Fitch Affirms AllianceBernstein American Income Portfolio's 'Strong' Fund Quality Rating

Fri Aug 22, 2014 10:48am EDT

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(The following statement was released by the rating agency) NEW YORK, August 22 (Fitch) Fitch Ratings has affirmed AllianceBernstein American Income Portfolio's (AIP) 'Strong' Fund Quality Rating. The fund is managed by AllianceBernstein L.P. (AB; A+/Stable/F1). KEY RATING DRIVERS The 'Strong' rating reflects the fund's robust and well-balanced investment process that combines the independent inputs of credit, quantitative and macro-economic research in a disciplined and formalised approach. The fund benefits from the depth of AB's fixed income and support resources, and from a robust IT platform. FUND PRESENTATION Launched in 1993, AllianceBernstein AIP is a Luxemburg-domiciled fund with USD7.9bn of assets as of end-July 2014, investing typically 65% in investment grade (IG) and 35% in high yield (HY) credit, including investments in USD-denominated emerging market debt. INVESTMENT PROCESS The fund's uses a flexible, barbell approach, to provide stable high income and to preserve capital. The well-balanced investment process combines the independent inputs of credit, economic and quantitative research to determine the overall portfolio positioning, while allowing portfolio managers (PM) sufficient flexibility in credit selection. The fund benefits from the depth of AB's fixed income and support resources. RESOURCES The fund is supported by a nine-member portfolio management team (eight in New York and one in London), with an average of 20 years of industry experience. Support is also provided by AB's global credit research team of 38, an economic team of nine, a quantitative research team of 10 and a fixed-income trading desk team of 21. The fund's IT platform is built around integrated proprietary and third-party systems and risk analytics. TRACK RECORD AIP has outperformed the Lipper category "Global Bond USD" since inception. The strong track record is illustrated by a Lipper consistent return score of five (highest quintile) over three-, five- and ten-year periods. The fund tends to outperform in rising and flat markets. It underperformed in 2008 and 2013, the latter being a particular case where correlation assumptions behind credit barbell investing in U.S. Treasuries and HY credit temporarily deteriorated. However, the fund's high allocation to U.S. Treasuries proved resourceful for shareholder liquidity at the time, and the manager's subsequent reallocation to HY credit has allowed the fund to generate excess returns in the bond market's 2014 recovery. FUND MANAGER AB is a diversified asset manager (USD480bn assets under management as at end-June 2014 and USD266bn in fixed income). 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 driver could result in a downgrade. For example, this may be manifested in significant structural deterioration in the fund's performance or excessive risk-taking. Fitch sees limited key person dependency given the depth of the fixed income team. Conversely, an upgrade could result from a demonstrated ability to outperform peers consistently on a risk-adjusted basis amid rising interest rates and in bear credit markets. 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 To receive forthcoming Fund Quality Rating research, opt in here Contacts: Primary Analyst Yuriy Layvand, CFA Director +1 212-908-9191 Fitch Ratings 33 Whitehall Street New York, NY 10004 Secondary Analyst Davie Rodriguez, CFA Senior Director +1-212-908-0386 Committee Chairman Ralph Aurora Senior Director +1 212 908 0528 Media Relations: Elaine Bailey, London, Tel: +44 203 530 1153, Email: elaine.bailey@fitchratings.com. Additional information is available at www.fitchratings.com. Applicable criteria, 'Fund Quality Ratings Criteria', dated 19 September 2011, are available at www.fitchratings.com. Applicable Criteria and Related Research: Fund Quality Ratings Criteria: Assessing Funds’ Investment Processes and Operational Attributes here Additional Disclosure Solicitation Status here ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING THIS LINK: here. IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'. PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES AND PROCEDURES ARE ALSO AVAILABLE FROM THE 'CODE OF CONDUCT' SECTION OF THIS SITE. FITCH MAY HAVE PROVIDED ANOTHER PERMISSIBLE SERVICE TO THE RATED ENTITY OR ITS RELATED THIRD PARTIES. DETAILS OF THIS SERVICE FOR RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH WEBSITE.

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