AllianceBernstein (NYSE:AB) Conference Transcript

Summary of AllianceBernstein Conference Call (December 09, 2025) Company Overview - Company: AllianceBernstein (NYSE: AB) - AUM: Over $850 billion - Core Capabilities: Fixed income, private markets, global equities - Partnership: Collaboration with Equitable enhances product development opportunities Key Themes and Insights Market Outlook and Client Allocation - Inflation Expectations: Anticipation of higher inflation impacting real returns and diversification challenges [10][11] - U.S. Market Valuation: The U.S. is considered expensive, with tight credit spreads and strong returns, making future performance uncertain [10][11] - Global Investment Shift: Encouragement for clients to consider offshore investments due to better returns and governance in foreign markets, particularly in Asia and emerging markets [12][27] - Dollar Weakness: A belief that the U.S. administration favors a weaker dollar, which could affect investment strategies [11][12] Fixed Income and Investment Strategies - Interest in Fixed Income: Increased interest in intermediate duration assets as clients move away from cash and money market funds [15][16] - High Yield Demand: Strong demand for high yield and investment-grade assets, despite a significant issuance in the market [16][18] - Market Dynamics: The back end of the yield curve may widen due to Treasury issuance needs, impacting fixed income strategies [21] Global Equity and Non-U.S. Investments - Interest in Non-U.S. Equities: Growing interest in EFA products from international clients looking to reduce U.S. exposure [26] - Emerging Markets Focus: Notable interest in China and emerging markets, particularly during periods of dollar weakness [27] Active ETFs and Product Development - Active ETF Growth: Approximately $10 billion in AUM across 20 strategies, with 60% being net new flows [31] - Customization and Thematic Investing: Focus on mass customization and thematic strategies, such as Security of the Future, to meet client needs [33][34] Defined Contribution Market - Market Size: Defined contribution market stands at $105 billion in assets [37] - Annuities in Retirement Plans: Discussion on the importance of integrating annuities into target date funds to provide security for retirees [39][40] - DOL Advisory Opinion: Recent advisory opinion from the Department of Labor provides a safe harbor for including annuities in retirement plans, potentially increasing adoption [41][43] Private Markets and Growth Strategy - Private Markets Target: Aiming for $90-$100 billion in private markets by 2027, currently close to $90 billion [46][49] - Growth Pillars: Continued growth expected from Equitable, third-party institutional support, and private wealth channels [50][52] Private Credit Landscape - Competitive Environment: Increased competition in private credit, particularly in direct lending, with weaker terms compared to previous years [59][60] - Risk Management: Emphasis on careful deployment of capital and proactive management of potential risks in portfolios [63][64] Financial Performance and Profitability - Management Fees: Steady fee rates around 38-39 basis points, with expectations of durability despite market fluctuations [69][70] - Operating Margin: Current operating margin tracking around 33%-34%, with ongoing focus on expense control and growth in private alternatives [75][84] Additional Insights - Market Sentiment: Despite concerns in the private credit space, there has not been a significant pullback in allocations from knowledgeable clients [64] - Future Opportunities: Potential for growth in the defined contribution market and private credit, with a focus on innovative product offerings [41][52][84]