A proven philosophy for Alliance Bernstein

According to Alliance Bernstein’s Kevin Boreen, senior vice-president and senior portfolio manager for global value equities, a consistent value philosophy has resulted in the organisation winning this year’s Money Management Fund Manager of the Year award in international equities.

For a company that “does not deviate from its style or trend follow”, that commitment to a tried and tested process resulted in the Bernstein global value equity fund achieving a 12.72 per cent return for retail investors, over the 12 months to end March.

Veronica Gullo, associate director at Assirt, says: “It really is a case of its performance being attributed to good stock selection. It is, we believe, one of the very best value managers out there globally.”

Boreen says that due to the fact that valuations have been temporarily compressed in the market during the past year, the firm did “have a slightly more diversified portfolio in the sense of having more holdings”. But he adds: “That’s a nuance on a very consistent approach to portfolio construction.”

In terms of the actual make-up of the portfolio, Boreen says: “We have been overweight in selected financials, energy, industrial commodities and capital equipment, and underweight in medical, technology and consumer cyclicals.

“But more important than that is the power of our research driven stock selection within each of those sectors, which finds companies that have good prospects and are very attractively valued relative to the market.”

While Boreen is reluctant to compare Bernstein to other value managers, he does believe there is a reason for the firm’s success.

“The really distinctive hallmark of Bernstein is its research and its very disciplined process,” he says.

Michael Bargholz, chief executive officer of Alliance Capital Management, agrees.

“Bernstein really is a marriage of research and quantitative tools used to construct portfolios which have the best investment ideas, and the best risk characteristics,” he says.

GMO and MFS Investment Management were both named as finalists in this category.

According to Gullo, GMO had an “exceptional performance in international equities and also emerging markets”.

She adds: “It is more of a quant-based manager, but it’s an active quant-based process. It actually came in at seventh place in emerging markets and returned just over 12 per cent in global equities.”

According to John McKinnon, executive director of GMO, recent market conditions haven’t been ideal for the company, but it has now managed to remain in the top quartile over the last five years.

“We don’t just stick to a value approach, we also combine value with momentum and sentiment measures which help us out in those sort of times,” he says.

The funds of Boston-based MFS Investment Management, a growth at a reasonable price (GARP) manager, are distributed solely by BNP Paribas to Australian investors.

Robert Harrison, managing director of BNP Paribas, believes the firm’s long-term approach has held it in good stead.

“It invests in companies for the long-term, and will sometimes suffer short-term underperformance, but will outperform in the long haul. For instance, in 2003 it underperformed in momentum driven markets, and then in 2004 it came back and outperformed. It had a great 2004,” he says.

Gullo adds: “It is a high quality mid-cap to large-cap manager with more of a growth bias to its portfolios. It has a very, very strong team that has been together for a number of years, and we like the way the team is put together, and the structures around that team.”

— Larissa Tuohy