AB Managed Volatility Equities Performance Review | News

What is the AB Managed Volatility Equities fund?

The AB Managed Volatility Equities Fund is designed for equity investors seeking lower volatility, reduced downside risk in falling equity markets, and the potential for long-term capital growth and some income, including franked Australian dividend income. The Fund implements a managed-volatility equities strategy that aims to reduce volatility by identifying, and investing in, high-quality listed equity securities that have reasonable valuations, high-quality cash flows and relatively stable share prices.

The Fund invests mainly in Australian Securities Exchange (ASX)–listed shares, with up to 20% of its assets in global developed-market shares, and has the ability to hold up to 20% in cash, for example as a short-term defensive measure at times of heightened equity market volatility.
The Fund does not always hedge the foreign currency exposures of its global equity assets to Australian dollars, and the investment manager has the discretion to determine the extent to which any foreign currency exposure is reduced or removed. For example, the investment manager may decide not to remove a foreign currency exposure if it believes it offers defensive characteristics that would assist in lowering the volatility of the Fund.
The AB Managed Volatility Equities Fund—MVE Class (the “MVEClass”) aims to achieve returns that exceed the S&P/ASX 300 Accumulation Index after fees over the medium to long term.

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Latest News & Updates For AB Managed Volatility Equities

AB Managed Volatility Equities Fund Commentary July 31, 2023

• In July, the MVE – Class underperformed its benchmark, the S&P/ ASX 300 Index, which was up 2.89% in Australian-dollar terms.

Detractors

• Pharmaceutical company Merck underperformed generally in line with healthcare on limited stock-specific news.

• A lack of exposure to “big four bank” CBA detracted. After weak bank results in February and May, the banking sector generally outperformed in July on limited news. We see margin pressure continuing to intensify as high rates induce customers to switch from low or no interest deposits to more attractive products.

• After a strong period of performance year to date, diagnostics company Sonic Healthcare detracted as it gave up some gains during the month. We continue to like Sonic for its strong balance sheet, stable cash flows and an attractive pipeline of bolt-on acquisitions.

Contributors

• An underweight to biotech company CSL contributed as a competitor to its flagship immunoglobulin franchise released positive phase 3 clinical trial data showing comparable efficacy in a major indication.

• Evolution Mining contributed as gold prices increased approximately US$40 per ounce in July, helping gold producers. In addition, Evolution reported fourth-quarter production results and provided FY:24 guidance that topped some expectations.

• Not holding asset manager Macquarie contributed as it downgraded its outlook for 2024 earnings, primarily due to lower deal flow and weaker commodity income.

READ HISTORICAL PERFORMANCE COMMENTARIES

Product Snapshot

Performance Review
Product Overview
Peer Comparison
Product Details

Performance Review

Fund Name	Last Month ? Returns after fees in the most recent (last) month).	3 Months Return ? Returns after fees in the most recent 3 months.	1 Year Return ? Trailing 12 month returns.	3 Years Average Return ? Average Annual returns from the last 3 years.	Since Inc. Average Return ? Average (annualised) returns since inception	1 Year Std. Dev. (Annual) ? The standard deviation (or annual volatility) of the last 12 months.	3 Years Std. Dev. (Annual) ? The average standard deviation (or annual volatility) from the last 3 years.	Since Inc. Std. Dev. (Annual) ? The average standard deviation (or annual volatility) since the fund inception.	1 Year Max Drawdown ? The maximum drawdown in the last 12 months - a drawdown is a peak-to-trough decline during a specific period for an investment, trading account, or fund.	3 Year Max Drawdown ? The maximum drawdown in the last 36 months - a drawdown is a peak-to-trough decline during a specific period for an investment, trading account, or fund.	Since Inc. Max Drawdown ? The maximum drawdown since inception - a drawdown is a peak-to-trough decline during a specific period for an investment, trading account, or fund.
AB Managed Volatility Equities	0.51%	5.21%	11.18%	3.32%	8.65%	7.74%	9.73%	9.86%	-4.14%	-10.35%	-17.06%

Product Overview

Fund Name	APIR Code ? A Product Code is unique a identifier code issued by a group or governing body, to reference products in a large group. For an example, APIR codes are commonly used for Funds and Ticker codes are commonly used for Securities such as ETFs and Stocks.	Structure ?	Asset Class ? An Asset Class breakdown provides the percentages of core asset classes found within a mutual fund, exchange-traded fund, or another portfolio. Asset classes (in microeconomics and beyond) generally refer to broad categories such as equities, fixed income, and commodities.	Asset Category ? An Asset Category is a grouping of investments that exhibit similar characteristics and are subject to the same laws and regulations. Asset categories (or a sub-asset class) are made up of instruments which often behave similarly to one another in the marketplace, looking down to the Asset Category level is important if looking to build a diversified portfolio.	Peer Benchmark Name ? A Peer Index (benchmark) refers to a peer group of investment managers who have the same investment style or category. It is used to compare the performance of one manager to their peer group, which makes it simpler for investors to choose between the vast number of investment managers.	Broad Market Index ? A Market Index (benchmark) refers to a hypothetical portfolio of investments that represents a segment, asset or category of an investable market. Market Indices are used to benchmark managers performance, to assist their style reliability and ability to provide excess returns.	FUM ? Funds/Assets under management (AUM) is the total market value of the investments that a person or entity manages on behalf of clients. Assets under management definitions and formulas vary by company.	Management Fee ? A management fee is a charge levied by an investment manager for managing an investment fund. The management fee is intended to compensate the managers for their time and expertise for selecting finanical products and managing the portfolio.	Performance Fee ? A performance fee is a payment made to an investment manager for generating positive returns. This is as opposed to a management fee, which is charged without regard to returns. A performance fee can be calculated many ways. Most common is as a percentage of investment profits, often both realized and unrealized. It is largely a feature of the hedge fund industry, where performance fees have made many hedge fund managers among the wealthiest people in the world.	Spread ? A spread can have several meanings in finance. Basically, however, they all refer to the difference between two prices, rates or yields. In one of the most common definitions, the spread is the gap between the bid and the ask prices of a security or asset, like a stock, bond or commodity. This is known as a bid-ask spread.
AB Managed Volatility Equities	ACM0006AU	Managed Funds	Domestic Equity	Australia Large Blend - Core / Style Neutral	Domestic Equity - Large Cap Neutral Index	ASX Index 200 Index	1.01 BN	0.55%	0.00%	0.5%

Peer Comparison

Fund Name	Peer Index Name ? A group of individuals who share similar characteristics and interests are called peer groups. Peer group analysis is an essential part of assessing a price for a particular stock in investment research. The emphasis here is on making a comparison, meaning that the peer group constituents should be more or less identical to the company being examined, especially in terms of their main business and market capitalization areas.	12 Months Excess Return ? Excess returns are an important metric that helps an investor to gauge performance in comparison to other investment alternatives. In general, all investors hope for positive excess return because it provides an investor with more money than they could have achieved by investing elsewhere.	Excess Return Annualised Since Inception ? Excess returns are an important metric that helps an investor to gauge performance in comparison to other investment alternatives. In general, all investors hope for positive excess return because it provides an investor with more money than they could have achieved by investing elsewhere.	12 Months Alpha ? Alpha is used in finance as a measure of performance, indicating when a strategy, trader, or portfolio manager has managed to beat the market return over 12 months. Alpha, often considered the active return on an investment, gauges the performance of an investment against a market index or benchmark that is considered to represent the market’s movement as a whole.	Alpha Annualised Since Inception ? Alpha is used in finance as a measure of performance, indicating when a strategy, trader, or portfolio manager has managed to beat the market annualized since inception. Alpha, often considered the active return on an investment, gauges the performance of an investment against a market index or benchmark that is considered to represent the market’s movement as a whole.	12 Months Beta ? Rolling 12Month Beta is a measure of the volatility—or systematic risk—of a security or portfolio compared to the market as a whole. Beta is used in the capital asset pricing model (CAPM), which describes the relationship between systematic risk and expected return for assets (usually stocks).	Beta Annualised Since Inception ? Beta is a measure of the volatility—or systematic risk—of a security or portfolio compared to the market as a whole. Beta is used in the capital asset pricing model (CAPM), which describes the relationship between systematic risk and expected return for assets (usually stocks).	12 Months Tracking Error ? 12Month Tracking error is the difference in actual performance between a position (usually an entire portfolio) and its corresponding benchmark over the last 12 months. The tracking error can be viewed as an indicator of how actively a fund is managed and its corresponding risk level. Evaluating a past tracking error of a portfolio manager may provide insight into the level of benchmark risk control the manager may demonstrate in the future.	Tracking Error Since Inception ? Since Inception tracking error is the difference in actual performance between a position (usually an entire portfolio) and its corresponding benchmark since inception. The tracking error can be viewed as an indicator of how actively a fund is managed and its corresponding risk level. Evaluating a past tracking error of a portfolio manager may provide insight into the level of benchmark risk control the manager may demonstrate in the future.	12 Months Correlation ? Correlation, in the finance and investment industries, is a statistic that measures the degree to which two securities move in relation to each other. Correlations are used in advanced portfolio management, computed as the correlation coefficient, which has a value that must fall between -1.0 and +1.0.	Correlation Since Inception ? Correlation, in the finance and investment industries, is a statistic that measures the degree to which two securities move in relation to each other. Correlations are used in advanced portfolio management, computed as the correlation coefficient, which has a value that must fall between -1.0 and +1.0.
AB Managed Volatility Equities	Domestic Equity - Large Cap Neutral Index	-7.57%	-1.02%	NA%	NA%	NA%	0.64	5.94%	7.37%	0.81	0.84

Product Details

Fund Name	Verifed by SMSF Mates	Manager Address	Phone	Website	Email
AB Managed Volatility Equities	Yes	32/88 Phillip St, Sydney NSW 2000, Australia	02 9255 1200	https://web.alliancebernstein.com/investments/au/portal.htm	Aust_ClientService@alliancebernstein.com

Product Due Diligence

What is AB Managed Volatility Equities

AB Managed Volatility Equities is an Managed Funds investment product that is benchmarked against ASX Index 200 Index and sits inside the Domestic Equity - Large Cap Neutral Index. Think of a benchmark as a standard where investment performance can be measured. Typically, market indices like the ASX200 and market-segment stock indexes are used for this purpose. The AB Managed Volatility Equities has Assets Under Management of 1.01 BN with a management fee of 0.55%, a performance fee of 0.00% and a buy/sell spread fee of 0.5%.

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Historical Performance Commentary

Performance Commentary - June 30, 2023

• In June, the MVE—Class underperformed its benchmark, the S&P/ASX 300 Index, which was up 1.73% in Australian-dollar terms.

Detractors

• The materials and financials sectors detracted the most, while healthcare and consumer staples contributed.

• Health insurer Medibank detracted during the month as Australia’s banking regulator announced that it will apply a temporary additional capital adequacy requirement on Medibank following its review of the company’s cybercrime event. Medibank has a strong balance sheet and has sufficient existing capital to meet the adjustment. While this removes near-term upside of capital return to shareholders, precedent indicates that the additional capital requirement is likely to be lifted within 12 to 36 months. As the largest private health insurer in Australia, we believe Medibank should continue to benefit from positive industry trends, including growing participation and lower claims growth.

Contributors

• An underweight to biotechnology company CSL contributed as the company provided first-time earnings guidance for FY:24 that disappointed the market. Drivers of the downgrade to earnings guidance relative to market expectations included persistent cost headwinds in its core plasma business, as well as emerging revenue headwinds in its recently acquired renal pharmaceutical business as a key product nears loss of exclusivity. We continue to be cautious on CSL as it shifts into new therapeutic areas.

• Oracle contributed as technology stocks more broadly outperformed. The company reported better-than-expected earnings for its 2023 fiscal fourth quarter on the strength of its cloud computing offerings.

Performance Commentary - May 31, 2023

Performance Commentary - April 30, 2023

Performance Commentary - March 31, 2023

Performance Commentary - February 28, 2023

Performance Commentary - January 31, 2023

Performance Commentary - December 31, 2022

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AB Managed Volatility Equities (ACM0006AU) Report & Performance