When you're looking at financial options, especially those tied to insurance products like variable annuities or life insurance, understanding the underlying investments is key. The Brighthouse Funds, specifically the AB International Bond Portfolio, is one such investment that might cross your path. It's designed with a clear goal: to maximize total return.
Let's break down what that means and what you might expect. This portfolio primarily focuses on fixed income securities, meaning it invests in debt instruments like bonds. The strategy here is quite global, with a significant emphasis on fixed income from issuers outside the U.S. They aim to diversify by investing in at least three different countries, tapping into both developed and emerging markets. This broad approach can include government and corporate debt, whether denominated in local currencies or U.S. dollars.
Now, for the practical side of things – the costs. The prospectus lays out the fees and expenses, and it's important to note that these figures don't include the charges from your specific variable life insurance policy or annuity contract. If those were factored in, the costs would naturally be higher. For the portfolio itself, you'll see different share classes (A, B, C, and E), each with its own expense structure. For instance, Class A shares have a total annual operating expense of 0.60%, while Class C shares come in at 1.15%. These percentages are applied to the value of your investment each year.
To give you a clearer picture, an example is provided. If you were to invest $10,000 and it grew at a steady 5% annually, the costs over one and three years would vary by share class. For Class A, you'd see around $61 in costs after one year and $192 after three. Class C, being the highest in this comparison, would incur about $117 after one year and $366 after three. These examples are based on assumptions, and actual results can differ.
Something else to be aware of is the 'portfolio turnover rate.' This refers to how often the fund buys and sells securities. A high turnover can mean higher transaction costs, which aren't directly shown in the annual operating expenses or the example. For this particular portfolio, since it commenced operations around the time of the prospectus, there wasn't a reportable turnover rate yet.
Finally, a heads-up on how you'll receive reports. Starting in 2021, paper copies of annual and semiannual reports might not be automatically mailed. Instead, they'll be available online, and you'll get a notification. If you prefer to keep receiving paper copies, you'll need to specifically request it from your insurance provider. It's a small detail, but it's good to be informed about how information is shared.
