RPT-Fitch affirms AllianceBernstein Global High Yield Portfolio's 'strong' fund quality rating

Fri Jan 17, 2014 8:14am EST

Jan 17 (Reuters) - (The following statement was released by the rating agency)

Fitch Ratings has affirmed AllianceBernstein Global High Yield Portfolio's (GHY) 'Strong' Fund Quality rating. The fund is managed by AllianceBernstein L.P. AllianceBernstein GHY benefits from a robust and well balanced investment process that combines the independent inputs of credit and macro-economic research in a disciplined and formalised approach. The fund benefits from the depth of AllianceBernstein's fixed income and support resources, and from a robust IT platform.

KEY RATING DRIVERS

Fund Presentation

Launched in September 1997, AllianceBernstein GHY is a Luxemburg domicile fund with USD22.7bn of assets as of end-December 2013, investing in high-yield debt securities of global issuers, including the US and emerging countries.

Investment Process

The fund's primarily bottom-up, investment process combines the independent inputs of fundamental and quantitative research in a disciplined approach, while allowing portfolio managers (PM) sufficient flexibility in the diversification of sources of risks and returns. Economic, credit and quantitative research are conducted by independent teams. Research recommendations are challenged in formal review meetings and a consensus is sought on portfolio investment decisions.

Resources

The portfolio management team consists of 10 individuals, with 21 years of experience and 11 years of company tenure on average. The team is supported by a credit research team of 35, an economic team of nine, a quantitative research team of eight and a fixed income trading desk of 20. The IT platform is built around integrated proprietary and third-party systems and risk analytics.

Track Record

The fund has outperformed the Lipper category "Bond Global High Yield" since inception. The strong track record is illustrated by a Lipper Leader of five (highest quintile) over five and 10 years. In 2013, the fund had roughly the same return as the category, while outperforming by 6.8% its composite benchmark (33% Barclays Capital High Yield Index 2% Constrained 33% JP Morgan GBI-EM 33% JP Morgan EMBI Global Index). The fund's large size makes managing both capacity and liquidity critical to its ability to consistently outperform over the long term and in periods of stress.

Asset Manager

AllianceBernstein, L.P., rated 'A+'/Stable/'F1' is a diversified asset manager (USD451bn assets under management as at end-December 2013). AB has been investing in high yield debt (HYD) and emerging market debt (EMD) since the mid-1980s and early 1990s respectively. AB managed USD64bn in EMD and HYD strategies as at end-September 2013.

RATING SENSITIVITIES

The rating may be sensitive to material changes in the investment or operational processes, or resources dedicated to the fund. A material adverse deviation from Fitch's guidelines for any key rating drivers could result in a downgrade of the rating. For example, this may be manifested in significant structural deterioration in the fund's performance relative to its benchmark and peers. Key man risk is limited given the depth of the credit team and the process-driven investment approach.

Fitch's Fund Quality Ratings combine Fitch's experience in qualitative fund analysis with rankings and performance data from Lipper, a Thomson Reuters company. Fitch's Fund Quality Ratings offer an independent, forward-looking assessment of a fund's key performance and risk attributes and consistency of longer-term returns, relative to peer group or benchmarks. The ratings focus on the fund manager's investment process, key fund performance drivers, risk management, and the quality of the fund's operational infrastructure.

For more information, please see www.fundmanagement.fitchratings.com

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Link to Fitch Ratings' Report: AllianceBernstein Global High Yield Portfolio