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Safety Stocks
Mind the Debt
15 April 2018
1 min read
Debt Matters for Stocks in Rising-Rate Environment
Sector data as of March 31, 2018; returns as of April 10, 2018
Past performance and current analysis do not guarantee future results.
US stocks are based on companies listed in Russell 1000. European stocks are based on companies listed in MSCI Europe. Japanese stocks are based on companies listed in MSCI Japan.
*Hedged equity returns of high-leverage and low-leverage companies. High leverage is the top quintile of companies measured by net debt/equity and low leverage is the bottom quintile of companies based on net debt/equity. Net debt/equity is the total of long-term and short-term debt minus cash and cash equivalents divided by the book value of the company’s equity.
†Sector debt to equity is the equally weighted average of net debt/equity as described above for each company in the sector. Sector beta is based on the average trailing 60-week beta of each stock within a sector, equally weighted. Sector classifications are based on Global Industry Classification Standard (GICS).
Source: MSCI, Russell Investments, S&P Compustat, Worldscope and AllianceBernstein (AB)
About the Author
Nelson Yu is a Senior Vice President, Head of Equities and a member of the firm’s Operating Committee. As Head of Equities, he is responsible for the management and strategic growth of AB’s equities business and investment decisions across the department. Since 1993, Yu has experience generating investment success in global equity markets by joining fundamental research with rigorous quantitative methods. He joined AB in 1997 as a programmer and analyst, and served as head of Quantitative Equity Research from 2014–2021. Since 2017, Yu also served as head of Multi-Style Core Equity strategies, with over $10 billion in assets. Most recently, he was CIO of Equities Investment Sciences and Insights, which brings together resources across Data Science, Quantitative Research, Advisory Services, Risk and Global Execution to deliver differentiated capabilities and insights to AB’s equities investment platform. Prior to joining AB, Yu was a supervising consultant at Grant Thornton. He holds a BSE in systems engineering from the University of Pennsylvania and a BS in Economics from the Wharton School at the University of Pennsylvania. Yu is a CFA charterholder. Location: New York
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