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Is AllianceBernstein's New Fund a Bid to Stem Outflows?

Fidelity hops on emerging-markets bandwagon and more ...

Morningstar Fund Analysts, 11/11/2011

AllianceBernstein filed to launch an emerging-markets equity fund in what could be a bid to stem outflows from its international lineup.

AllianceBernstein has been watching money flow out the door this year. According to Morningstar data, it has lost an estimated $3.3 billion in mutual fund assets year to date through October 2011, continuing the trend of outflows the firm has seen every quarter since September 2008. With roughly half of the outflows this year coming from the AllianceBernstein International Value ABIAX and AllianceBernstein International Growth AWPAX strategies, the firm's international funds have been hit particularly hard. In the face of this investor purge, the asset manager filed to launch AllianceBernstein Emerging Markets Equity in 2012.

While the firm may be making an attempt to woo international investors to more trendy emerging markets, this is also a late play in the game. Emerging markets as a category first ramped up in 2005, when their estimated net inflows went to $13.5 billion from roughly $4.8 billion.

The emerging-markets strategy also will be included as a sleeve within the firm's AllianceBernstein International Portfolio SIMTX and Bernstein Tax-Managed International SNIVX funds. Both sport 10-year trailing returns, which fall below roughly 80% of their peers.

Although AllianceBernstein has been running an institutional emerging-markets strategy for over 15 years, this is the first offering for retail investors. Earlier in the year the firm announced it would be going back to its "retail roots" by launching new offerings for individual investors. The firm is perhaps turning to its retail distribution in hopes to offset outflows, which have also occurred on the institutional side.

Henry D'Auria, the firm's chief investment officer of emerging markets, is slated to comanage the retail offering along with director of research for AllianceBernstein's emerging-markets value effort, Sammy Suzuki.

AllianceBernstein is turning to fixed income as well to expand its international lineup, with the firm having filed to launch AllianceBernstein International Bond in 2012. The new fund will be run by the same group as at AllianceBernstein Global Bond ANAGX, a stable group with top quartile category returns for the trailing three years. The new fund will allow for more foreign currency and derivatives exposure.

Spotted: Fidelity Riding Emerging-Markets Trend
Not one to be left out of a big crowd, Fidelity is stepping up efforts to increase its share of the popular emerging-markets category.

Morningstar fund analysts cover more than 1,700 mutual funds and write regular commentary covering fund industry news, fund investing trends, picks, portfolio planning, international investing, and more.
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