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AllianceBernstein Managed Volatility Equities Fund added to Macquarie Wrap

Tue, 14 Jul 2015 21:35:33 +0000

The AllianceBernstein Managed Volatility Equities Fund has been added to the Macquarie Wrap investment platform.

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

Wed, 28 Jan 2015 20:35:44 +0000

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.

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

2 FTSE ASFA Australia 300 Index—Tax Exempt

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Diamonds in the rough: the search for returns in 2015

Thu, 11 Dec 2014 20:35:03 +0000

AllianceBernstein’s outlook for 2015

AllianceBernstein portfolio managers and economists expect that the investment playing field of 2015 in Asia and Australia will require fancy footwork—sidestepping macro risk while at the same time uncovering hidden investment gems.

The team provides an outlook for 2015 covering the regional economy, Asian fixed income, Asian equities and Australian equities.

Macro Overview: Dispersion to continue

“A key macro trend for 2015 will be a continuation of the dispersion seen during 2014—that is, the disparities between various countries or economic regions in terms of growth and monetary policy, and corresponding differences in the direction of many financial markets,” said Guy Bruten, Senior Economist—Asia Pacific and Anthony Chan, Senior Economist—Asia.

“One generalisation that may safely be made is that the subdued growth outlook and the fall in oil prices will help hold inflation in check, and give central banks room where necessary to keep monetary policy accommodative,” said Bruten.

“China’s ability to avoid a hard economic landing will be seen as increasingly important. Our view is that China is likely to make a ‘long’ landing, by muddling through to recovery in two to three years—assuming that the government makes no policy mistakes,” said Chan.

“One potential source of upside surprise during 2015 could be India and Indonesia, and the extent to which they—in the context of continuing weakness in the euro-area and Japan—could lead to an investor re-rating of Asia,” added Chan.

Asia Fixed Income: Low risk, high liquidity

“Our Asia-Pacific fixed-income strategy going in to 2015 will be conservatively positioned with regard to risk and liquidity, in anticipation of further market volatility,” said Hayden Briscoe, Director—Asia Pacific Fixed Income.

“It will be relatively light on credit with greater emphasis on more liquid sectors such as government bonds and currencies, with some use of currencies as a proxy for credit and interest-rate exposures. We will selectively own government bonds in markets such as China, Indonesia, South Korea and New Zealand which offer positive real yields.

“Despite being positive on the long-term appreciation of the renminbi (RMB), we successfully hedged 50% of our portfolio with a put option early in 2014 in anticipation of the currency’s deprecation. We are now once again long the RMB.”

Asia Equities: Contrarian opportunities

“Our Asian equities portfolios are entering 2015 with a focus on value opportunities in China and cyclical stocks in India, while de-emphasising markets in South East Asia where valuations, in our view, have become too high. The strategy is a reflection of the big run-up in defensive and South East Asian stocks from 2009 to 2014,” said Stuart Rae, Chief Investment Officer—Pacific Basin Equities.

“The skew in valuations caused by this flight to safety has created a contrarian buying opportunity in cyclical stocks and North Asian markets and we have positioned our portfolios accordingly. A contrarian style can capture opportunities in depressed markets that are beginning to turn around. India is an example of how quickly that can happen.”

Australia Equities: Stock selection is key

“Australia faces a number of challenges in 2015, arising mainly from the end of the commodities boom and the need to rebalance the economy so that industries outside the mining sector drive growth,” said Roy Maslen, Chief Investment Officer—Australian Value Equities.

“Our outlook for the Australian economy has been more downbeat than the consensus for some time, and we expect the Reserve Bank of Australia to lower the cash rate during 2015. Corporate Australia, however, is in good shape, with balance sheets and cash flows generally strong, providing scope to build attractively valued portfolios.

“Given the macro nature of the risks, the most promising investment opportunities lie in careful stock selection rather than in taking sector bets and we prefer stocks where the underlying businesses have multiple operations, some of which are performing well while others have turnaround potential that could lead to a substantial lift in earnings. On these criteria, we see opportunities in the building materials, airlines and finance sectors.

“To maintain exposure to equities, while limiting potential market drawdowns, we see opportunities in infrastructure, REITs and healthcare stocks that offer price stability, quality earnings, quality balance sheets and reasonable valuations. Our research suggests that, given the relatively small size and concentrated nature of the Australian equities market, investing outside the benchmark—in offshore markets, for example—can enhance the risk-smoothing attributes of a portfolio,” said Maslen.

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