global fund managers AllianceBernstein and Franklin Templeton Investments to its platform.

AllianceBernstein will offer its AB Concentrated Global Growth Equities and the AB Concentrated US Growth Equities portfolios as part of OneVue’s Managed Account Model Portfolio offering.

Franklin Templeton will add its Franklin Concentrated Global Equity ex-Australia portfolio to OneVue.

Jen Driscoll, AB’s Chief Executive Officer Australia, said: “OneVue is one of the few platforms in Australia actively offering global SMAs and we look forward to working with them to provide investors with the benefits of direct international share ownership, such as transparency, direct dividend cashflow and tax efficiencies, all at an affordable cost.”

Matthew Harrison, Managing Director, Franklin Templeton Investments Australia said, “Investor demand for high performing global and mid-cap equity funds continues to grow. We’re excited to have the Franklin Global Equity portfolio, a high conviction strategy, added to the OneVue platform.”

Lisa McCallum, OneVue EGM Platform Services, said: “Australian investors are increasingly demanding access to global investments to diversify their portfolios. We are very pleased to be partnering with both AllianceBernstein and Franklin Templeton who are both leading global fund managers with deep research and portfolio management expertise.”

In 2017, OneVue was recognized as the fastest mover with the most new platform developments in the 2016 Investment Trends Platform Benchmarking survey and won the Best Innovator – SMSF Adviser in the Self Managed Super Funds Awards 2017

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The Fund takes an active core approach that seeks to emphasise security selection as the expected driver of performance while closely managing systematic risk exposures. The actively-managed, long-only Fund, launched in Australia in July 2015, is run by a stable and experienced team and is based on a strategy which has a track record of more than 10 years of delivering excess returns to clients.

“We are very pleased to receive this rating,” said Jen Driscoll, Chief Executive Officer—Australia. “We believe the Fund, given its high conviction approach to security selection and its careful management of risk, offers investors a differentiated approach to delivering consistent and competitive investment returns.”

Lonsec noted that, while the Fund itself has a limited performance track record, the underlying strategy has a “well-established” record. The research house said that other strengths included a stable and experienced investment management team and attractive management fees relative to other core equity strategies rated.

The Fund is designed for equity investors with high risk tolerances who want the potential for long-term capital growth and some income by investing in global equity securities.

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Stephen, who was previously a Business Development Manager at AMP, will report to Ben Moore, AB’s Sydney-based National Retail Sales Manager.

“We’re delighted that Stephen is joining us at such an exciting time, when our Australian retail strategy is building up a real head of steam,” said Jen Driscoll, Chief Executive Officer—Australia.

“Stephen and Ben have worked together in previous roles, and that shared experience is an excellent foundation for the value proposition they will offer to our financial-adviser client base, based on teamwork, market connectivity and a consultative approach.”

Prior to the five and a half years Stephen spent at AMP, he was a Business Development Manager at Aviva for four and a half years. He brings to AB extensive experience across both institutionally aligned and independent advice networks.

AB has diversified its traditionally institution-focused presence in Australia with the launch of retail funds offering financial advisers and their clients a choice across fixed-income and equity strategies according to the investors’ return objectives and risk profiles.

They include the AllianceBernstein Managed Volatility Equities Fund, which made a total fund return of 12.55% in the year to August 31, compared to the benchmark FTSE ASFA Australia 300 Index—Tax Exempt Index, which lost 2.23%. The Fund has a ‘Recommended’ rating from Lonsec.

Other funds in the line-up include the AllianceBernstein Emerging Consumer Fund and the AllianceBernstein Global High Income Fund, which have ‘Recommended’ ratings from Lonsec and Zenith Investment Partners respectively.

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Jen Driscoll, AB‘s Chief Executive Officer—Australia, said: “We’re delighted that AB’s Managed Volatility Equities Fund is now accessible via the highly regarded Macquarie Wrap platform.”
The Fund aims to reduce volatility by identifying, and investing in, high-quality listed equity securities which have reasonable valuations, high-quality cash flows and relatively stable share prices.

Roy Maslen, Chief Investment Officer—Australian Equities, said: “Australian investors—particularly those in or near retirement—are increasingly demanding investment products that provide more certainty, while still participating in growth. Being added to platforms like Macquarie Wrap is further evidence that there is growing demand in Australia for better solutions to this retirement conundrum.”

“In the 15 months since its inception, the Fund’s best relative returns have been during months when the index fell sharply but the Fund fell significantly less, resulting in a higher return overall at a lower volatility,” said Maslen.

For the financial year July 1, 2014, to June 30, 2015, the comparable figures were 12.6% and 0.80% respectively (see Disclosure, next page).

The Fund, which has an indirect cost ratio of 0.55%, invests primarily in Australian equities and is designed for investors seeking lower volatility, reduced downside risk in falling equity markets, the potential for long-term capital growth and some income, including franked Australian dividend income.

While likely to lag a rising market, the Fund is expected to benefit from the so-called “low-volatility paradox”—a well-researched and well-documented phenomenon in which low-volatility stocks tend to outperform higher-volatility stocks on a risk-adjusted basis over time.

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Jen Driscoll, Chief Executive Officer of AB in Australia, said: “We’re delighted that AB’s Managed Volatility Equities Fund is now accessible via the netwealth Platform. The Fund—which achieved a total (net of fees) fund return of 26.6% in its first year, with almost half the volatility of the FTSE ASFA Australia 300 Index—has delivered excellent returns by smoothing the ride for investors during periods of market volatility.”

Roy Maslen, Chief Investment Officer—Australian Equities, said: “In the past year, the Fund’s best relative returns have been during months when the index fell sharply, but the Fund fell significantly less, resulting in a higher return overall, at a lower volatility, which is exactly what it is designed to do.

“Australian investors—particularly those in or near retirement—are increasingly demanding investment products that provide more certainty, while still participating in growth and volatility for the Fund during the period was 48% less than that of its benchmark, after including franking credits*,” said Maslen.

The Fund, which charges a management fee of 0.55%, invests primarily in Australian equities and is designed for investors seeking lower volatility, reduced downside risk in falling equity markets, the potential for long-term capital growth and some income, including franked Australian dividend income.

It aims to reduce volatility by identifying, and investing in, high-quality listed equity securities which have reasonable valuations, high-quality cash flows and relatively stable share prices.

While likely to lag a rising market, the Fund is expected to benefit from the so-called “low-volatility paradox”—a well-researched and well-documented phenomenon in which low-volatility stocks tend to outperform higher-volatility stocks on a risk-adjusted basis over time.

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The AllianceBernstein Managed Volatility Equities Fund—which produced a total (net of fees) fund return of 26.6% in its first year—has been added to the BT Wrap and HUB24 investment platforms. The Fund has a ‘Recommended’ rating from Lonsec.

“This Fund is a response to client concerns to meet the needs of investors, particularly those in or near retirement, by balancing the desire to participate in equity-market growth while cushioning the impact of market downturns,” said Jen Driscoll, Chief Executive Officer of AB in Australia.

“We’re therefore very excited to be offering this opportunity to the adviser community and the broader retail investment market.
“While past performance is no predictor of future results, the Managed Volatility Equities Fund has achieved excellent returns by doing what it’s supposed to do—smoothing the ride for investors during periods of market volatility.”

Roy Maslen, Chief Investment Officer—Australian Equities, said: “In the past year, the Fund’s best relative returns have been during months when the index fell sharply, but the Fund fell significantly less, resulting in a higher return overall at a lower volatility.”

Volatility for the Fund from inception at March 31, 2014, to March 31, 2015, was 30% less on a daily basis than that of the FTSE ASFA Australia 300 Index—Tax Exempt, after including franking credits.

The Fund, which charges a management fee of 0.55%, invests primarily in Australian equities and is designed for investors seeking lower volatility, reduced downside risk in falling equity markets, the potential for long-term capital growth and some income, including franked Australian dividend income.

It aims to reduce volatility by identifying, and investing in, high-quality listed equity securities which have reasonable valuations, high-quality cash flows and relatively stable share prices.

While likely to lag a rising market, the Fund is expected to benefit from the so-called “low-volatility paradox”—a well-researched and well-documented phenomenon in which low-volatility stocks tend to outperform higher-volatility stocks on a risk-adjusted basis over time.

Driscoll noted that other recent AB activity in the Australian retail market included the addition of the AllianceBernstein Global High Income Fund to the HUB24 platform.

* Against the FTSE ASFA Australia 300 Index—Tax Exempt. All returns quoted are net of fees. Relative performance includes accrued franking credits for the period of 0.78%. 

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