While many investors have gotten spooked by ongoing turbulence in the emerging markets and have been fairly negative on prospective fixed-income returns going forward, AllianceBernstein
actually appears to be bullish on both sectors, albeit selectively. The firm recently filed nine N-1A forms with the SEC
for new fund products, most of which are in the emerging markets or fixed-income category (and some are in both).
In the emerging markets space, the firm is in the process of registering the AllianceBernstein Emerging Markets Corporate Debt Portfolio
, the AllianceBernstein Emerging Market Debt Portfolio
, the AllianceBernstein Emerging Markets Core Portfolio
and the AllianceBernstein Emerging Markets Growth Portfolio
, a spokesman for AllianceBernstein, declined to comment on the strategies for now, as they're in the process of being registered with the SEC, but some of the firm's thinking behind its investments could be gleaned from its portfolio managers' blog posts.
Despite the troubles in Russia and Ukraine, and uncertainty surrounding what's come to be known as the "fragile five" (Brazil, India, Indonesia, South Africa and Turkey), Sharon Fay
, AB's head of equities, thinks opportunities can still be found in other regions and that the concerns over China's slowdown are largely overblown. She suggests investors continue to maintain emerging markets exposure, or those that are underweight the sector start building exposure. "We believe that there is still a compelling longer-term case for significant EM equity exposure within a diversified portfolio," she wrote in a blog post
on March 6.
"Emerging market equities can provide better long-term earnings growth from access to the rapid economic growth that is typically fueled by stronger productivity growth," she added. "Diversification is another benefit. Although correlations between emerging and developed markets have increased in recent years, last year reminded us that they often still behave very differently. And within emerging markets, investors can diversify further by including smaller markets," Fay wrote.
Within fixed-income, it looks like AB is banking on more esoteric strategies than traditional bonds. Its new products in this category will include the AllianceBernstein Credit Long/Short Portfolio
, the AllianceBernstein Floating Rate Strategies Fund
, the AllianceBernstein High-Yield Portfolio
and the AllianceBernstein Mortgage Opportunities Portfolio
In a January blog post
, Gershon Distenfeld
, AllianceBernstein's director of high-yield debt, noted that junk bonds came out relatively unscathed (with 7 percent returns) amid last year's largely disappointing fixed-income performance. "High-yield has almost always come out ahead of rising-rate environments because as interest rates rise, economic conditions generally improve, which is a boon for credit sectors. The result: high-yield isn't as sensitive to rate increases as other bond sectors. Its main risk isn't rates but weakening credit conditions--and credit fundamentals certainly aren't weak right now," he wrote.
In addition to the emerging market and fixed-income products, the firm also registered its new AllianceBernstein Mid-Cap Growth Portfolio
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