Fund Rationale: AB Short Duration High Yield Portfolio Fund

AB Short Duration High Yield Portfolio Fund (the "Fund")
SGD Hedged Class IT Distribution Shares (ISIN: LU1306336097)
Fund Manager Page

Endowus has selected the Fund as it invests in high yield securities globally, while also positioning itself to limit downside volatility by emphasising a shorter duration and higher quality within the universe, run by a team of highly experienced managers.

Key Information

Fund Objective: Seeks high risk-adjusted returns by building a fixed-income portfolio with an average duration of less than four years to reduce sensitivity to credit market sell-offs and interest rate moves, and by focusing on higher-rated issuers in the high-yield space.

Suitability: Investors who have a higher risk-tolerance and are seeking the income potential of fixed-income investment.

* Total Fund-level Fees include fund management fee of 0.55%.
** Endowus do not charge a preliminary sales charge or any other additional fees, other than the all-in Endowus Access Fee.

Fund Characteristics

Fund Inception: 29 July 2011
Share Class Inception: 29 December 2015
Benchmark: Bloomberg Barclays Global High Yield Corporate

Fund AUM: SGD 1.8bn
Source: MorningStar as of 27 May 2021. Please refer to the FMC page for the most updated AUM.

Regional Allocation:

Sector Allocation:

Source: MorningStar as of 31 March 2021. Allocation data indicate actual exposure as a percentage of the Fund's total Net Asset Value. Please refer to the Fund Manager Page for the most updated information on Fund Holdings and Breakdown.

Selection Criteria

Endowus has selected the AB Short Duration High Yield Portfolio Fund because while it invests in high yield securities globally, it is positioned to limit downside volatility by emphasising a shorter duration and higher quality within the universe. The Fund limits its duration exposure to less than 4 years, and can only invest a maximum of 10% in CCC-rated securities. The focus tends to be in BB/B rated securities. In addition, the investment team adds value by selecting credits, allocating to sectors and countries, and managing the portfolio beta based on their top down and bottom up views. The Fund can also opportunistically use derivatives to hedge downside volatility. As a result, the Fund has realised a low down-market capture ratio as well a lower volatility historically, testifying its downside protection capability. 

The Fund is managed by 5 Portfolio Managers with an average of 18 years of industry experience. The Lead Portfolio Manager, Gershon, has 24 years of industry experience, most of which has been with AB. The team is involved in all other High Yield strategies that AB runs, and is highly experienced in this field. One differentiating factor that AB has in its investment process is the use of technology to enable faster information dissemination and investment decisions. We think that the investment process is highly streamlined with common research frameworks in place, while the ultimate decision lies with the Portfolio Managers. 

Investors should note that the design of the Strategy means that it generally does not capture the full upside of the global high yield market. There is exposure to the high yield market through credit indices such as CDX to maximise liquidity. You can consider this Fund if you would like exposure to the broad global high yield market while at the same prefer not to have too much exposure to duration risk.


Updated by Endowus: June 2021

** Disclaimer: Past performance should not be taken as an indication or guarantee of future performance and no representation or warranty, express or implied, is made regarding future performance. Any opinions expressed reflect a judgment at the original date of publication by us and are subject to change without notice.
The prospectus, profile statement, product highlight sheet, fund factsheet or other offer or product documents may contain references about the expected risk tolerance of their target investors. These are in no way indicative of how we at Endowus have assessed your risk tolerance based on your stated objectives and financial situation. Endowus accepts no responsibility for investment decisions made in response to the expected risk tolerance levels mentioned in the product or offer documents.