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This World-Bond Fund Is Flexible Yet Disciplined

Alliance Bernstein Global Bond's robust team has delivered peer-beating returns, says Morningstar's Emory Zink.

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Alliance Bernstein Global Bond employs a disciplined flexibility that has helped it to rise to the top of its world-bond peers. In addition to sovereign bonds issued by developed countries, the portfolio holds corporate bonds, residential and commercial mortgage-backed securities, as well as emerging-markets debt. The vast majority of securities in the portfolio are rated investment-grade, and though the managers do use derivatives, leverage is kept at 15% of assets or less. Though the fund is mostly hedged to the US dollar, leeway exists for tactical currency plays when managers identify opportunities.

Managers Scott DiMaggio and Matthew Sheridan are joined by Paul De Noon, who serves as head of emerging-markets debt at Alliance Bernstein, and Douglas Peeples, the chief investment officer of the firm’s fixed-income group. A bevy of credit, quantitative, and securitized analysts support this management team in a research process that marries the quantitative top-down analysis of a broad opportunity set with a thorough bottom-up fundamental research on each security added to the portfolio.

The approach has paid off for investors. In calendar years 2014 and 2015, the fund landed in the highest-performing decile of its world-bond category, and since the implementation of its current mandate in November 2007, the fund has provided 4.7% of annualized return through March 2016--outpacing its Barclays Global Aggregate Index and most of its category peers. The fund's thorough and disciplined approach to a complex and dynamic category earns the fund a Morningstar Analyst Rating of Silver.

Emory Zink does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.