NEW YORK & PARIS--()--Fitch Ratings has affirmed the 'Satisfactory' Fund Quality Rating assigned to AllianceBernstein Thematic Research Portfolio, a fund managed by AllianceBernstein L.P. (AB; A+/Stable/F1).
The assigned Satisfactory Fund Quality Rating is driven primarily by Fitch's evaluation of the fund's investment process, the resources dedicated to the fund and AB's strength as an asset manager. The rating also incorporates an analysis of the fund's historical risk/return performance track record relative to peers in order to identify performance outliers.
AllianceBernstein Thematic Research Portfolio is a Luxemburg domiciled fund with USD95m in assets as of end-December 2012 that invests in global equities under a thematic approach. The investment process is a combination of top-down thematic research and fundamental bottom-up research. The portfolio consists of 60-80 stocks that are expected to benefit from identified long-term, cross-sector themes focusing on disruption. The fund is fully invested and exhibits a natural growth and technology sector bias. The research discipline has not changed since last review and the full investment team and operational resources remain intact.
Overall, the fund underperformed during the first three quarters in 2012, ranking in the third quartile by total returns for the year relative to 93 thematic peer funds, while also recording an above-average volatility (according to selected data from Lipper that Fitch used in its analysis). The underperformance reflects the fund's adverse positioning in certain themes and underlying companies, and the behavior of long-duration bets in a risk-off environment. Performance slightly recovered during the last quarter of 2012 and first month of 2013 with NAV up 1.6% and 3.5%, over these periods, respectively.
Accordingly, at the end of the year, when the fund became eligible for a Lipper Consistent Return Score, it scored a 1 (lowest) over a three-year period. The score ranks funds on a scale of 1 to 5 based on their history of providing relatively superior consistency and risk-adjusted returns when compared to a group of funds, which in this case was a broad 5000+ group of funds under the Lipper Global Equities Global classification.
Fitch acknowledges that this strategy entails investing in long-duration themes which may underperform over the short-term and risk-off periods; thus Fitch does not consider the current underperformance to be an outlier at this time. However, Fitch's rating on the fund may be sensitive to its ongoing performance, factoring in the volatility and lower relative returns experienced so far in 2011 and 2012. Fitch will continue to monitor the fund's performance and evaluate as necessary. The rating may also be sensitive to changes in the management team and research analysts. In the case of this fund, the portfolio manager occupies a key role, so if she were to cease managing the fund, Fitch could review its rating as well.
AB is a global, diversified asset manager (USD426bn assets under management as at December 2012), approximately 63% owned by AXA S.A. (A/Stable/F1). Equities represent 21% of AUM. USD4.35bn in total were managed under a thematic 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.
For more information, please see www.fitchspotlight.com/FQR.
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Applicable criteria, 'Fund Quality Rating Criteria', dated 19 September 2012, is available at www.fitchratings.com.