A Core Bond Portfolio for the More Adventurous Investor
Emory Zink: AB Intermediate-Term Bond is a core bond portfolio for the more adventurous investor. Portfolio managers Shawn Keegan and Greg Wilensky took the reins of this fund in late 2005. They are joined by Douglas Peebles, who simultaneously serves as the firm's fixed-income chief investment officer, and in early 2016, by Michael Canter, head of the firm's securitized asset group.
Though the fund benchmarks against the Bloomberg Barclays U.S. Aggregate Index, this portfolio entertains a broader range of return sources versus the index and peers, including the ability to own up to 25% of assets in high-yield or non-U.S. debt, as well as mortgage derivatives, modest currency positions, and more exotic securitized fare. Given this flexibility, quantitative models critically enable management to evaluate the expansive investment universe, while the bottom-up fundamental research of a 50-plus corps of analysts whittles down the narrower opportunity set.
Over the trailing five years ending July 2017, the fund produced 2.8% of annualized return, outpacing its index and 80% of peers. The fund's penchant for embracing riskier, more complex investments has fueled its greater volatility versus other intermediate-term bond category options, but for an investor with the patience to endure through rough patches, this fund provides a riveting ride at an attractive price, supporting its Morningstar Analyst Rating of Bronze.