uploads///Portfolio Breakdown of the AWPAX

What’s the Sector Composition of the AB International Growth Fund?


Aug. 26 2016, Published 5:39 p.m. ET

AB International Growth Fund overview

The AB International Growth Fund invests “in an international portfolio of equity securities of companies selected by the Adviser for their growth potential within various market sectors.” Fund literature states that the fund will be invested in stocks of companies located in at least three countries other than the US. Assets are invested in both developed and emerging markets. The fund can invest in derivatives like futures and options, as well as currency derivatives to hedge unfavorable currency exposure.

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Bottom-up stock research is the primary driver for stock selection. Geographic allocation is not pre-determined and is driven by the stock selection process. The fund normally invests in 60–100 stocks. The fund’s assets were spread across 56 holdings as of July 2016, and it was managing assets worth $330.6 million. As of June, its equity holdings included Prudential (PUK), UBS Group AG (UBS), Tata Motors Limited (TTM), Ctrip.com International (CTRP), and Mobileye N.V. (MBLY).

Portfolio changes in the AB International Growth Fund

Sector-wise, financials form the biggest portion of the AWPAX. Consumer discretionary is a distant second, followed by consumer staples. These two sectors have reversed places from the last reported period. Information technology and industrials are the only other sectors that command over a tenth of the assets. The top three sectors form a combined 58% of the fund’s portfolio. A major change from the previous quarter is the introduction of telecom services stocks. The sector, which was absent from the May 2016 portfolio, forms 4% of the AWPAX as of July.

We’ve looked at the quarterly portfolios of the AWPAX for the past three years. Among the consumer-focused sectors, discretionary has taken precedence over staples. Energy stocks, which used to form over 5% of the portfolio three years ago, were last part of the fund in 2015. They have been completely absent from the portfolio this year. Health care stocks seem to be less interesting than industrials and information technology, given the reduced exposure to the former and the increased exposure to the latter two sectors. This is an indication of a shift from defensive to aggressive positioning by the fund.

With this portfolio positioning, how has the AB International Growth Fund – Class A (AWPAX) fared in 2016 so far? Let’s look at that in the next article.


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