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AllianceBernstein launches Emerging Markets Multi-Asset strategy


AllianceBernstein has launched the Emerging Market Multi-Asset (EMMA) strategy, which seeks to capture a wide spectrum of emerging-market opportunities by taking advantage of all the asset classes available, to enhance returns, capture the benefits of diversification and reduce volatility.

As emerging markets have continued to grow, through both their share of global GDP and the proportions of global capital markets that they represent, many investors nowadays find themselves underweight to the emerging markets.  However, those looking to resolve this through equities alone may find they also have to bear increased overall portfolio risk. EMMA can help to address this challenge; seeking to achieve equity-like returns with lower volatility—thereby potentially muting the impact of increased allocations on overall portfolio risk for investors.

The investment strategy uses a combination of fundamental and quantitative research, investing in equities, debt (including high-yield securities) and currencies. These are held in an integrated portfolio, rather than bolting together separately managed equity, bond and currency portfolios.

Because market risks and return opportunities change over time, AllianceBernstein believes that investors can achieve better results by adapting to changing market conditions, becoming more aggressive when conditions appear favourable (for example holding more equities) and reducing exposure when risks appear high (for example more debt). Active asset allocation is used to adjust the fund’s exposure to those asset classes and sectors where the risk-adjusted opportunity seems most attractive—allowing the fund to capture the return potential of emerging market equities, with lower volatility and meaningful downside protection.

Morgan Harting (pictured), Senior Portfolio Manager and Emerging Markets Multi-Asset Team leader says: “Emerging markets represent a considerable – and growing – proportion of the world economy and offer significant return potential. However, traditional all-equity approaches are not best designed to minimise unwanted surprises. EMMA will aim to capture these investment opportunities whilst seeking to reduce undesirable volatility and offer an optimal risk/return profile unconstrained by naïve benchmarks or investment instruments.

“Emerging markets represent over 12% of the MSCI All-Countries World Index. UK pension funds typically allocate less than half that to emerging market equities and very little to EM bonds. We think that this needs to change, and we hope that this innovative approach can help to address that.”

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