Security Check for Equity Declines

Sharon Fay (pictured) and Kent Hargis Protecting against stock-market declines is a top priority for many investors. But with lower-volatility stocks looking expensive today, will they get the job done if equities fall from new peaks?

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Risk Parity Under the Microscope

Posted by Daniel J. Loewy (pictured) and Brian T. Brugman of AllianceBernstein (NYSE: AB) After tremendous growth over more than a decade of strong returns, risk-parity strategies have recently been struggling. Has the market run-up exposed a fatal flaw? We don’t think so.

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Reaching for Yield: Worth the Risk?

Investors seeking more robust returns in a lower-interest-rate environment often look to high-yield bonds for answers. But it’s critical that they don’t reach too far down the credit spectrum in search of higher yields—as tempting as it may be.

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Bond History: Rhyming, Not Repeating

When the Fed does eventually start raising interest rates, at AllianceBernstein we don’t expect to see bonds experiencing the dire scenarios of 1981 or 1994. Instead, the 2003–2006 period of slow and measured rate normalization seems more likely. But it’s not a perfect match, and we do see some important investment factors to consider.

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High Yield: The Perfect Storm That Wasn’t

In a year when the US Federal Reserve caused jitters over quantitative easing, the US government endured a shutdown and investors shifted focus to equities, it’s no surprise that pure “duration-sensitive” bonds like US Treasuries had negative returns as interest rates spiked. But high yield emerged relatively unscathed, returning over 7% for the year.

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Building a Better Passive Mousetrap

Michael DePalma (pictured) and Richard Abramson In a recent blog, Passive Management Does Not Equal Passive Investing, we showed how passively managed portfolios actually create an active investment in which volatility isn’t benign and risk exposures can vary wildly over time. So if we could fix the problem and reduce exposure to spikes in market [...]

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The Marriage of QDIAs and Managed Volatility in US DC Plans

Probably the best way to connect US defined contribution (DC) plan participants with the angst-reducing benefits of managing volatility is through a plan’s qualified default investment alternative (QDIA)—especially if the QDIA is a target-date fund.

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Dig Deep—Then Dig Some More—to Uncover Risks in EM Corporate Debt

Emerging-market (EM) corporate debt returned big numbers for investors in recent years, as the sector rode a general wave of optimism about the future. But those days are gone. In 2013, successful investors have had to take a more painstaking path.

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Passive Management ≠ Passive Investing

Michael DePalma (pictured) and Guoan Du Passive investments are often misunderstood. Instead of providing static positioning as implied by the label, they can be very capricious because of market and sector turbulence. To tame a passive asset, we think investors need to exert more active control over the dynamics of volatility.

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Reality – Expectations = Happiness

Many US investors may be disappointed when they open their account statements.  Despite the widespread news that the Dow Jones Industrial Average gained 21% in the  first 10 months of 2013, most US investors’ taxable portfolio returns were far lower—typically somewhere between 5% and16% range.

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