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Multi-pronged, dynamic asset allocation moderates volatility while boosting returns

The Edge Singapore
The Edge Singapore • 3 min read
Multi-pronged, dynamic asset allocation moderates volatility while boosting returns
Best Group over 3 years: MIXED ASSETS
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Best Group over 3 years: MIXED ASSETS

SINGAPORE (April 30): Many investors, well-schooled in the art of value investing, pride themselves on staying vested for the long term after picking what they think will be winners.

From the experience and research of AllianceBernstein, investors can do better if they are invested in a portfolio where short-term adjustments are made, in response to changing market conditions. By doing so, it is possible to reduce risk and the impact of extreme market environments, without sacrificing long-term returns.

“Dynamic Asset Allocation is a highly customisable, globally diversified toolset that seeks to moderate overall volatility and limit extreme outcomes in times of market stress without sacrificing long-term growth potential. Our ability to tailor solutions to meet specific risk, return and marketing needs provides an important competitive edge,” explains Karen Lim, managing director of the Southeast Asia Client Group atAllianceBernstein Singapore.

This approach is something AllianceBernstein, which has AUM of US$150 billion ($214 billion) as of end-2019, can be proud of. It has been named Best Group over 3 years — Mixed Assets, at this year’s Refinitiv Lipper Fund Awards.

Karen Lim, managing director of the Southeast Asia Client Group atAllianceBernstein Singapore

Indeed, with the Covid-19 pandemic being a multi-pronged crisis requiring coordinated epidemiological, monetary and fiscal solutions to address, having a multi-asset portfolio might just be what is needed by investors, most of whom will not have a clear idea of when things will recover.

“It is the first time in history that global economies have voluntarily shut down so as to avoid a truly deadly global outcome. Global capital markets have never seen this before, so history is a poor guide for such crisis moments, beyond the reminder that eventually, this too shall pass,” observes Lim.

To help investors deal with the volatility and generate better returns across different asset classes, AllianceBernstein has built up a diverse team with wide-ranging skillsets.

Its fixed income and equity teams, with more than 40 portfolio managers and double that number of industry-specialist analysts, are a high-performance network of investment boutiques, each with unique disciplines and investment styles.

AllianceBernstein’s American Income portfolio team incorporates both quantitative and fundamental research inputs for an “all-weather” portfolio.

The American Growth portfolio focused on buying America’s best growth businesses, specifically those that deliver the highest cash flow returns on capital, that are less cyclical, and that can re-invest back into their own business to compound their high earnings power and returns. “This focus on highly profitable, cash-generative and less cyclical businesses has served us well in the recent Covid-19-induced sell-off,” says Lim.

The team running the Concentrated Global Equity portfolio focuses on companies that can deliver earnings growth of 10% or more for five years in a row, which has historically led to significant alpha over the MSCI World index.

AllianceBernstein’s Eurozone Equity PMs take a “business owner” mindset to the companies that they hold, but focus on undervalued cash flows that can deliver double-digit IRRs over the next five years. “The fund has benefitted from the private equity mindset of our team and a focus on cash flow value,” says Lim.

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