Keep Your Bond Portfolio Ahead

Navigating Opportunities and Risks in Today’s Fixed-Income Market

Political change in the US, toppy valuations and rising interest rates. It’s not surprising that some investors are worrying about bonds. But there’s a lot you can do to build a better fixed-income portfolio, whether it’s finding better beta, a more efficient structure or targeted alpha opportunities.

Go Global

With US interest rates headed up, it’s time to think about going global with your bonds and hedging currency exposure. This approach can create more effective market exposure, which could enhance risk-adjusted returns. For example, in rising US interest-rate environments, hedged global bonds beat US bonds eight out of nine times over the past 20 years.

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Consider High-Yield Credit…But Be Selective

The economic expansion is providing support for US high-yield bonds—and valuations are attractive. What’s more, high yield is driven more by company performance, so it’s less sensitive to rising rates. When the Fed hikes rates in response to a stronger economy, that same economy tends to boost high-yield issuers. But not every bond is a winner: to beat the benchmark, look for targeted opportunities with a broad multi-sector approach to improve diversification and reduce risk.

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Balance Interest-Rate And Credit Exposures

Why diversify your bonds? Because fixed-income sectors don’t always move in sync. With interest rates rising and high-yield bond spreads lower than they’ve been, it’s time to consider a more flexible portfolio structure. Balancing actively managed interest-rate and credit exposures in one portfolio may help manage downside risk while delivering attractive income.

Research


Add Inflation Protection

Inflation hasn’t been a problem for a while, but in the past it has been a painful issue for both stock and bond portfolios. With the US economic expansion continuing and inflation beginning to rise, it’s a good time to think about adding inflation-protection strategies to your fixed-income arsenal. And, by the way, inflation protection is still cheap today.

Consider AB's Fixed Income Offerings

 
AB Global Bond Fund (ANAYX)

Against 298 World Bond Funds

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AB High Income Fund (AGDYX)

Against 590 High Yield Bond Funds

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AB Income Fund (ACGYX)

Against 856 Intermediate-Term Bond Funds

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AB Bond Inflation Strategy (ABNYX)

Against 202 Inflation-Protected Bond Funds

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Investors should consider the investment objectives, risks, charges and expenses of the fund/portfolio carefully before investing. For copies of our prospectus or summary prospectus, which contain this and other information, click here or contact your AB representative. Please read the prospectus and/or summary prospectus carefully before investing.

The views expressed herein may change at any time after the date of this publication. This informational does not constitute as investment advice.

Morningstar ratings are only one method of evaluating a fund.
Morningstar ratings for the funds shown reflect performance as of June 30, 2017. The value of each fund will fluctuate as the market fluctuates. The market values of each fund’s holdings rise and fall from day to day, so investments may lose value. Past performance does not guarantee future results. Morningstar ratings are specific metrics of performance and do not represent absolute performance of any fund. For each fund with at least a three-year history, Morningstar calculates a Morningstar Rating based on a Morningstar Risk-Adjusted Return measure that accounts for variation in a fund’s monthly performance, placing more emphasis on downward variations and rewarding consistent performance. Exchange-traded funds and open-ended mutual funds are considered a single population for comparative purposes. The top 10% of funds in each category receive 5 stars, the next 22.5% receive 4 stars, the next 35% receive 3 stars, the next 22.5% receive 2 stars and the bottom 10% receive 1 star. The Overall Morningstar Rating for a fund is derived from a weighted average of the performance figures associated with its three-, five- and 10-year (if applicable) Morningstar Rating metrics. Morningstar rating is for the share class noted only; other share classes may have different performance characteristics.

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AB Global Bond Fund was rated 5, 4 and 4 stars against 298, 253 and 126 funds in the category for the three-, five- and 10-year periods, respectively. AB High Income Fund was rated 5 stars against 590 and 474 funds in the category, for the three- and five-year periods, respectively. AB Income Fund was rated 5 stars against 856, 767 and 540 funds in the category for the three-, five- and 10-year periods, respectively. AB Inflation Bond Strategy was rated 5 stars against 202 and 172 funds in the category for the three- and five-year periods, respectively. AB Inflation Bond Strategy was rated 5 stars against 195 and 165 funds in the category for the three- and five-year periods, respectively.

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Investment Products Offered:

Are Not FDIC Insured | May Lose Value | Are Not Bank Guaranteed

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