HEAD-TO-HEAD: Alliance Bernstein vs Columbia Threadneedle

123456

Investment strategy 

Both the AB and the Threadneedle funds invest in US equities and have a focus on quality growth companies. However, the main difference between the two products is that the AB fund has more of a growth tilt, while the Threadneedle fund is more valuation-conscious, said Ng.

Since the AB fund has a focus on growth companies, its benchmark is the Russell 1000 Growth Index. The fund is fairly concentrated relative to its peers, holding around 40 to 50 stocks.

Turning to the Threadneedle fund, Ng said it also prefers quality names, which the fund defines as those companies with sustainable earnings and high levels of profitability in the long-term.

“It looks at companies with a strong competitive advantage and which are able to generate strong cash flows.”

In terms of the fund also being valuation-conscious, Ng added that “the manager of the fund tries to look for opportunities in these quality stocks, and that’s usually when the stock has cheaper valuations.”

Unlike the AB fund, the Threadneedle fund’s benchmark index is the S&P 500.

The differences in investment strategies are manifested in the differences in sector allocations.

Since the AB Fund has a strong tilt towards growth companies, it is heavily invested in IT, healthcare and consumer discretionary.

“If you put those sectors all together, they nearly account for 75% to 80% of the portfolio. So it is highly concentrated in the growth sectors,” explained Ng.

The Threadneedle fund also has allocations in growth sectors, such as in IT, but it holds financial names as well as, and these usually have cheaper valuations.

Sector allocation

Source: Fund factsheets

123456