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AB American Gr Ptf SK USD Acc

Analyst Report
Morningstar's Take
|25/04/2019

by Natalia Wolfstetter
*  This rating and report were issued for a different share class of this fund. The performance and fee structure of this class may vary from that referenced.


Changes with AB American Growth Portfolio’s supporting cast and the management team’s mixed record keep its Morningstar Analyst Rating at Neutral, just like its US-based sibling, AB Large Cap Growth. Lead manager Frank Caruso is long-tenured, but his analyst support is less experienced. When Caruso, a 26-year veteran at AB, took over this strategy in February 2012, he had a dedicated squad that has morphed since. From 2014 to 2017, a pair of analysts left the firm, while three joined. Sector coverage also changed hands in some of the fund’s bigger sectors over this span, such as industrials and consumer discretionary. Such changes in coverage are concerning, because this team manages four strategies across the style spectrum and has a lot of ground to cover. Indeed, inconsistent stock-picking in consumer discretionary contributed to pedestrian long-term records on two of Caruso’s other charges, US-domiciled AB Relative Value and AB Core Opportunities. Granted, a similar approach to those funds’ has done well here. Caruso and his team rely on quantitative models and fundamental research to look for profitable companies with low debt that can compound capital in any economic environment. They have a penchant for growth-oriented stocks, which shows in an average price/earnings ratio that is higher than the Russell 1000 Growth Index’s. The portfolio also tilts toward quality, as evidenced by its above-benchmark average return on assets. Over Caruso’s tenure from early 2012 through March 2019, the fund handily beat the benchmark and its typical US large-growth equity Morningstar Category peer. It’s unclear whether the team can consistently outperform. The fund is growthier than its bogy, which has given it a leg up in this bull market. Its quality factor has also been in favour during recent market downturns, such as from mid-2015 to early 2016, boosting its performance in those periods. Plus, the fund has owed much of its success to comanager Vinay Thapar’s healthcare picks. Stock selection in that sector contributed to about half of the fund’s outperformance over Caruso’s tenure. The fund needs to show its worth across more ground and over multiyear periods.

Morningstar Analyst Rating™
To find out how Morningstar rates a fund click here.
Portfolio RoleThis large-cap fund with a growth tilt belongs in a supporting role.
Morningstar Pillars
PeopleNeutral
Management's mixed track record and analyst turnover warrant a Neutral People rating.
ParentNeutral
This firm continues to face challenges.
ProcessNeutral
The process is sound but undifferentiated.
PerformancePositive
Putting together a nice record.
PriceNegative
Above average.
Morningstar Analyst RatingMorningstar evaluates funds based on five key pillars, which it's analysts believe lead to funds that are most likely to outperform over the long term on a risk-adjusted basis.
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A fim de prover consistência para todos os relatórios fornecidos por diferentes Asset Managers, os data points calculados apresentados são gerados usando uma metodologia de cálculo proprietária da Morningstar, que pode ser conferida com mais detalhes em(https://www.morningstar.com/research/signature)