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AllianceBernstein targets volatility with new fund

AllianceBernstein is set to launch a global, multi-sector fixed income strategy, unrestricted by market benchmarks, to its Australian retail market.

The AllianceBernstein Dynamic Global Fixed Income Fund will offer Australian financial advisers who are concerned about rising volatility in bond markets more options in an environment of continuing low yields. The fund is aimed at delivering attractive risk-adjusted returns throughout the investment cycle by targeting the fullest possible range of investment options and focusing on absolute, rather than benchmark-relative, returns.

Alison Martier, senior portfolio manager at AllianceBernstein, said many managers find it difficult in this environment to balance personal risk and continuing market uncertainty.

“They are not helped by the public debate about asset allocation in Australia, which seems to imply that investors’ best option right now is to sell bonds and buy equities or some other asset class. We think this is misleading and potentially risky, given that fixed-income should always be part of a diversified portfolio,” said Ms Martier.

There is a narrow selection of such products in the Australian fixed-income market, which is dominated by low-yielding term deposits and by debt/equity securities, which are complex and rank behind bonds in the event of borrower default, she added.

“One way around this challenge is to take a broader look at fixed-income and to invest globally, rather than just domestically, and across all sectors rather than just governments and financial institutions, and to do so without the risks and constraints posed by bond benchmarks,” Ms Martier said.

The AllianceBernstein fund strategically avoids the risks associated with benchmark investing and offers a way of maintaining appropriate fixed-income allocations while also improving their risk-adjusted fixed income returns for clients, she said.