Alliance-Bernstein: Expertise in Global High Yields
For my latest income recommendation, I have picked a very free-ranging fund with experienced managers and a good track record for higher yields, which even in this case do involve higher risk than more sedate funds with narrower mandates, notes international expert Vivian Lewis, editor of Global Investing.
Alliance-Bernstein Global High Yield Fund (AWF) is closed-end from from the Alliance-Bernstein stable of mostly open-end funds.
The fund invests in some of the scarier parts of the bond and yield markets and is building on its long experience in the haunted reaches of non-investment grade paper which obviously has to pay higher interest.
Frankly I don't want to buy shopping center bonds if Amazon (AMZN) is going to wipe out malls or auto loans if we are all going to share rides or bonds from political hot spots like South Africa, Brazil, Kenya, or Turkey where the government risks falling.
This fund uses currency hedges and swaps so that almost all its exposure worldwide in in US$s, but in fact it is not really over 90% invested in US risks.
The hedges are what give you that idea. In fact it is active in many niches in the bond market to boost income and can add risk if the managers think it will pay off.
The risks are terrifying when I consider investing on my own or with an index tracking yield ETF in this area of the bond market.
So I want Alliance-Bernstein in my corner. You also want them to hedge sensibly and cheaply against some of the risks — which is not what individual investors can do.
You may want to be in non-investment grade (also known as junk bonds) for some of your yield holdings but you want a savvy manager to pick them.
The fund's net asset value at the close of last week was $14.08. It has fallen to $12.92 with the market reeling and its latest payout being made. It currently yields 6.4%.