AllianceBernstein senior portfolio manager Jeremy Cunningham said the global multi-sector approach used for the AllianceBernstein Global High Income Fund allows for significantly greater opportunities and flexibility, as well as improving liquidity.
Mr Cunningham told InvestorDaily that AllianceBernstein’s strategy involved opportunistically investing in a range of instruments.
“This would include, for example, investment-grade corporate debt, mortgage-backed securities, credit default swaps, options preferred stock and convertibles where the risk-adjusted yield is attractive,” he said.
The portfolio is overweighted in US high-yield securities, European high-yield securities and emerging market corporate securities, and underweight in emerging market sovereign and emerging market currency.
According to the investment firm, a broad investment approach results in greater liquidity than is typically available on many Australian high-yield products, including annuities.
“We have found that such a strategy, held ideally over a five-year period, can result in relatively high and stable returns and lower underlying volatility than Australian equities over a full cycle," Mr Cunningham said.
AllianceBernstein stated its High Income Fund was designed for Australian investors who want to earn high income returns in the long term by investing in global debt of fixed-income securities.
Mr Cunningham said the fund was in response to falling interest rates, which has resulted in retirees reconsidering term deposits and annuities as their main source of income.
He said a key part of managing this type of portfolio was having an investment process that “combines both in-depth fundamental analysis with quantitative research”.
“Not just a top down perspective or macro-perspective, but combining that efficiently with bottom down analysis, so you’re able to reconcile the two,” said Mr Cunningham.
“Quantitative input is key to ensuring the process remains robust and repeatable,” said Mr Cunningham.
