In contrast, the AB fund, led by Douglas Peebles, measures its performance against two benchmarks. The first benchmark is a combination of 33% Barclays High Yield 2% Constrained Index, 33% JPMorgan GBI-EM, and 33% JPMorgan EMBI Global. The second benchmark is the Barclays Global High Yield Bond Index.
“On top of a combination of bottom-up and top-down approaches, Peebles also uses an in-house market cycle indicator to construct his portfolio. Using this method, Peebles and his team track different bond asset classes and assess how they perform in different situations,” Ng said.
Unlike the Blackrock fund, the AB fund allocates to emerging market debt.
Ng pointed out that the AB fund has recently made a tactical decision to diversify into investment grade debt (BBB rating and above).
“The AB fund is still focused on high yield debt in the sense that Peebles maintains at least two-thirds of the fund’s allocation in high yield bonds (BB rating or below). I would say as of now, the AB fund is maintaining a balanced portfolio,” Ng noted.
A snapshot of the two funds:
