Michael Capella, Managing Director for the US Strategic Relationship Group at AllianceBernstein, joined Keith Black, Managing Director of RIA Channel to discuss AB’s technology-driven approach to the municipal bond market.
Alliance Bernstein is well-known for its innovative approach to the muni market. Over the last decade, AB has introduced unique structures and products such as a tax aware separately managed account (SMA), a municipal inflation fund, and a muni impact SMA. These portfolios implement active portfolio management through the use of both fundamental and quantitative research. “That innovation, now, is really geared towards bringing technology to scale and add efficiency to our entire business, and hopefully deliver better outcomes for our clients,” says Capella.
Alliance Bernstein searches for alpha in three areas: trading, speed, and tax. The firm’s investment in technology has allowed their traders to more efficiently search the market for mispriced bonds. Their automated systems focus on the speed of implementation, allowing them to build client SMA portfolios in as little as ten days. Tax aware strategies look for tax swaps on a daily basis, seeking to harvest tax losses without negatively impacting portfolio characteristics. Ideally, these three sources of alpha could provide returns of 50 to 100 basis points per year in excess of the value added through active management, explains Capella. Clients can build SMA portfolios with customized goals, such as ESG overlays, sector exclusions, ladders, and quality.
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Michael Capella is a Senior Vice President and Managing Director of the US Strategic Relationship Group, where he oversees the firm’s relationships within the independent broker-dealer, custodian and bank-trust channels. Prior to joining the firm in 2010, he was a vice president at T. Rowe Price, where he managed relationships with broker-dealer and global private bank clients. Before joining T. Rowe Price in 2004, Capella was a financial advisor at UBS Financial Services. He previously spent four years working as an account executive in the advertising industry. Capella holds a BA in communication and an MBA from the University of Maryland.