Meet Abbie: Helping Define the Future of Bond Investing
Bond markets aren’t an easy arena, and today, there is a perfect storm of declining and fragmented liquidity, a shrinking broker-dealer market, and tighter regulation. To navigate this environment, investment managers need tailored information to help them make decisions faster, streamline processes and get a 360-degree view of risks and opportunities.
Embracing Innovation in Our Fixed-Income Platform
At AB, we’re tackling this challenge by innovating in the digital world with proprietary technologies, including ALFA and PRISM.
ALFA, the Automated Liquidity and Filtering Analytics application, aggregates pockets of market data into one access point, helping traders make better-informed decisions. With PRISM, our credit rating and scoring system, AB credit analysts share views on bond issuers in a consistent, comparable, quantifiable way across industries, ratings and geographies.
When leading-edge technologies like these work together in a single, integrated system, AB’s investment experts are able to tap into shared knowledge and insights on individual bonds. And that power is magnified when a high-tech tool has conversations with these research systems to determine which bonds analysts find attractive and understand what’s available in the market at any given time.
That’s where Abbie comes in.
Creating AB’s Virtual Portfolio Assistant
We created Abbie as a virtual assistant to lend a digital, high-speed hand to our portfolio teams and traders. Originally, she was a chatbot that could be directed to build orders more quickly and with fewer errors than humans, who are prone to mistakes—even when they’re being extremely careful.
Here’s an example of Abbie in action: A portfolio manager may ask her for help when investing new cash in a fixed-income strategy. Abbie can assess current portfolio positioning and ask the investment expert for specific attributes of bonds to buy—yield ranges, attractiveness based on AB’s fundamental and quantitative analysis and level of liquidity, for example.
Abbie, conversing with our other technology applications, scours the bond market and returns in a flash with specific suggested trades as starting points for the portfolio manager. That leaves more time for AB’s investing experts to do the deep thinking and decision-making that can add value for clients.
The portfolio manager can review the trade, ask Abbie to make adjustments and then send her off to build the orders. Abbie also checks for errors if traders’ orders seem out of place, watches markets around the clock and can check for portfolio exposures that might be affected by breaking news or events.
Learning and Advancing: What’s Next for Abbie?
In the future, Abbie may alert our Investment Professionals to new portfolio inflows and analyze strategies on her own, generating an initial list of potential investments. Or she may see a great opportunity on ALFA that looks strong on PRISM and nudge our investment staff to investigate the opportunity. Once Abbie is smart enough to understand trading parameters, she may even trade with bots like her at other institutions.
She may also monitor portfolio activity, keeping an eye out for unusual behavior that could indicate a human mistake. One day, she may even answer simple questions for our clients about their exposure to certain issuers or risks. Humans will always have control over key decisions and complex client interactions, but Abbie can give them a head start and, in some cases, a range of options to consider.
Simply put, Abbie gives AB an edge. By collaborating with other components of our digital ecosystem, she can monitor a vast bond universe, freeing up more time for portfolio teams to focus on bigger-picture decisions and deliver investment insights. What’s more, spotting and executing on opportunities faster can create an extra source of potential outperformance in today’s environment.