From Anomaly to Opportunity: High Yields on Short Bonds

Will Smith is Director of US High Yield Credit. He is also a member of the High Income, Global High Yield, Limited Duration High Income, Short Duration High Yield and European High Yield portfolio-management teams. Smith designed and is one of the lead portfolio managers for AB’s Multi-Sector Credit Strategy, which invests across investment-grade and high-yield credit sectors globally.

A disciplined process that focuses on a variety of approaches—including quantitative, liquidity and macro models—to generate returns is key to Smith’s investment philosophy. This is an aggressive style within tight limits, one that emphasizes risk management and a longer investment horizon.

“Building better credit portfolios isn't just about humans doing deep research,” Smith says. “It’s focusing that research where and when other approaches won’t be as effective.”

Robert Schwartz, Senior Vice President and Portfolio Manager, joined AB in 2012 as a corporate research analyst, covering specialty finance, automotive, aerospace/defense and industrial companies. He analyzed the same industries as a senior credit analyst at Citadel Investment Group and Bell Point Capital Management. Schwartz started his career in Detroit as an automotive engineer, where he was awarded two patents.

AB's emphasis on differentiated research and its long-term focus drew Schwartz to the firm. Using automated tools—like the digitization of fundamental research—that convert research into trade ideas is key to this active management approach. “We focus on the range of possible outcomes,” he says. “We don't put weight on a single point forecast or on trailing metrics.”

Schwartz's motivations are twofold: curiosity about how businesses perform during various economic and industry cycles, and competitiveness to generate the best returns for clients. “It's not a sprint,” he says. “It's a lot of sprints.”

Gershon M. Distenfeld thrives on facing challenge, solving problems and putting people with different personalities and different viewpoints together to "make the engine run." When he joined AB in 1998 from a role as an operations analyst at Lehman Brothers, Distenfeld had long been fascinated by the high-yield market, and he led that practice at AB from 2006 to 2016 before assuming responsibility for all of credit. He has been co-head of fixed income since 2018.

In an industry that tends to focus on the short term, Distenfeld's investment philosophy takes the long view, considers a range of outcomes and focuses on the downside. This approach puts process and constant innovation at the forefront, making full use of AB's proprietary technology to mine the insights of fundamental and quantitative research.

"We're constantly reinventing ourselves," Distenfeld says. "We don't just sit still. We adapt to new information so we can find new factors that work."

Distenfeld's eye toward the long view extends to his charitable work with organizations like New Jersey NCSY. This youth organization for disaster relief partners with Habitat for Humanity and NECHAMA to repair homes and lives affected by natural disasters.