This global core solution provides the ability to diversify US interest rate risk when treasury yields are rising.

 

Overall Strategy

Going global in debt provides the ability to achieve competitive risk-adjusted returns with lower volatility.

Risk (less to more) versus return (less to more). Stability created by T-Bills and Global Bonds Hedged (less Risk/Less return). Core created by Global bonds hedged and unhedged has moderate risk and moderate return. High Income is created with high yield debt which is more risk, more return. Click Image to Expand
 

More About This Strategy

  • This multi-sector portfolio is run by a stable, highly-experienced team
  • This is a core fixed income product that provides balance to an overall investment portfolio
  • An expansive opportunity set diversifies the fund’s economic and yield-curve exposures
  • In addition, applying a global currency hedge can increase bond yields for low, or negative-yielding bonds
10-Year Bond Yield Percent hedged and unhedged by country (US, Canada, Germany, UK, France, Japan, Spain, and Italy).
 

Available Product

AB's Global Bond Strategy is available in a mutual fund for use in Retirement Plans. 

 
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The Morningstar RatingTM for funds, or star rating, is calculated for managed products (including mutual funds, variable annuity and variable life subaccounts, exchange-traded funds, closed-end funds, and separate accounts) with at least a three-year history. Exchange-traded funds and open-ended mutual funds are considered a single population for comparative purposes. The star rating is calculated based on a Morningstar Risk-Adjusted Return measure that accounts for variation in a managed product’s monthly excess performance, placing more emphasis on downward variations and rewarding consistent performance. The Morningstar Rating does not include any adjustment for sales loads. The top 10.0% of products in each product category receive 5 stars, the next 22.5% receive 4 stars, the next 35.0% receive 3 stars, the next 22.5% receive 2 stars and the bottom 10.0% receive 1 star. The Overall Morningstar RatingTM for a managed product is derived from a weighted average of the performance figures associated with its three-, five- and 10-year (if applicable) Morningstar Rating metrics. The weights are: 100% three-year rating for 36–59 months of total returns, 60% five-year rating/40% three-year rating for 60–119 months of total returns and 50% 10-year rating/30% five-year rating/20% three-year rating for 120 or more months of total returns. While the 10-year overall star rating formula seems to give the most weight to the 10-year period, the most recent three-year period actually has the greatest impact because it is included in all three rating periods.

Risks To Consider

Market Risk: The market values of the portfolio’s holdings rise and fall from day to day, so investments may lose value.
Interest Rate Risk: As interest rates rise, bond prices fall and vice versa, long-term securities tend to rise and fall more than short-term securities.
Credit Risk: A bond's credit rating reflects the issuer's ability to make timely payments of interest or principal - the lower the rating, the higher the risk of default. If the issuer's financial strength deteriorates, the issuer's rating may be lowered and the bond's value may decline.
Inflation Risk: Prices for goods and services tend to rise over time, which may erode the purchasing power of investments.
Foreign (Non-US) Risk: Non-US securities may be more volatile because of political, regulatory, market and economic uncertainties associated with such securities. Fluctuations in currency exchange rates may negatively affect the value of the investment or reduce returns. These risks are magnified in emerging or developing markets.
Diversification Risk: Portfolios that hold a smaller number of securities may be more volatile than more diversified portfolios, since gains or losses from each security will have a greater impact on the portfolio's overall value.
Derivatives Risk: Investing in derivative instruments such as options, futures, forwards or swaps can be riskier than traditional investments, and may be more volatile, especially in a down market.
Leverage Risk: Trying to enhance investment returns by borrowing money or using other leverage tools magnify both gains and losses, resulting in greater volatility.