Jan 17 (Reuters) - (The following statement was released by the rating agency)
Fitch Ratings has affirmed AllianceBernstein Emerging Market Debt (EMD) fund’s ‘Excellent’ rating. The fund is managed by AllianceBernstein L.P.
AllianceBernstein EMD 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.
Launched in March 2006, AllianceBernstein EMD is a Luxemburg domiciled fund with USD808m of assets as of end-December 2013, investing in dollar- and local currency-denominated emerging market (EM) sovereign, quasi sovereign, corporate debt, currencies and derivatives.
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.
The fund benefits from the depth of AB’s resources, including the nine-strong, largely, EMD team, led by Paul DeNoon, the fund’s PM. The team is supported by four dedicated economists, part of an economic team of nine, 35 credit research analysts, a quant research team of eight and a fixed income trading desk of 20. Over the past 18 months, AB has increased its capabilities in EM corporate research, in line with market developments and the fund’s allocation. The IT platform is built around integrated proprietary and third party systems and risk analytics.
The AllianceBernstein EMD fund has consistently outperformed the Lipper category “Bond Emerging Market Global Hard Currency”. The strong track record is illustrated by a Lipper Leader of four (second highest quintile) over five years and three over three years. Over the past five years, the fund returned 85.7%, outperforming its benchmark (JP Morgan EMBI - Global) and Lipper category by 13.3% and 21.3% respectively (second quintile performance). Last year proved to be challenging, as the fund’s performance was fourth quintile in its Lipper category.
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 emerging market debt since the early 1990s. AB managed USD27bn in emerging market debt strategies as at end-September 2013.
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 of the rating. For example, this may be manifested in significant structural deterioration in the fund’s performance relative to its benchmark and peers.
Fitch would take action if long term risk-adjusted performance relative to peers, as indicated by Lipper scores, continues to deteriorate. 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.
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Link to Fitch Ratings’ Report: AllianceBernstein Emerging Market Debt Portfolio