AllianceBernstein launched three new actively managed exchange-traded funds in March, targeting low volatility, high dividends, and disruptors – three nascent themes for investors over the past few years. These products focus on investors’ long-term portfolio requirements while enabling them to capitalize on tactical trading opportunities.
In this article, we’ll look at these new funds and how they could help investors fine-tune their exposure.
See our Active ETFs Channel to learn more about this investment vehicle and its suitability for your portfolio.
Low Volatility With LOWV
Many investors have shifted their concern from returns to risk over the past few quarters. With interest rates rising and bank failures abound, many investors desire less volatility.
The AB US Low Volatility Equity ETF (LOWV) targets capital appreciation with an emphasis on lower volatility relative to broader equity markets. In particular, the portfolio managers hold a 60 to 80 mid- to large-cap stocks portfolio. These stocks comprise attractively priced, high-quality and stable businesses to minimize volatility and risk.
Some of the fund’s top holdings include:
- Microsoft Corp. (MSFT) – 7.65%
- Alphabet Inc. (GOOGL) – 4.47%
- Apple Inc. (AAPL) – 3.94%
- Broadcom Inc. (AVGO) – 2.82%
- Autozone Inc. (AZO) – 2.77%
The new fund will compete with larger passively managed low-volatility ETFs, including the iShares MSCI USA Min Vol Factor ETF (USMV) and the Invesco S&P 500 Low Volatility ETF (SPLV).
High Income With HIDV
High yields have become critical for income investors to keep up with inflation. And with interest rates still rising, fixed-income investments remain a risky bet (since yield and price are inversely related).
The AB US High Dividend ETF (HIDV) invests in dividend stocks to increase portfolio yield. Using the Russell 1000 Index as a base, the fund managers employ a systematic screen and look beyond traditional “high dividend” stocks to generate more exposure than typical dividend funds. At the same time, it has a modest 0.45% expense ratio.
The fund’s top holdings include:
- Apple Inc. (AAPL) – 6.9%
- Microsoft Corp. (MSFT) – 6.09%
- Visa Inc. (V) – 2.08%
- Amazon.com Inc. (AMZN) – 2.05%
- Mastercard Inc. (MA) – 1.87%
The fund will compete with more established high-yield passive funds, including the Vanguard High Dividend Yield ETF (VYM) and the Schwab US Dividend Equity ETF (SCHD).
High Potential With FWD
The rise of ChatGPT underscores technology’s potential to disrupt multiple industries rapidly. As a result, many investors are looking to hedge against or invest in these kinds of innovations.
The AB Disruptors ETF (FWD) invests in innovative market leaders poised to disrupt their respective industries. By combining top-down thematic research with bottom-up fundamental analysis, the fund managers select 80 to 120 stocks at the rapid adoption phase of the S-curve to provide access to durable high-growth opportunities.
Companies in the fund’s portfolio include:
- Nvidia Corp. (NVDA) – 3.54%
- Microsoft Corp. (MSFT) – 2.41%
- Advanced Micro Devices Inc. (AMD) – 2.01%
- Quanta Services Inc. (PWR) – 1.83%
- Meta Platforms Inc. (META) – 1.80%
The fund competes with well-known competitors, like Cathie Wood’s ARK Innovation ETF (ARKK), which has amassed more than $7 billion in assets.
The Bottom Line
AllianceBernstein’s new active ETFs address three critical areas for investors with compelling strategies.
The new launches also come as active ETFs continue to capture market share from mutual funds. According to ETF.com, roughly one-third of ETFs are active, holding nearly $400 billion in assets. The trend is so compelling that many mutual funds are undergoing ETF conversions to make their strategies more cost and tax efficient for investors.
Take a look at our recently launched Model Portfolios to see how you can rebalance your portfolio.
