AllianceBernstein Discovery Value Fund’s recent fee hike has earned it a downgrade from a Bronze to Neutral rating by Morningstar.
According to Morningstar analyst David Falkof, in 2012 AllianceBernstein lifted this fund's fee cap, which had kept expenses on all of the share classes well below the averages for their similarly sold peer groups since 2005. “The fund's low cost gave it a meaningful built-in advantage over rivals,” wrote Falkof.
“With the fee cap lifted, the fund's expenses now are middling across most of the shares. For instance, the A shares now charge 1.27% relative to the front-load mid-cap median fee of 1.31%.”
However, from a strategy perspective, the fund remains the same. Co-managers James MacGregor and Andrew Weiner have run a deep-value strategy since taking the helm in December 2005, seeking small- and mid-cap companies priced at steep discounts to their estimated intrinsic values, according to Falkof.
“But while the fund's approach and management team has been steady, its now less-attractive fees pose a higher hurdle for outperforming peers on a risk-adjusted basis. As a result, the fund's Analyst Rating falls to Neutral from Bronze.”
