NYSE:AB AllianceBernstein Q1 2025 Earnings Report $41.01 +1.61 (+4.09%) Closing price 05/1/2025 03:59 PM EasternExtended Trading$41.08 +0.06 (+0.16%) As of 09:25 AM Eastern Extended trading is trading that happens on electronic markets outside of regular trading hours. This is a fair market value extended hours price provided by Polygon.io. Learn more. Earnings HistoryForecast AllianceBernstein EPS ResultsActual EPS$0.80Consensus EPS $0.78Beat/MissBeat by +$0.02One Year Ago EPS$0.73AllianceBernstein Revenue ResultsActual Revenue$838.21 millionExpected Revenue$859.36 millionBeat/MissMissed by -$21.15 millionYoY Revenue Growth-5.20%AllianceBernstein Announcement DetailsQuarterQ1 2025Date4/24/2025TimeBefore Market OpensConference Call DateThursday, April 24, 2025Conference Call Time10:00AM ETConference Call ResourcesConference Call AudioConference Call TranscriptSlide DeckPress Release (8-K)Quarterly Report (10-Q)SEC FilingEarnings HistoryCompany ProfileSlide DeckFull Screen Slide DeckPowered by AllianceBernstein Q1 2025 Earnings Call TranscriptProvided by QuartrApril 24, 2025 ShareLink copied to clipboard.PresentationSkip to Participants Operator00:00:00Thank you for standing by, and welcome to the Alliance Perthes' First Quarter twenty twenty five Earnings Review. At this time, all participants are in a listen only mode. After the remarks, there will be a question and answer session, and I will give you instruction on how to ask questions at that time. As a reminder, this conference is being recorded and will be available for replay on our website shortly after the conclusion of this call. Would now like to turn the conference over to the host for this call, Head of Investor Relations for AV, Mr. Operator00:00:28Ioannis Sergali. Please go ahead. Ioanis JorgaliVice President of Investor Relations at AllianceBernstein00:00:33Good morning, everyone, and welcome to our first quarter twenty twenty five earnings review. This conference call is being webcast and accompanied by a slide presentation that's posted in the Investor Relations section of our website, www.alliancebernstein.com. With us today to discuss the company's results for the quarter are Seth Bernstein, President and CEO and Tom Simeone, CFO. Onur Erzan, Head of Global Client Group and Private Wealth will join us for questions after our prepared remarks. Some of the information we'll present today is forward looking and subject to certain SEC rules and regulations regarding disclosure. Ioanis JorgaliVice President of Investor Relations at AllianceBernstein00:01:17So I would like to point out to the Safe Harbor language on Slide two of our presentation. You can also find our Safe Harbor language in the MD and A of our 10 Q, which we filed this morning. We base our distribution to unitholders on our adjusted results, which we provide in addition to and not as a substitute for our GAAP results. Our standard GAAP reporting and a reconciliation of GAAP to adjusted results are in our presentation appendix, press release and our 10 Q. Under Regulation FD, management may only address questions of material nature from the investment community in a public forum. Ioanis JorgaliVice President of Investor Relations at AllianceBernstein00:02:00So please ask all such questions during this call. Now I'll turn it over to Seth. Seth BernsteinPresident and CEO at AllianceBernstein00:02:07Good morning and thank you for joining us today. Against the backdrop of escalating uncertainty around trade policy and economic growth, AllianceBernstein delivered another strong quarter. Our results highlight the strength of our franchise, the depth of our investment expertise and the breadth of our globally diversified platform. On Slide three, I'll review the key business highlights of our first quarter. First, all three of our distribution channels grew organically in the first quarter, generating $2,700,000,000 in firm wide active net inflows. Seth BernsteinPresident and CEO at AllianceBernstein00:02:40Our differentiated distribution platform gives us an edge in growing markets like Asia, U. S. High net worth and insurance, where we've consistently gained market share, including in the first quarter of twenty twenty five. Coupled with the extensive range of our investment capabilities that span across traditional and alternative assets, we're strategically positioned to help our clients navigate turbulent markets and benefit from rapidly emerging trends. The fixed income reallocation theme is a prime example of our ability to capture demand where it exists, having generated over $35,000,000,000 of active fixed income inflows over the last two years. Seth BernsteinPresident and CEO at AllianceBernstein00:03:18Even amidst the return of rates volatility and heightened policy risks, we successfully generated $1,000,000,000 in active fixed income inflows during the first quarter of twenty twenty five. Despite the downturn in overseas demand for our taxable fixed income strategies, largely driving a $1,400,000,000 in firm wide taxable outflows, we continue to enjoy robust growth for our tax exempt franchise, which generated $2,400,000,000 of inflows. Our industry leading retail meaning platform has been driving force of organic growth, achieving an impressive 19% annualized growth rate in the first quarter. Over the past five years, retail tax exempt has consistently grown at double digit rates, reaching $46,000,000,000 in AUM, more than doubling in size since 2020. The secular growth in private alternatives is another theme that benefits us. Seth BernsteinPresident and CEO at AllianceBernstein00:04:12During the quarter, we had over $2,500,000,000 of institutional deployments into our private markets platform, coupled with inflows from high net worth into our asset based finance and private credit strategies. Active equity outflows of 2,500,000,000 moderated compared to recent quarters, with institutional redemptions slowing down while retail flows flip back to positive. In the first quarter of twenty twenty five, we generated $500,000,000 of retail inflows driven by solid demand for our U. S. Large cap growth, global strategic core, U. Seth BernsteinPresident and CEO at AllianceBernstein00:04:44S. Select and our security of the future strategies. Secondly, we are actively expanding our private market platform by deepening existing partnerships, establishing new ones and diversifying the growth avenues of our business. Our fee paying and fee eligible assets under management have reached $75,000,000,000 as of quarter end, marking a 20% increase compared to a year ago. We have successfully deployed nearly 40% of Equitable's second ten billion dollars commitment and are leveraging our expertise to extend the addressable market with institutional and retail oriented solutions. Seth BernsteinPresident and CEO at AllianceBernstein00:05:20We are replicating the success of our evergreen capabilities in middle market lending that have been historically marketed within our private wealth channel. We're excited with the momentum we're seeing as we extend our private credit franchise to the institutional channel with customized solutions. In asset based finance, we're expanding our retail offerings to help our own private wealth clients access this exciting new asset class, while also venturing into new distribution platforms. Our credit opportunities interval fund has exceeded $200,000,000 in assets under management, including allocation from third party retail clients. In the first quarter, we've engaged with nearly a dozen new RIAs and were encouraged by the increasing number of advisors exploring alternative investments with AB. Seth BernsteinPresident and CEO at AllianceBernstein00:06:07We continue to leverage our strong local relationships in the RIA channel, where we already partner with national aggregators and independent advisors in areas such as municipal bonds. Third, our diversified asset mix, coupled with our enhanced operational efficiency, provides downside protection to our revenue base and to our margins. As asset managers, we value diversification, and we've developed an all weather platform that mitigates concentration risks by geography or asset class. With liquid and illiquid credit accounting for nearly half of our assets under management, we believe we're less vulnerable to significant equity market downturns. The strategic initiatives we completed last year optimized our expense structure to expand the upside from favorable market conditions while also fortifying our business against downturns. Seth BernsteinPresident and CEO at AllianceBernstein00:06:58We enter a turbulent market environment from a position of strength. Fourth, we have a durable base fee rate that has held relatively steady over the past several years. Our all in fee rate, including base and performance fees, is another differentiating factor for AB. This relative stability results in symmetrical growth between our management fees and our AUM. Moving on to Slide four. Seth BernsteinPresident and CEO at AllianceBernstein00:07:25I'll highlight our strengthening relationship with Equitable. We firmly believe that being affiliated with a leading insurance provider is a competitive advantage for AB. Leveraging the permanent capital commitment from Equitable helps us seed and scale our higher fee, longer dated private alternative strategies. Investment grade quality private credit is a key growth opportunity for both Equitable and AllianceBernstein, and we've now deployed nearly $14,000,000,000 of the $20,000,000,000 committed by Equitable. This has enabled us to build out new capabilities like residential mortgages and private ABS, which we intend to expand with our other insurance and institutional clients. Seth BernsteinPresident and CEO at AllianceBernstein00:08:04We continue to scale our distribution, leveraging our leading brand awareness expertise in vehicle versatility to expand our third party growth avenues. This virtuous circle of delivering additional yield to our partners' balance sheet while seeding new strategies with permanent capital enables AllianceBernstein to sustainably expand our business. We remain on target to grow our private markets AUM to 90,000,000,000 to $100,000,000,000 by 2027. Slide five reflects a summary page with our key financial metrics. Tom will follow-up with more commentary on our results. Seth BernsteinPresident and CEO at AllianceBernstein00:08:42Turning to Slide six, I'll review our investment performance starting with fixed income. Despite resurgent rates volatility driven by inflationary pressures caused by policy uncertainty, bonds served as a safe haven during the first quarter of twenty twenty five, with Bloomberg's U. S. Aggregate index returning 2.8%. Our fixed income performance benefited from active duration management and our allocation to investment grade, while our security selection within high yield detracted from relative performance. Seth BernsteinPresident and CEO at AllianceBernstein00:09:13Overall, our performance improved with 6463% of our AUM outperforming over the one and three year periods, while 81% outperformed over the five year period. Quarter to date dynamics have been tumultuous with markets reacting sharply to tariff headlines, global growth uncertainty and shifting demand for U. S. Treasuries. Despite policy risks intensifying and credit spreads widening to levels reminiscent of the regional banking crisis in 2023, fixed income is proving relatively resilient compared to the significant drawdowns we've seen in U. Seth BernsteinPresident and CEO at AllianceBernstein00:09:47S. Equity markets. For example, at the peak of the drawdown caused by a tariff announcement, the S and P five hundred was down 15%, while The U. S. High yield index was down less than two percent. Seth BernsteinPresident and CEO at AllianceBernstein00:09:58While the elevated rate volatility made dampen sentiment and appetite for duration, we view the value proposition for fixed income as intact. Specifically, we see the belly of the yield curve as an attractive spot to manage duration risk, given the ongoing buildup of term premium. Credit remains an area of opportunity with all in year yields over 8% presenting an appealing risk adjusted return profile compared to long term equity forecasts. With policies still in motion, markets may continue to react faster than fundamentals, creating dislocations as well as opportunities for new investors. In this environment, we're constructive on fixed income and we have the right strategies to compete for the next wave of the reallocation. Seth BernsteinPresident and CEO at AllianceBernstein00:10:44Turning to equities. Near record high valuations in U. S. Equities, combined with a dimming economic outlook for The U. S. Seth BernsteinPresident and CEO at AllianceBernstein00:10:51Arising from a changing trade policy triggered a rotation into international equities. The percentage of AUM outperforming over the one year period deteriorated to 23%. The shift was primarily driven by our U. S. Large cap growth fund distributed in Japan flipping from above to below median. Seth BernsteinPresident and CEO at AllianceBernstein00:11:09A significant factor contributing to this change was the strengthening VN during the quarter impacting comparisons against other local growth managers. The three year figure had improved to 52%, while the five year declined to 45%. This performance trend reflects the market dynamic of excessive concentration in a few mega cap names within the AI scene. Our investment focus on companies demonstrating consistent growth with disciplined approach to valuation also posed challenges in the later half of 2024. Year to date, despite the volatility following the tariff announcements platform has demonstrated significant relative performance. Seth BernsteinPresident and CEO at AllianceBernstein00:11:51U. S. Large check growth has generated nearly 300 basis points of relative outperformance, positioning it near the top decile year to date. Our strategic core portfolios designed to offer downside protection in volatile environments have outperformed their benchmarks by 300 to 400 basis points year to date. Furthermore, our global, international and emerging markets portfolios have established track records that have exhibited strong performance. Seth BernsteinPresident and CEO at AllianceBernstein00:12:18Additionally, our U. S. Core strategies, select equities and U. S. Strategic equities have continued to deliver robust returns following a successful year, showcasing their ability to generate alpha across various market conditions and attracting client interest. Seth BernsteinPresident and CEO at AllianceBernstein00:12:33Overall, we had eight active equity strategies that generated over $100,000,000 in inflows during the first quarter of twenty twenty five. Now turning to Slide seven. Retail posted its seventh straight quarter of positive net flows with sales continuing to track at record pace levels, offsetting elevated redemptions during a turbulent quarter. Actively managed asset classes were inflowing in the first quarter, led by enduring enduring organic gains in tax exempt, solid inflows into multi asset and modest inflows into active equities. We continued to gain retail market share in tax exempt for the ninth consecutive quarter, growing at a 19% annualized rate. Seth BernsteinPresident and CEO at AllianceBernstein00:13:17Our all market income strategy drove multi asset sales in the first quarter, particularly out of the Asia Pacific region. Active equity also grew organically, supported by continued inflows into our U. S. Large cap growth strategy in addition to global strategic core and U. S. Seth BernsteinPresident and CEO at AllianceBernstein00:13:33Select equities. Thematic investing is another area with significant potential. Our security of the future portfolio continues to attract solid inflows, surpassing $1,000,000,000 in AUM just one year since we launched. Diversifying our product offerings remains a cornerstone of our distribution strategy, and we're very pleased with the early success we're seeing as we scale our services across our global footprint. Offsetting our organic gains, our taxable fixed income franchise posted outflows of $1,400,000,000 primarily as our marquee income strategies AIP and GHY had outflows given the uncertain rate outlook. Seth BernsteinPresident and CEO at AllianceBernstein00:14:13Base management fees grew 10% year over year, reflective of market growth and organic flows, while they were down 3% versus the prior quarter due to the equity drawdown. Organic base fee growth was 2% over the last twelve months and slightly below 1% as of the first quarter. Moving to Slide eight. Institutional sales inflows rebounded in the first quarter of twenty twenty five to the highest level since fourth quarter twenty twenty two, breaking a streak of persistent outflows. Channel inflows were driven by an accelerated pace in alternative deployments across various services, including private placements, commercial real estate debt, residential loans and CLOs. Seth BernsteinPresident and CEO at AllianceBernstein00:14:58Active equity outflows of $1,900,000,000 in the first quarter moderated versus recent trends. Our pipeline grew to $13,500,000,000 in the first quarter, up $2,800,000,000 sequentially, reaching its highest levels in the seventh quarter. Note that institutional fundings also accelerated with roughly $3,000,000,000 in pass through mandates that were not captured within our pipeline. The decrease in the pipeline fee rate was mainly attributed to the addition of a sizable lower FEED mandates, including an $800,000,000 in passive index equities and $1,100,000,000 in systematic fixed income. Our ongoing efforts to market our systematic strategy continues to attract strong client interest, enabling us to grow our institutional market share and fixed income. Seth BernsteinPresident and CEO at AllianceBernstein00:15:45However, these mandates tend to be lower feed and will impact pipeline fee rate. Turning to Slide nine. Private wealth posted solid inflows in the first quarter, growing to an annualized organic growth rate of more than 2%, the fastest pace in two years. As a reminder, our private wealth net inflows exclude reinvested dividends and interest income, which is typically reported within net assets across key wealth management peers. Our organic growth was fueled by increased sales momentum, underscoring robust client engagement and advisor productivity. Seth BernsteinPresident and CEO at AllianceBernstein00:16:23We're still focused on supporting and growing our advisor sales force, ramping up our recruiting effort in line with our long term target of 5% headcount growth. Demand dynamics within the channel were positive across all asset classes except for active equities. Fixed income inflows exceeded $800,000,000 driven by our muni tax aware strategies, money markets and Global Plus. Solid demand for our passive tax harvesting strategy led to $600,000,000 in inflows into passive equities, growing organically at nearly 10% annualized rate. Alt MAS inflows of nearly $500,000,000 growing at 7% annualized rate marked the eighth consecutive quarter of organic growth through alternatives and multi asset within Bernstein. Seth BernsteinPresident and CEO at AllianceBernstein00:17:11Private alternatives, including real estate debt, CarVal and private credit accounted for approximately half of those inflows. Fundraising and private alternatives continued to be a significant driver of channel activity with approximately $400,000,000 raised in the first quarter. Base management fees grew 10% year over year and came in flat sequentially. Channel revenues were up 6% versus the prior year and down 17% quarter over quarter, primarily due to performance fees typically crystallizing in the fourth quarter. Before moving on to our financial review, I'm delighted to introduce our newly appointed CFO, Tom Simeone. Seth BernsteinPresident and CEO at AllianceBernstein00:17:50Having had the privilege of collaborating with Tom for several years, I'm eager for our unitholders, analysts and all stakeholders to have the opportunity to become acquainted with him. Tom? Tom SimeoneCFO at AllianceBernstein00:18:01Thank you, Seth. Good morning, everyone, and thank you for joining our call. During my twenty year tenure at AB, I've had the privilege of serving in various roles across the organization. This has taught me what sets AB apart. I am enthusiastic about the future that lies ahead of us and excited to share our financial results with you today. Tom SimeoneCFO at AllianceBernstein00:18:20Let's delve into the details. We continue to deliver strong financial performance in the first quarter, reflecting solid growth in asset management fees and focused expense discipline. First quarter adjusted earnings of $0.80 per unit were up 10% versus prior year, benefiting from strong markets early in the quarter, sustained organic growth, a durable fee rate and solid margin expansion. Distributions and EPU grew uniformly as we distribute 100% of our adjusted earnings to unitholders. On Slide 10, we show our adjusted results, which remove the effect of certain items not considered part of our core operating business. Tom SimeoneCFO at AllianceBernstein00:18:58For a reconciliation of GAAP and adjusted financials, please refer to our presentation appendix or our 10 Q. First quarter net revenues of $838,000,000 were down 5% versus the prior year and up 6% on a like for like basis, excluding Bernstein Research. First quarter base fees increased 8% versus prior year, in line with the growth in our firm wide average AUM. Performance fees of $39,000,000 increased by $12,000,000 from prior year period, reflecting sustained alpha generation from our international small cap and middle market lending strategies. Dividend and interest revenue, net of broker dealer related interest expense, declined versus prior year, which reflects lower cash and margin balances within Private Wealth. Tom SimeoneCFO at AllianceBernstein00:19:44In the first quarter, we had an $11,000,000 loss as compared to a gain in the prior year period related to our seed like capital and other investments. Moving to expenses. Our first quarter total operating expenses of $555,000,000 declined 10% year over year, reflecting the deconsolidation of Bernstein Research as well as lower occupancy costs from our New York office relocation and a lower compensation ratio. Total compensation benefits expenses of $414,000,000 declined by 6% versus the prior year in absolute terms. This reflects a 48.5% compensation ratio of adjusted net revenues in line with our guidance and below the 49% ratio in the prior year period. Tom SimeoneCFO at AllianceBernstein00:20:28We will continue to accrue at a 48.5% compensation to revenue ratio in the second quarter of twenty twenty five, but we are mindful of market volatility and may adjust this in the second half of the year depending on conditions. Promotion and servicing costs decreased by 36% from the prior year, primarily reflecting a significant reduction of trade execution and clearance expenses from Bernstein Research in addition to lower marketing expenses. G and A declined 13% versus the prior year period, primarily driven by occupancy savings from our New York City office relocation, coupled with lower professional fee and portfolio servicing costs. The first quarter run rate of our non compensation expenses is tracking better than our guidance as we are exercising expense discipline in the face of a deteriorating market backdrop underscoring our improved operational flexibility. We maintain our guidance of 600,000,000 to $625,000,000 of full year 2025 non compensation expenses, but we'll continue to exercise expense discipline given volatile markets. Tom SimeoneCFO at AllianceBernstein00:21:30As a reminder, promotion and servicing makes up roughly 20% to 25% of non comp expenses and G and A accounts for 75% to 80% excluding one time items. First quarter interest on borrowings decreased by $10,000,000 versus the prior year due to a lower cost of debt and lower debt balances. Please note that we intend to increase leverage during the year to fund our commitment to the Ruby Re sidecar and take advantage of any other potential growth opportunities that may arise. ABLPs effective tax rate was 6.2% in the first quarter, in line with our full year guidance of 6% to 7%. Transitioning to Slide 11, let's take a look at the trajectory of our firm wide base fee rate, which is net of distribution expenses. Tom SimeoneCFO at AllianceBernstein00:22:14In the first quarter, our firm wide fee rate stood at 39.5 basis points, slightly higher versus the first quarter of twenty twenty four, supported by AUM shifts between asset classes and channels. Looking forward, I would note that we may see less support from mix shift given market movements in March and April, which could put downward pressure on the fee rate. This dynamic was somewhat evident in the first quarter as the decline in fee rate from the fourth quarter of twenty twenty four was primarily attributed to the adverse effects of the downturn in equity markets during the latter part of the quarter. The decrease was particularly influenced by the drawdown in U. S. Tom SimeoneCFO at AllianceBernstein00:22:50Equities, which constitute approximately three quarters of our total equity assets. Although non U. S. Equities performed better, their smaller share of our asset allocation only partially mitigated the overall negative impact on the fee rate. In contrast, fixed income markets outperformed equities in the first quarter of twenty twenty five, While this provided diversification benefits to our assets under management and revenues, our fixed income strategies typically command lower fees, particularly for our institutional side. Tom SimeoneCFO at AllianceBernstein00:23:22While our fee rate will remain mix dependent, we have managed to deliver a durable fee rate over time as our regional sales mix and selective growth initiatives have mitigated some of the fee erosion witnessed across the industry. Slide 12 provides a detailed breakdown of our performance fees by private and public strategies. Performance related fees from our private alternative strategies totaled $20,000,000 during the first quarter. On the public front, our international small cap strategy, which has consistently outperformed the benchmark over the one, three, five and ten year periods, yielded $19,000,000 in performance fees. Although public alpha is volatile and more difficult to predict, our public strategies enhance our market leverage profile and provide additional upside tied to the public markets. Tom SimeoneCFO at AllianceBernstein00:24:08As a result, we're revising our annual performance fee expectations to 90,000,000 to $105,000,000 up from the prior projection of 70,000,000 to $75,000,000 For the remainder of the year, we expect our private alternative strategies to be the primary contributors to our performance fees as they have been in recent years. These strategies include commercial real estate debt, AB CarVal and AB Private Credit Investors or AB PCI, which is the largest contributor. Although certain strategies exhibit greater volatility than others, we anticipate an additional 50,000,000 to $60,000,000 of hurdle based performance fees for the remainder of 2025. It is important to highlight that our estimate factors in a lower interest rate environment. However, the wide range of rate cut projections obscured our visibility on the potential impact from such cuts. Tom SimeoneCFO at AllianceBernstein00:25:01Turning to Slide 13. We saw solid margin expansion during the first quarter of twenty twenty five. The adjusted operating margin reached 33.7, up three forty basis points versus the first quarter of twenty twenty four, demonstrating our improved operating leverage following the completion of both the Bernstein Research JV and the move to Hudson Yards. Our forecast for 33% margin for 2025 assumes flat markets from year end 2024 levels. If the recent market weakness continues, it could put downward pressure on future margins, although we will also actively manage expenses. Tom SimeoneCFO at AllianceBernstein00:25:37While we are keenly focused on margins, we are also committed to investing in growth and generating long term value for our unitholders. As part of our strategic planning, we have allocated resources for targeted growth investments such as onboarding new investment teams and introducing new products with the expectation that these endeavors will yield enhanced returns over time. Before we move on to the Q and A session, I want to extend my heartfelt appreciation to all my colleagues throughout our organization for their unwavering dedication. It is a privilege to assume the CFO role, and I'm eager to contribute to our collective success and create value for our clients, our unitholders, our colleagues and all our stakeholders. With that, we're pleased to answer your questions. Tom SimeoneCFO at AllianceBernstein00:26:20Operator? Operator00:26:24We will now begin the question and answer And your first question comes from the line of Alex Blostein with Goldman Sachs. Alex, please go ahead. Alexander BlosteinManaging Director at Goldman Sachs00:26:50Hi, good morning. Thank you. Tom, welcome to the call. Question to you guys, starting maybe with asset allocation trends you guys are seeing so far in the second quarter. Obviously, super volatile backdrop, lots of uncertainty. Alexander BlosteinManaging Director at Goldman Sachs00:27:03It seems like the retail channel is starting to look a little bit softer, including on the fixed income side, which has been historically a source of strength for you guys. So how do you expect the retail channel, I guess, to behave as we kind of deal with the current backdrop? Seth, curious in particular when it comes to non U. S. Retail given your distribution footprint there, how that channel is performing and the outlook there? Alexander BlosteinManaging Director at Goldman Sachs00:27:27Thanks. Onur ErzanHead of Global Client Group & Head of Bernstein Private Wealth at AllianceBernstein00:27:29Sure. Hi, Alex. Onur here. I'll take the question. In terms of I'll start with asset allocation then switch to non U. Onur ErzanHead of Global Client Group & Head of Bernstein Private Wealth at AllianceBernstein00:27:39S. Retail. What we are seeing is driven by largely what's happening with the treasuries and rates. Obviously, the continued Fed uncertainty with the rate cuts as well as the tariff policy uncertainty is creating some confusion in the market. As a result, we have seen starting in Q1 some outflows out of retail taxable fixed income, particularly in the overseas markets, our flagships like Hong Kong, Taiwan. Onur ErzanHead of Global Client Group & Head of Bernstein Private Wealth at AllianceBernstein00:28:17This is not a first time or a new thing. We have seen this trend in the past. There were times like COVID or 2022. When the rate cuts happen, when the shape of the yield curve gets solidified with the steeper yield curve, our strategy is go back to strong inflows. So as a result, although this current volatility is not going to help in the very short term, we believe it will continue to support us in the long term. Onur ErzanHead of Global Client Group & Head of Bernstein Private Wealth at AllianceBernstein00:28:47And as you recall, when there was an asset rebalancing into taxable fixed income, we were one of the first beneficiaries of that and we gathered close to $35,000,000,000 of net flows from taxable fixed income. So definitely, it will help us in the long term, while it might partially hurt us along with others in the short term. However, balancing some of that is the strength of our tax exempt franchise in The U. S. As well as our growing ETF franchise, which obviously caters to us like the different audience with the active ETFs being 100% U. Onur ErzanHead of Global Client Group & Head of Bernstein Private Wealth at AllianceBernstein00:29:26S. Today. So overall, we continue to see relative strength in our units U. S. Unit business hence overall we believe relatively confident about the long term prospects for taxable and tax exempt fixed income. Onur ErzanHead of Global Client Group & Head of Bernstein Private Wealth at AllianceBernstein00:29:46In terms of the non U. S. Geographies, I already touched on the fixed income. I'm not going to belabor further into that. In terms of equities, as you know, we run the largest active equity strategy in Japan. Onur ErzanHead of Global Client Group & Head of Bernstein Private Wealth at AllianceBernstein00:30:01And that strategy delivered very strong flows in first quarter. We continue to monitor what's happening not only with equity markets, but also with dollar yen dynamics. However, even if second quarter might be a little bit softer with again equity market and FX volatility, the structural trend in Japan is the growth of the retirement market with the Nisse accounts. And we play well into that retirement money, which tends to be stickier, more long term oriented, less short term. And we expect to have strong kind of growth in our Japan franchise leveraging that retirement trend. Seth BernsteinPresident and CEO at AllianceBernstein00:30:45Alex, I'd just add that, as I said in my earlier comments, we believe the fixed income thesis remains intact despite what has been remarkable volatility. And when you look at sort of yields of 8% out there and they could get higher for sure, but they look pretty good relative to any kind of long term expectations of equity returns right now. And I think risk aversion will probably remain present for a while. And so I think once the stability begins to reassert itself, I think there's pretty attractive opportunities out there for people who don't want to venture back into equities so quickly. But that will take some more time to figure out. Seth BernsteinPresident and CEO at AllianceBernstein00:31:34But it's also worth noting that our own retail flows have certainly stabilized in recent days at a better level. So look, we are monitoring it just like everyone else is and can't predict the future. But I like the mix of businesses we have and our emphasis on fixed income in a time like this. Alexander BlosteinManaging Director at Goldman Sachs00:31:56Yes. I agree with you there. Alexander BlosteinManaging Director at Goldman Sachs00:31:57Thanks. Alexander BlosteinManaging Director at Goldman Sachs00:31:58Great detail. For my follow-up question, I just wanted to ask you guys around the Equitable dynamics and now with the tender results now and participation was relatively limited. And I was curious if you could expand on maybe some of the structural benefits to Equitable from having AllianceBernstein as a public company? Do you ultimately see them willing to acquire more over time? Or kind of how do you think that relationship plays out over the next several years? Seth BernsteinPresident and CEO at AllianceBernstein00:32:29Thanks, Alex. Well, first thing I'd say is, you all cover Equitable and you should certainly ask them the question yourself. We took it, I take it as a vote of confidence in this business that they had decided to make such an endeavor to increase their holdings in AB in the manner that they did. I think the premium clearly didn't convince a ton of people to go tender into it. And I think a part of that is the very high distribution yield we offer remains pretty attractive, particularly in times like this to clients. Seth BernsteinPresident and CEO at AllianceBernstein00:33:10So I do think and know that Equitable understands the logic of maintaining the independence of AB, frankly, several reasons. One, our employees like the clear alignment and the recognition that a public security has for their endeavors. And we don't take that lightly from a deferred compensation perspective as well as a clear understanding of the business and its goals. Secondly, Equitable sees this as a more attractive currency potentially as we continue to look for opportunities to supplement our product or distribution, capabilities. And so we want that as do they as a potential option. Seth BernsteinPresident and CEO at AllianceBernstein00:34:04As you know, we've used it before, whether it was the purchase of CarVal or in other contexts. And I guess finally, I would say to you that they get it's a pretty tax advantageous position that they have today in their position as a private partner as well as owner of public units to have AB in the current status as a partnership. So there is no change in our view in that and I don't believe there's a change in their view. Alexander BlosteinManaging Director at Goldman Sachs00:34:43Great. That's super helpful. Thank you, guys. Operator00:34:49Your next question comes from the line of Craig Siegenthaler with Bank of America. Craig, please go ahead. Craig SiegenthalerManaging Director at Bank of America00:34:56Good morning, Seth, and I hope everyone's doing well. I had two follow ups to Alex's last question. The first one is, is EQH taking a more active role in Imaginative AB, which I thought was run fairly autonomously over the last twenty years across three CEOs? And then the follow-up would be, are there any limits in place to prevent EQH from buying more stock in the future? Seth BernsteinPresident and CEO at AllianceBernstein00:35:23There has been absolutely no change in the engagement or activities of Equitable versus the operations of AllianceBernstein. We continue to operate autonomously with independent members Board with independent members. We continue to set our own comp to revenue ratio in consultation, of course, with our Board. And we intend to have that continue. So there's been absolutely no change, Greg, in that regard and there's no change anticipated. Seth BernsteinPresident and CEO at AllianceBernstein00:35:59Additionally, Equitable, there is no technical restriction that I'm aware of that precludes Equitable from potentially buying more units. And indeed, as you might have wrecked or I'm sure you recognize that when we entered into the RGA transaction, we actually funded that acquisition through an investment equitable made in in units of the private units of AB to facilitate that. We raised $150,000,000 to do that. I can see that ownership stake rising or falling depending on our acquisition activity. And I'd point out that it had fallen as part of the acquisition of CarVal. Seth BernsteinPresident and CEO at AllianceBernstein00:36:45So there isn't a limitation, Craig, that I'm aware of. Craig SiegenthalerManaging Director at Bank of America00:36:52Thanks, Seth. Just a follow-up. Your retail muni SMA flows have been really, really strong. They might actually be the leading driver of organic growth at AB, but you can correct me there if I'm wrong. But we U. Craig SiegenthalerManaging Director at Bank of America00:37:06S. Lawmakers now are discussing the removal or even cap of the tax exemptions on muni bond interest. So if enacted, do you see that as a headwind to flows? Or do you think the secular drivers of munis in the SMA wrapper are so powerful that kind of sort of power right through that sort of issue? Seth BernsteinPresident and CEO at AllianceBernstein00:37:27Look, we we spend a lot of time focusing, as you might imagine, on what's going on in the reconciliation discussions in in in Washington. And, as you know, muni deductibility has come up before. Our own view is that, there won't be a repeal, and that's what we hear from from people we talk to in Washington, but it ain't over until it's over. So I recognize that. There may be areas within the high I'm sorry, within the muni market that might see some sort of restriction or other ways, for example, limiting higher income individuals' ability to take that deduction. Seth BernsteinPresident and CEO at AllianceBernstein00:38:14But our view is that the importance that muni financing has to states and municipalities is so critical and fundamental, that we don't think, that full repeal is on the table. But obviously, we're watching it carefully. To answer your question more directly, I think in the event that such a change happened and it was revealed, I think you would certainly see a one time reaction to that in the repricing of the sector to accommodate it. I think that would be a likely outcome. So there would be a shock to that market that would affect flows. Seth BernsteinPresident and CEO at AllianceBernstein00:38:55But ultimately, muni credit quality and credit migration is much slower, as you know, I think, than corporate migration. It has been a very comfortable place for people to keep a portion of their retirement savings. And the need for income, if anything, is even greater than it's been before, and I don't see a better substitute for it. Now it may what what constitutes a taxable American holdings may change to include non municipal fixed income assets. That may well happen. Seth BernsteinPresident and CEO at AllianceBernstein00:39:37But I think people are very comfortable investing in that space and it will continue to be an important part of people's retirement. Craig SiegenthalerManaging Director at Bank of America00:39:45Yeah. Onur ErzanHead of Global Client Group & Head of Bernstein Private Wealth at AllianceBernstein00:39:46And also the positive is in scenario where there are no major changes, which is probably the base case scenario, you would expect also some increased demand because there has been some volatility with some cautious over issuance of mini bonds in the first quarter. So there was a demand supply imbalance that created a yield outlook that is even stronger than before also relative to treasuries. So although negative scenarios are out there and there's definitely some risk, also there is an upside when the markets normalize in terms of tax protected yield and high net worth and ultra net worth clients kind of using it as they always did over the last decades. Craig SiegenthalerManaging Director at Bank of America00:40:40Thanks, Jonah. Operator00:40:46Your next question comes from the line of Bill Katz with TD Cowen. Bill, please go ahead. William KatzSenior Equity Analyst at TD Cowen00:40:52Okay. Thank you very much. And Tom, congratulations on the new role. Maybe start with on the expense side. I think if I heard you correctly, no change to the prior guide on non comp of $600,000,000 to $625,000,000 So is the first quarter just some delay of spend and that might accelerate into the back half of the year? William KatzSenior Equity Analyst at TD Cowen00:41:13Or what kind of flex would you have if the revenue backdrop were not to play out against your base assumptions? Tom SimeoneCFO at AllianceBernstein00:41:20Yes. Bill, this is Tom. Thank you. You have it right there. The 66.25%, we're going to remain sticking to that guide for now. Tom SimeoneCFO at AllianceBernstein00:41:26But Q1 is a bit lower. We do see some spend increasing throughout the remainder of the year. And based on that, if you annualize Q1, you'll see that we do have some flex. So we do have some levers that we can pull if we need to reduce expenses during the year. Seth BernsteinPresident and CEO at AllianceBernstein00:41:44Look, if we don't see that base case roll forward, we're going need to take a more cautious route in spending. William KatzSenior Equity Analyst at TD Cowen00:41:58Great. That was your Yes, yes, for sure. Thank you. And then maybe a big picture question, doing very well on the alt side. I think we're to unpack that a little bit. William KatzSenior Equity Analyst at TD Cowen00:42:07What's the allocation in the private wealth side now to alts? How much further do you think you have to sort of take that? I think last recollection was something around 10%, but just correct me on that. And then maybe you could unpack a little bit about some of the success factors you're having on the third party side, maybe which products you're seeing the most traction and where you see the greatest incremental distribution connectivity? Thank you. Onur ErzanHead of Global Client Group & Head of Bernstein Private Wealth at AllianceBernstein00:42:34Sure. Yes, your recollection is right. We tend to have around allocation in the client portfolios today if you look at our overall AUM, particularly for certain client segments like ultra network clients, obviously, offices, that target allocation is much greater, 20% or above. So there is definitely more upside and hence we have a pretty robust product pipeline, not only to drive allocations from existing clients, but also use new products to acquire new clients. I mean, actually if you look at our first quarter, if I were to quote the net new assets, which is different than net flows, so if you were to look at it like a wealth manager, our annualized organic growth rate was 6.5% on a net new asset basis. Onur ErzanHead of Global Client Group & Head of Bernstein Private Wealth at AllianceBernstein00:43:24So as a result, as the net new asset growth materializes that will benefit alternatives at the current rate at least 10% and with also our network and family office and even at a greater rate. In terms of the demand, it's broad based. Obviously private credit is a big part of the story. But also for our private wealth business, we onboard best in class managers that are additive in other adjacent asset classes, whether it's in real estate equity, venture capital, etcetera. So it's going to be relatively broad based in our private wealth channel. Onur ErzanHead of Global Client Group & Head of Bernstein Private Wealth at AllianceBernstein00:44:01But the trends in private credit, the strategies we offer whether it's middle market lending, whether it's the carve out strategies, the demands stayed strong in the first quarter and expect it to remain that way for the rest of the year. In terms of other channels and where we are seeing the demand broadening, insurance definitely has been an uptick. As you know, we have been focusing on building on insurance capabilities globally, leveraging some of the Equitable synergy. Equitable is now 13 almost $13,500,000,000 into their $20,000,000,000 overall commitments. And that helps us broaden the strategies we offer. Onur ErzanHead of Global Client Group & Head of Bernstein Private Wealth at AllianceBernstein00:44:50For instance, the new private placement ABS that we added in the fourth quarter of twenty twenty four already is contributing to our flows. Resi mortgage platform is broadening out of CarVal, So there are a lot of bright spots and we started to see an increased pool for from third party channels including third party insurers into our middle market lending strategy as we create different leverage levels for the product and insurers typically prefer lower leverage versions of the product. So we are definitely broadening the client base for direct lending in the insurance channel. So I expect the insurance to be a very strong contributor to our alternative growth in private credit across core direct lending, real estate debt as well as specialty finance and hard assets from Carvell. On the retail side, our interval fund and the BDC kind of product are in the markets. Onur ErzanHead of Global Client Group & Head of Bernstein Private Wealth at AllianceBernstein00:45:56Our focus in The U. S. Has been the interval funds given the broad appeal and ease of deploying that strategy. The minimums are low. It's a 40 act product. Onur ErzanHead of Global Client Group & Head of Bernstein Private Wealth at AllianceBernstein00:46:09So and the sub docs and the whole client experience is much smoother than some of the more complex solutions. We are approaching several hundred million dollars in that product already at the twelve month mark, which is in line with our plans. And hitting that threshold allows us to have broader conversations with larger broker dealers and warehouses and we expect to onboard a large broker dealer in that strategy this quarter, while seeing also continued demands from the RIAs. And in terms of product extensions or products that are getting interest in the overseas markets, there's definitely interest in non correlated assets. Some of the asset based finance is definitely interesting to our clients seeing strong demand as well as our aviation income, which is a little niche, but definitely seen as a less correlated product from the client base. William KatzSenior Equity Analyst at TD Cowen00:47:11Thank you very much for that. Operator00:47:16Your next question comes from the line of Ben Budish with Barclays. Ben, please go ahead. Benjamin BudishDirector at Barclays00:47:21Hi, good morning and thanks for taking the question. I wanted to check on your private markets fee expectation. I guess first Tom, it sounded like you indicated that the expectation for this year was a guide up. When I was looking at the transcript from the last call, think the commentary was 70,000,000 to $75,000,000 of recurring hurdle based performance fees. I just want make sure I have the right sort of apples to apples comparison. Benjamin BudishDirector at Barclays00:47:43And then the other piece I was curious about in the slides you indicate that AB PCI is the majority of private markets performance fees. Curious, could you remind us what were the other big pieces in 2023 and 2024 that drove higher private markets fees? And is there potential for that to recur if conditions are correct? Do you feel pretty good about the sort of 70,000,000 to 80,000,000 full year that you're looking at for 2025? Tom SimeoneCFO at AllianceBernstein00:48:07So the other performance fees in 2024 were carve out PCI and real estate. Is that what you're getting at there? Are you trying to understand the difference between $2,024,000,000 and projected 2025 Benjamin BudishDirector at Barclays00:48:21Yes, just the commentary. So the sorry, it's the commentary for '25 for what you gave last quarter versus what you're saying today. So how does the 70 to 75 compared to what you're saying today of 90 to 105? Like I assume the prior would not have included public markets. But Tom SimeoneCFO at AllianceBernstein00:48:39Yeah. We had some international SMID that that resulted in about $19,000,000 20 million dollars of performance fees in q one, and that's why well, that's what's leading to the revision upward. So the public markets forecast hasn't changed. The private markets forecast has not changed. But what increased it overall is because we had some public performance fees in Q1. Benjamin BudishDirector at Barclays00:49:05That's helpful. And then maybe a broader question on private markets. You talked a little bit about investment grade private credit. It's a huge thing we hear about from some of the other alternative managers. Just curious how much of your private markets activity today is investment grade? Benjamin BudishDirector at Barclays00:49:19And when you talk about sort of expanding to other third party insurance partners or other LPs sort of or even other wealth clients sort of outside your current your wealth business, how much how important is investment grade as part of that strategy? Thank you. Onur ErzanHead of Global Client Group & Head of Bernstein Private Wealth at AllianceBernstein00:49:35Yes. It's primarily an insurance story. When it comes to private wealth or third party retail, even the larger parts of the institutional markets, typically IG is not the dominant strategy, although it might be appealing in certain jurisdictions like Japan, etcetera, where they might be looking for some diversification from fixed income, but not the full risk exposure to the wider credit markets. Within insurance, definitely it's the highest growth part of our market. That's why we have been expanding our IG capabilities significantly either through team extensions as well as additional leadership by talents. Onur ErzanHead of Global Client Group & Head of Bernstein Private Wealth at AllianceBernstein00:50:21I mean that was one of the reasons why we brought Jeff Cornell from a large insurance company who was the CIO there to lead insurance efforts. That was back in May 24, as you might recall. And that has been a large part of our growth. In terms of specific percentages, I don't have it offhand. But again, in terms of net flows into private credit in insurance, IG has been the disproportionate amount and I will expect it to remain that way. Benjamin BudishDirector at Barclays00:50:55All right. Thank you very much. Very helpful. Operator00:51:00Your next question comes from the line of Dan Fannon with Jefferies. Dan, please go ahead. Daniel FannonManaging Director - Research Analyst at Jefferies00:51:06Thanks. Good morning. Just wanted one more clarification on the performance fee outlook. Is the public markets numbers this is just being conservative where you're assuming no performance fees because the performance is yet to be crystallized? Or is there a start of the year? Daniel FannonManaging Director - Research Analyst at Jefferies00:51:21Can you give us an update maybe on how those strategies are looking to give us a sense of what that might actually come to? Tom SimeoneCFO at AllianceBernstein00:51:26That's exactly right. The public markets, don't forecast generally because they need to be crystallized. Daniel FannonManaging Director - Research Analyst at Jefferies00:51:34Okay. Understood. And then just a follow-up on advisor productivity and just within the private wealth, you talked about that improving. Can you talk about the mix of new advisors versus existing advisors and whether the newer ones coming on board that you're actively recruiting more aggressively are the ones that are more productive or it's more broad based? Onur ErzanHead of Global Client Group & Head of Bernstein Private Wealth at AllianceBernstein00:51:55It's more broad based. Our strength in the private wealth channel has been the retention of our most tenured and most productive advisers. We have, I think, industry retention rates, and that has been a very strong contributor to productivity. And when we recruit, as you know, our recruiting mix tends to skew towards younger advisers where we train and developing our own model. Although we are adding more experienced advisers at a slow rate consciously, right now the recruiting mix remains heavily skewed towards younger advisers that we mold into our model. Onur ErzanHead of Global Client Group & Head of Bernstein Private Wealth at AllianceBernstein00:52:39But there's definitely some upside from adding more experienced advisers over time, and we have a dedicated team effort to accelerate that in the coming quarters. Daniel FannonManaging Director - Research Analyst at Jefferies00:52:50Thank you. Operator00:53:14And your next question comes from the line of Bill Katz with TD Cowen. Bill, please go ahead. William KatzSenior Equity Analyst at TD Cowen00:53:20Thanks. I just appreciate the follow-up. A couple of sort of modeling nits just tracking too. Tom, just a follow-up on the public side of performance fees. Is there a way to give us a sense of either AUM that are eligible for performance fees and or how these those relative funds those funds are doing either relative or absolute return at the end of the Q1 versus maybe twelvethirty one as we think through sort of the incremental upside? Tom SimeoneCFO at AllianceBernstein00:53:49I think you're asking about the private side there, Bill. And those are very predictable, and those are recurring and consistent. So that's why I'm William KatzSenior Equity Analyst at TD Cowen00:53:58I'm sorry to interrupt. No. It's more on the public side. Just trying to get a sense of what how to think through the upside to that 0 to $5,000,000 guide here on Page 12 of the slide deck. Think about just how is absolute relative performance sitting at threethirty one versus twelvethirty one? William KatzSenior Equity Analyst at TD Cowen00:54:14Or are there any high watermark issues that we have to sort of contemplate? Tom SimeoneCFO at AllianceBernstein00:54:19Yes. With the volatility in the market, it's hard to respond to that one right now from both an interest perspective and then just the equity markets and what they're doing. William KatzSenior Equity Analyst at TD Cowen00:54:28Okay. And just you've mentioned in your commentary that there could be some pressure on the base fee rate given the market backdrop and that makes sense. Is there a way that you could give us what the exit fee rate was on the base fee rate at $3.31 maybe versus the average for the quarter at the prior actual number? Tom SimeoneCFO at AllianceBernstein00:54:50You know what else I have in front of me and I'm sorry Bill is the fee rate for the quarter of thirty nine point five basis points. William KatzSenior Equity Analyst at TD Cowen00:54:57Okay. Thank you very much. Operator00:55:02Your next question comes from the line of John Donne with Evercore ISI. John, please go ahead. John DunnAnalyst at Evercore00:55:10Thank you. Maybe the pipeline being up is great. Can you just maybe give us a little more flavor of the temperature of different parts of the institutional side of the business? And also maybe kind of a look geographically, if there's any different appetite for risk in different regions? Onur ErzanHead of Global Client Group & Head of Bernstein Private Wealth at AllianceBernstein00:55:31Yes, sure. We feel very good about the continued strength in the pipeline. There has been definitely very strong kind of upside from particularly fixed income. Insurance, as I mentioned earlier, was a big contributor, but we also had increased allocation to our systematic fixed income capabilities, which we launched relatively recent in the last several years. And it's great to see that that's opening a new type of opportunities for us and we onboarded there in terms of the pipeline. Onur ErzanHead of Global Client Group & Head of Bernstein Private Wealth at AllianceBernstein00:56:06We added a significant international client, a European client to that strategy. So feeling good about the momentum there. In terms of other areas of pockets of strength, I mean, definitely the demand for asset based finance is strong across different geographies. I'm talking at this point more pre pipeline, but definitely in terms if I look at the client conversations, what comes to the CRM, definitely you would see a lot of asset based finance type conversations that is there. When it comes to equities, equities have been somewhat concentrated in the more under allocated areas, whether it's emerging markets, whether it's value strategies, whether it's the small mid cap, right? Onur ErzanHead of Global Client Group & Head of Bernstein Private Wealth at AllianceBernstein00:56:59Because it has been very dominated in the last several years with the large cap with the mix mega seven etcetera. So those are the areas that we have seen more increased clients interest if you will. John DunnAnalyst at Evercore00:57:17Got it. John DunnAnalyst at Evercore00:57:17And John DunnAnalyst at Evercore00:57:18then U. S. Growth equities in Japan, so distributed in Japan have been a nice tailwind for you guys. Are you seeing any kind of early signals of John DunnAnalyst at Evercore00:57:31non U. S. Investors avoiding doing business with The U. S? Onur ErzanHead of Global Client Group & Head of Bernstein Private Wealth at AllianceBernstein00:57:37Sorry, the last part of your question got muffled. Can you repeat the last part of your question, please? John DunnAnalyst at Evercore00:57:42Yes. You seeing Japanese or other non U. S. Investors avoiding investing in U. S. John DunnAnalyst at Evercore00:57:53Stocks? Onur ErzanHead of Global Client Group & Head of Bernstein Private Wealth at AllianceBernstein00:57:55No, we have not seen that broad trend. My guess is going to be a reaction more country by country. Definitely, we have not seen any major impact in our core geographies like Japan. Obviously, need to monitor what happens over time and maybe there could be some reaction to US exceptionalism. But so far looking at the activity since the Liberation Day, we have not picked up anything dominant. John DunnAnalyst at Evercore00:58:31You. Tom SimeoneCFO at AllianceBernstein00:58:35Hey, Bill, this is Tom. Let me just get back to Tom SimeoneCFO at AllianceBernstein00:58:37you on that one thing. Tom SimeoneCFO at AllianceBernstein00:58:37While we don't look at the exit fee rate, I will say the 39.5 basis points that we experienced for Q1, that ticked down a little bit in the later half of the quarter. So if that helps you in any way there. Operator00:58:59That concludes the conference call.Read moreParticipantsExecutivesIoanis JorgaliVice President of Investor RelationsSeth BernsteinPresident and CEOTom SimeoneCFOOnur ErzanHead of Global Client Group & Head of Bernstein Private WealthAnalystsAlexander BlosteinManaging Director at Goldman SachsCraig SiegenthalerManaging Director at Bank of AmericaWilliam KatzSenior Equity Analyst at TD CowenBenjamin BudishDirector at BarclaysDaniel FannonManaging Director - Research Analyst at JefferiesJohn DunnAnalyst at EvercorePowered by Conference Call Audio Live Call not available Earnings Conference CallAllianceBernstein Q1 202500:00 / 00:00Speed:1x1.25x1.5x2xTranscript SectionsPresentationParticipants Earnings DocumentsSlide DeckPress Release(8-K)Quarterly report(10-Q) AllianceBernstein Earnings HeadlinesEquitable holdings outlines $2B capital release strategy through 2025 initiativesApril 30 at 5:47 PM | msn.com11 Best Buy-the-Dip Stocks to Buy NowApril 30 at 2:34 PM | insidermonkey.comTrump’s Bitcoin Reserve is No Accident…Bryce Paul believes this is the #1 coin to buy right now The catalyst behind this surge is a massive new blockchain development…May 2, 2025 | Crypto 101 Media (Ad)Barclays Issues Positive Forecast for AllianceBernstein (NYSE:AB) Stock PriceApril 27, 2025 | americanbankingnews.comAllianceBernstein price target raised to $37 from $36 at BarclaysApril 26, 2025 | markets.businessinsider.comAllianceBernstein (AB) Receives a Hold from Bank of America SecuritiesApril 26, 2025 | markets.businessinsider.comSee More AllianceBernstein Headlines Get Earnings Announcements in your inboxWant to stay updated on the latest earnings announcements and upcoming reports for companies like AllianceBernstein? Sign up for Earnings360's daily newsletter to receive timely earnings updates on AllianceBernstein and other key companies, straight to your email. Email Address About AllianceBernsteinAllianceBernstein (NYSE:AB) is a publicly owned investment manager. The firm is a related adviser The firm manages separate client focused portfolios for its clients. The firm primarily invests in common and preferred stocks, warrants and convertible securities, government and corporate fxed-income securities, commodities, currencies, real estate-related assets and infation-protected securities. The firm employs quantitative analysis along with long-term purchases, short-term purchases, trading, short sales, margin transactions, option strategies including writing covered options, uncovered options and spread strategies to make its investments. The firm obtains external research to complement its in-house research. The firm was formerly known as Alliance Capital Management Holding LP. AllianceBernstein Holding L.P. was founded in 1967 and is based in Nashville,Tennessee.View AllianceBernstein ProfileRead more More Earnings Resources from MarketBeat Earnings Tools Today's Earnings Tomorrow's Earnings Next Week's Earnings Upcoming Earnings Calls Earnings Newsletter Earnings Call Transcripts Earnings Beats & Misses Corporate Guidance Earnings Screener Earnings By Country U.S. Earnings Reports Canadian Earnings Reports U.K. Earnings Reports Latest Articles Palantir Earnings: 1 Bullish Signal and 1 Area of ConcernMicrosoft Crushes Earnings, What’s Next for MSFT Stock?Qualcomm's Earnings: 2 Reasons to Buy, 1 to Stay AwayAMD Stock Signals Strong Buy Ahead of EarningsAmazon's Earnings Will Make or Break the Stock's Comeback CrowdStrike Stock Nears Record High, Dip Ahead of Earnings?Alphabet Rebounds After Strong Earnings and Buyback Announcement Upcoming Earnings Palantir Technologies (5/5/2025)Vertex Pharmaceuticals (5/5/2025)Realty Income (5/5/2025)Williams Companies (5/5/2025)CRH (5/5/2025)Advanced Micro Devices (5/6/2025)American Electric Power (5/6/2025)Constellation Energy (5/6/2025)Marriott International (5/6/2025)Energy Transfer (5/6/2025) Get 30 Days of MarketBeat All Access for Free Sign up for MarketBeat All Access to gain access to MarketBeat's full suite of research tools. Start Your 30-Day Trial MarketBeat All Access Features Best-in-Class Portfolio Monitoring Get personalized stock ideas. Compare portfolio to indices. Check stock news, ratings, SEC filings, and more. Stock Ideas and Recommendations See daily stock ideas from top analysts. Receive short-term trading ideas from MarketBeat. Identify trending stocks on social media. Advanced Stock Screeners and Research Tools Use our seven stock screeners to find suitable stocks. Stay informed with MarketBeat's real-time news. Export data to Excel for personal analysis. Sign in to your free account to enjoy these benefits In-depth profiles and analysis for 20,000 public companies. Real-time analyst ratings, insider transactions, earnings data, and more. Our daily ratings and market update email newsletter. Sign in to your free account to enjoy all that MarketBeat has to offer. Sign In Create Account Your Email Address: Email Address Required Your Password: Password Required Log In or Sign in with Facebook Sign in with Google Forgot your password? Your Email Address: Please enter your email address. Please enter a valid email address Choose a Password: Please enter your password. Your password must be at least 8 characters long and contain at least 1 number, 1 letter, and 1 special character. Create My Account (Free) or Sign in with Facebook Sign in with Google By creating a free account, you agree to our terms of service. This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.
PresentationSkip to Participants Operator00:00:00Thank you for standing by, and welcome to the Alliance Perthes' First Quarter twenty twenty five Earnings Review. At this time, all participants are in a listen only mode. After the remarks, there will be a question and answer session, and I will give you instruction on how to ask questions at that time. As a reminder, this conference is being recorded and will be available for replay on our website shortly after the conclusion of this call. Would now like to turn the conference over to the host for this call, Head of Investor Relations for AV, Mr. Operator00:00:28Ioannis Sergali. Please go ahead. Ioanis JorgaliVice President of Investor Relations at AllianceBernstein00:00:33Good morning, everyone, and welcome to our first quarter twenty twenty five earnings review. This conference call is being webcast and accompanied by a slide presentation that's posted in the Investor Relations section of our website, www.alliancebernstein.com. With us today to discuss the company's results for the quarter are Seth Bernstein, President and CEO and Tom Simeone, CFO. Onur Erzan, Head of Global Client Group and Private Wealth will join us for questions after our prepared remarks. Some of the information we'll present today is forward looking and subject to certain SEC rules and regulations regarding disclosure. Ioanis JorgaliVice President of Investor Relations at AllianceBernstein00:01:17So I would like to point out to the Safe Harbor language on Slide two of our presentation. You can also find our Safe Harbor language in the MD and A of our 10 Q, which we filed this morning. We base our distribution to unitholders on our adjusted results, which we provide in addition to and not as a substitute for our GAAP results. Our standard GAAP reporting and a reconciliation of GAAP to adjusted results are in our presentation appendix, press release and our 10 Q. Under Regulation FD, management may only address questions of material nature from the investment community in a public forum. Ioanis JorgaliVice President of Investor Relations at AllianceBernstein00:02:00So please ask all such questions during this call. Now I'll turn it over to Seth. Seth BernsteinPresident and CEO at AllianceBernstein00:02:07Good morning and thank you for joining us today. Against the backdrop of escalating uncertainty around trade policy and economic growth, AllianceBernstein delivered another strong quarter. Our results highlight the strength of our franchise, the depth of our investment expertise and the breadth of our globally diversified platform. On Slide three, I'll review the key business highlights of our first quarter. First, all three of our distribution channels grew organically in the first quarter, generating $2,700,000,000 in firm wide active net inflows. Seth BernsteinPresident and CEO at AllianceBernstein00:02:40Our differentiated distribution platform gives us an edge in growing markets like Asia, U. S. High net worth and insurance, where we've consistently gained market share, including in the first quarter of twenty twenty five. Coupled with the extensive range of our investment capabilities that span across traditional and alternative assets, we're strategically positioned to help our clients navigate turbulent markets and benefit from rapidly emerging trends. The fixed income reallocation theme is a prime example of our ability to capture demand where it exists, having generated over $35,000,000,000 of active fixed income inflows over the last two years. Seth BernsteinPresident and CEO at AllianceBernstein00:03:18Even amidst the return of rates volatility and heightened policy risks, we successfully generated $1,000,000,000 in active fixed income inflows during the first quarter of twenty twenty five. Despite the downturn in overseas demand for our taxable fixed income strategies, largely driving a $1,400,000,000 in firm wide taxable outflows, we continue to enjoy robust growth for our tax exempt franchise, which generated $2,400,000,000 of inflows. Our industry leading retail meaning platform has been driving force of organic growth, achieving an impressive 19% annualized growth rate in the first quarter. Over the past five years, retail tax exempt has consistently grown at double digit rates, reaching $46,000,000,000 in AUM, more than doubling in size since 2020. The secular growth in private alternatives is another theme that benefits us. Seth BernsteinPresident and CEO at AllianceBernstein00:04:12During the quarter, we had over $2,500,000,000 of institutional deployments into our private markets platform, coupled with inflows from high net worth into our asset based finance and private credit strategies. Active equity outflows of 2,500,000,000 moderated compared to recent quarters, with institutional redemptions slowing down while retail flows flip back to positive. In the first quarter of twenty twenty five, we generated $500,000,000 of retail inflows driven by solid demand for our U. S. Large cap growth, global strategic core, U. Seth BernsteinPresident and CEO at AllianceBernstein00:04:44S. Select and our security of the future strategies. Secondly, we are actively expanding our private market platform by deepening existing partnerships, establishing new ones and diversifying the growth avenues of our business. Our fee paying and fee eligible assets under management have reached $75,000,000,000 as of quarter end, marking a 20% increase compared to a year ago. We have successfully deployed nearly 40% of Equitable's second ten billion dollars commitment and are leveraging our expertise to extend the addressable market with institutional and retail oriented solutions. Seth BernsteinPresident and CEO at AllianceBernstein00:05:20We are replicating the success of our evergreen capabilities in middle market lending that have been historically marketed within our private wealth channel. We're excited with the momentum we're seeing as we extend our private credit franchise to the institutional channel with customized solutions. In asset based finance, we're expanding our retail offerings to help our own private wealth clients access this exciting new asset class, while also venturing into new distribution platforms. Our credit opportunities interval fund has exceeded $200,000,000 in assets under management, including allocation from third party retail clients. In the first quarter, we've engaged with nearly a dozen new RIAs and were encouraged by the increasing number of advisors exploring alternative investments with AB. Seth BernsteinPresident and CEO at AllianceBernstein00:06:07We continue to leverage our strong local relationships in the RIA channel, where we already partner with national aggregators and independent advisors in areas such as municipal bonds. Third, our diversified asset mix, coupled with our enhanced operational efficiency, provides downside protection to our revenue base and to our margins. As asset managers, we value diversification, and we've developed an all weather platform that mitigates concentration risks by geography or asset class. With liquid and illiquid credit accounting for nearly half of our assets under management, we believe we're less vulnerable to significant equity market downturns. The strategic initiatives we completed last year optimized our expense structure to expand the upside from favorable market conditions while also fortifying our business against downturns. Seth BernsteinPresident and CEO at AllianceBernstein00:06:58We enter a turbulent market environment from a position of strength. Fourth, we have a durable base fee rate that has held relatively steady over the past several years. Our all in fee rate, including base and performance fees, is another differentiating factor for AB. This relative stability results in symmetrical growth between our management fees and our AUM. Moving on to Slide four. Seth BernsteinPresident and CEO at AllianceBernstein00:07:25I'll highlight our strengthening relationship with Equitable. We firmly believe that being affiliated with a leading insurance provider is a competitive advantage for AB. Leveraging the permanent capital commitment from Equitable helps us seed and scale our higher fee, longer dated private alternative strategies. Investment grade quality private credit is a key growth opportunity for both Equitable and AllianceBernstein, and we've now deployed nearly $14,000,000,000 of the $20,000,000,000 committed by Equitable. This has enabled us to build out new capabilities like residential mortgages and private ABS, which we intend to expand with our other insurance and institutional clients. Seth BernsteinPresident and CEO at AllianceBernstein00:08:04We continue to scale our distribution, leveraging our leading brand awareness expertise in vehicle versatility to expand our third party growth avenues. This virtuous circle of delivering additional yield to our partners' balance sheet while seeding new strategies with permanent capital enables AllianceBernstein to sustainably expand our business. We remain on target to grow our private markets AUM to 90,000,000,000 to $100,000,000,000 by 2027. Slide five reflects a summary page with our key financial metrics. Tom will follow-up with more commentary on our results. Seth BernsteinPresident and CEO at AllianceBernstein00:08:42Turning to Slide six, I'll review our investment performance starting with fixed income. Despite resurgent rates volatility driven by inflationary pressures caused by policy uncertainty, bonds served as a safe haven during the first quarter of twenty twenty five, with Bloomberg's U. S. Aggregate index returning 2.8%. Our fixed income performance benefited from active duration management and our allocation to investment grade, while our security selection within high yield detracted from relative performance. Seth BernsteinPresident and CEO at AllianceBernstein00:09:13Overall, our performance improved with 6463% of our AUM outperforming over the one and three year periods, while 81% outperformed over the five year period. Quarter to date dynamics have been tumultuous with markets reacting sharply to tariff headlines, global growth uncertainty and shifting demand for U. S. Treasuries. Despite policy risks intensifying and credit spreads widening to levels reminiscent of the regional banking crisis in 2023, fixed income is proving relatively resilient compared to the significant drawdowns we've seen in U. Seth BernsteinPresident and CEO at AllianceBernstein00:09:47S. Equity markets. For example, at the peak of the drawdown caused by a tariff announcement, the S and P five hundred was down 15%, while The U. S. High yield index was down less than two percent. Seth BernsteinPresident and CEO at AllianceBernstein00:09:58While the elevated rate volatility made dampen sentiment and appetite for duration, we view the value proposition for fixed income as intact. Specifically, we see the belly of the yield curve as an attractive spot to manage duration risk, given the ongoing buildup of term premium. Credit remains an area of opportunity with all in year yields over 8% presenting an appealing risk adjusted return profile compared to long term equity forecasts. With policies still in motion, markets may continue to react faster than fundamentals, creating dislocations as well as opportunities for new investors. In this environment, we're constructive on fixed income and we have the right strategies to compete for the next wave of the reallocation. Seth BernsteinPresident and CEO at AllianceBernstein00:10:44Turning to equities. Near record high valuations in U. S. Equities, combined with a dimming economic outlook for The U. S. Seth BernsteinPresident and CEO at AllianceBernstein00:10:51Arising from a changing trade policy triggered a rotation into international equities. The percentage of AUM outperforming over the one year period deteriorated to 23%. The shift was primarily driven by our U. S. Large cap growth fund distributed in Japan flipping from above to below median. Seth BernsteinPresident and CEO at AllianceBernstein00:11:09A significant factor contributing to this change was the strengthening VN during the quarter impacting comparisons against other local growth managers. The three year figure had improved to 52%, while the five year declined to 45%. This performance trend reflects the market dynamic of excessive concentration in a few mega cap names within the AI scene. Our investment focus on companies demonstrating consistent growth with disciplined approach to valuation also posed challenges in the later half of 2024. Year to date, despite the volatility following the tariff announcements platform has demonstrated significant relative performance. Seth BernsteinPresident and CEO at AllianceBernstein00:11:51U. S. Large check growth has generated nearly 300 basis points of relative outperformance, positioning it near the top decile year to date. Our strategic core portfolios designed to offer downside protection in volatile environments have outperformed their benchmarks by 300 to 400 basis points year to date. Furthermore, our global, international and emerging markets portfolios have established track records that have exhibited strong performance. Seth BernsteinPresident and CEO at AllianceBernstein00:12:18Additionally, our U. S. Core strategies, select equities and U. S. Strategic equities have continued to deliver robust returns following a successful year, showcasing their ability to generate alpha across various market conditions and attracting client interest. Seth BernsteinPresident and CEO at AllianceBernstein00:12:33Overall, we had eight active equity strategies that generated over $100,000,000 in inflows during the first quarter of twenty twenty five. Now turning to Slide seven. Retail posted its seventh straight quarter of positive net flows with sales continuing to track at record pace levels, offsetting elevated redemptions during a turbulent quarter. Actively managed asset classes were inflowing in the first quarter, led by enduring enduring organic gains in tax exempt, solid inflows into multi asset and modest inflows into active equities. We continued to gain retail market share in tax exempt for the ninth consecutive quarter, growing at a 19% annualized rate. Seth BernsteinPresident and CEO at AllianceBernstein00:13:17Our all market income strategy drove multi asset sales in the first quarter, particularly out of the Asia Pacific region. Active equity also grew organically, supported by continued inflows into our U. S. Large cap growth strategy in addition to global strategic core and U. S. Seth BernsteinPresident and CEO at AllianceBernstein00:13:33Select equities. Thematic investing is another area with significant potential. Our security of the future portfolio continues to attract solid inflows, surpassing $1,000,000,000 in AUM just one year since we launched. Diversifying our product offerings remains a cornerstone of our distribution strategy, and we're very pleased with the early success we're seeing as we scale our services across our global footprint. Offsetting our organic gains, our taxable fixed income franchise posted outflows of $1,400,000,000 primarily as our marquee income strategies AIP and GHY had outflows given the uncertain rate outlook. Seth BernsteinPresident and CEO at AllianceBernstein00:14:13Base management fees grew 10% year over year, reflective of market growth and organic flows, while they were down 3% versus the prior quarter due to the equity drawdown. Organic base fee growth was 2% over the last twelve months and slightly below 1% as of the first quarter. Moving to Slide eight. Institutional sales inflows rebounded in the first quarter of twenty twenty five to the highest level since fourth quarter twenty twenty two, breaking a streak of persistent outflows. Channel inflows were driven by an accelerated pace in alternative deployments across various services, including private placements, commercial real estate debt, residential loans and CLOs. Seth BernsteinPresident and CEO at AllianceBernstein00:14:58Active equity outflows of $1,900,000,000 in the first quarter moderated versus recent trends. Our pipeline grew to $13,500,000,000 in the first quarter, up $2,800,000,000 sequentially, reaching its highest levels in the seventh quarter. Note that institutional fundings also accelerated with roughly $3,000,000,000 in pass through mandates that were not captured within our pipeline. The decrease in the pipeline fee rate was mainly attributed to the addition of a sizable lower FEED mandates, including an $800,000,000 in passive index equities and $1,100,000,000 in systematic fixed income. Our ongoing efforts to market our systematic strategy continues to attract strong client interest, enabling us to grow our institutional market share and fixed income. Seth BernsteinPresident and CEO at AllianceBernstein00:15:45However, these mandates tend to be lower feed and will impact pipeline fee rate. Turning to Slide nine. Private wealth posted solid inflows in the first quarter, growing to an annualized organic growth rate of more than 2%, the fastest pace in two years. As a reminder, our private wealth net inflows exclude reinvested dividends and interest income, which is typically reported within net assets across key wealth management peers. Our organic growth was fueled by increased sales momentum, underscoring robust client engagement and advisor productivity. Seth BernsteinPresident and CEO at AllianceBernstein00:16:23We're still focused on supporting and growing our advisor sales force, ramping up our recruiting effort in line with our long term target of 5% headcount growth. Demand dynamics within the channel were positive across all asset classes except for active equities. Fixed income inflows exceeded $800,000,000 driven by our muni tax aware strategies, money markets and Global Plus. Solid demand for our passive tax harvesting strategy led to $600,000,000 in inflows into passive equities, growing organically at nearly 10% annualized rate. Alt MAS inflows of nearly $500,000,000 growing at 7% annualized rate marked the eighth consecutive quarter of organic growth through alternatives and multi asset within Bernstein. Seth BernsteinPresident and CEO at AllianceBernstein00:17:11Private alternatives, including real estate debt, CarVal and private credit accounted for approximately half of those inflows. Fundraising and private alternatives continued to be a significant driver of channel activity with approximately $400,000,000 raised in the first quarter. Base management fees grew 10% year over year and came in flat sequentially. Channel revenues were up 6% versus the prior year and down 17% quarter over quarter, primarily due to performance fees typically crystallizing in the fourth quarter. Before moving on to our financial review, I'm delighted to introduce our newly appointed CFO, Tom Simeone. Seth BernsteinPresident and CEO at AllianceBernstein00:17:50Having had the privilege of collaborating with Tom for several years, I'm eager for our unitholders, analysts and all stakeholders to have the opportunity to become acquainted with him. Tom? Tom SimeoneCFO at AllianceBernstein00:18:01Thank you, Seth. Good morning, everyone, and thank you for joining our call. During my twenty year tenure at AB, I've had the privilege of serving in various roles across the organization. This has taught me what sets AB apart. I am enthusiastic about the future that lies ahead of us and excited to share our financial results with you today. Tom SimeoneCFO at AllianceBernstein00:18:20Let's delve into the details. We continue to deliver strong financial performance in the first quarter, reflecting solid growth in asset management fees and focused expense discipline. First quarter adjusted earnings of $0.80 per unit were up 10% versus prior year, benefiting from strong markets early in the quarter, sustained organic growth, a durable fee rate and solid margin expansion. Distributions and EPU grew uniformly as we distribute 100% of our adjusted earnings to unitholders. On Slide 10, we show our adjusted results, which remove the effect of certain items not considered part of our core operating business. Tom SimeoneCFO at AllianceBernstein00:18:58For a reconciliation of GAAP and adjusted financials, please refer to our presentation appendix or our 10 Q. First quarter net revenues of $838,000,000 were down 5% versus the prior year and up 6% on a like for like basis, excluding Bernstein Research. First quarter base fees increased 8% versus prior year, in line with the growth in our firm wide average AUM. Performance fees of $39,000,000 increased by $12,000,000 from prior year period, reflecting sustained alpha generation from our international small cap and middle market lending strategies. Dividend and interest revenue, net of broker dealer related interest expense, declined versus prior year, which reflects lower cash and margin balances within Private Wealth. Tom SimeoneCFO at AllianceBernstein00:19:44In the first quarter, we had an $11,000,000 loss as compared to a gain in the prior year period related to our seed like capital and other investments. Moving to expenses. Our first quarter total operating expenses of $555,000,000 declined 10% year over year, reflecting the deconsolidation of Bernstein Research as well as lower occupancy costs from our New York office relocation and a lower compensation ratio. Total compensation benefits expenses of $414,000,000 declined by 6% versus the prior year in absolute terms. This reflects a 48.5% compensation ratio of adjusted net revenues in line with our guidance and below the 49% ratio in the prior year period. Tom SimeoneCFO at AllianceBernstein00:20:28We will continue to accrue at a 48.5% compensation to revenue ratio in the second quarter of twenty twenty five, but we are mindful of market volatility and may adjust this in the second half of the year depending on conditions. Promotion and servicing costs decreased by 36% from the prior year, primarily reflecting a significant reduction of trade execution and clearance expenses from Bernstein Research in addition to lower marketing expenses. G and A declined 13% versus the prior year period, primarily driven by occupancy savings from our New York City office relocation, coupled with lower professional fee and portfolio servicing costs. The first quarter run rate of our non compensation expenses is tracking better than our guidance as we are exercising expense discipline in the face of a deteriorating market backdrop underscoring our improved operational flexibility. We maintain our guidance of 600,000,000 to $625,000,000 of full year 2025 non compensation expenses, but we'll continue to exercise expense discipline given volatile markets. Tom SimeoneCFO at AllianceBernstein00:21:30As a reminder, promotion and servicing makes up roughly 20% to 25% of non comp expenses and G and A accounts for 75% to 80% excluding one time items. First quarter interest on borrowings decreased by $10,000,000 versus the prior year due to a lower cost of debt and lower debt balances. Please note that we intend to increase leverage during the year to fund our commitment to the Ruby Re sidecar and take advantage of any other potential growth opportunities that may arise. ABLPs effective tax rate was 6.2% in the first quarter, in line with our full year guidance of 6% to 7%. Transitioning to Slide 11, let's take a look at the trajectory of our firm wide base fee rate, which is net of distribution expenses. Tom SimeoneCFO at AllianceBernstein00:22:14In the first quarter, our firm wide fee rate stood at 39.5 basis points, slightly higher versus the first quarter of twenty twenty four, supported by AUM shifts between asset classes and channels. Looking forward, I would note that we may see less support from mix shift given market movements in March and April, which could put downward pressure on the fee rate. This dynamic was somewhat evident in the first quarter as the decline in fee rate from the fourth quarter of twenty twenty four was primarily attributed to the adverse effects of the downturn in equity markets during the latter part of the quarter. The decrease was particularly influenced by the drawdown in U. S. Tom SimeoneCFO at AllianceBernstein00:22:50Equities, which constitute approximately three quarters of our total equity assets. Although non U. S. Equities performed better, their smaller share of our asset allocation only partially mitigated the overall negative impact on the fee rate. In contrast, fixed income markets outperformed equities in the first quarter of twenty twenty five, While this provided diversification benefits to our assets under management and revenues, our fixed income strategies typically command lower fees, particularly for our institutional side. Tom SimeoneCFO at AllianceBernstein00:23:22While our fee rate will remain mix dependent, we have managed to deliver a durable fee rate over time as our regional sales mix and selective growth initiatives have mitigated some of the fee erosion witnessed across the industry. Slide 12 provides a detailed breakdown of our performance fees by private and public strategies. Performance related fees from our private alternative strategies totaled $20,000,000 during the first quarter. On the public front, our international small cap strategy, which has consistently outperformed the benchmark over the one, three, five and ten year periods, yielded $19,000,000 in performance fees. Although public alpha is volatile and more difficult to predict, our public strategies enhance our market leverage profile and provide additional upside tied to the public markets. Tom SimeoneCFO at AllianceBernstein00:24:08As a result, we're revising our annual performance fee expectations to 90,000,000 to $105,000,000 up from the prior projection of 70,000,000 to $75,000,000 For the remainder of the year, we expect our private alternative strategies to be the primary contributors to our performance fees as they have been in recent years. These strategies include commercial real estate debt, AB CarVal and AB Private Credit Investors or AB PCI, which is the largest contributor. Although certain strategies exhibit greater volatility than others, we anticipate an additional 50,000,000 to $60,000,000 of hurdle based performance fees for the remainder of 2025. It is important to highlight that our estimate factors in a lower interest rate environment. However, the wide range of rate cut projections obscured our visibility on the potential impact from such cuts. Tom SimeoneCFO at AllianceBernstein00:25:01Turning to Slide 13. We saw solid margin expansion during the first quarter of twenty twenty five. The adjusted operating margin reached 33.7, up three forty basis points versus the first quarter of twenty twenty four, demonstrating our improved operating leverage following the completion of both the Bernstein Research JV and the move to Hudson Yards. Our forecast for 33% margin for 2025 assumes flat markets from year end 2024 levels. If the recent market weakness continues, it could put downward pressure on future margins, although we will also actively manage expenses. Tom SimeoneCFO at AllianceBernstein00:25:37While we are keenly focused on margins, we are also committed to investing in growth and generating long term value for our unitholders. As part of our strategic planning, we have allocated resources for targeted growth investments such as onboarding new investment teams and introducing new products with the expectation that these endeavors will yield enhanced returns over time. Before we move on to the Q and A session, I want to extend my heartfelt appreciation to all my colleagues throughout our organization for their unwavering dedication. It is a privilege to assume the CFO role, and I'm eager to contribute to our collective success and create value for our clients, our unitholders, our colleagues and all our stakeholders. With that, we're pleased to answer your questions. Tom SimeoneCFO at AllianceBernstein00:26:20Operator? Operator00:26:24We will now begin the question and answer And your first question comes from the line of Alex Blostein with Goldman Sachs. Alex, please go ahead. Alexander BlosteinManaging Director at Goldman Sachs00:26:50Hi, good morning. Thank you. Tom, welcome to the call. Question to you guys, starting maybe with asset allocation trends you guys are seeing so far in the second quarter. Obviously, super volatile backdrop, lots of uncertainty. Alexander BlosteinManaging Director at Goldman Sachs00:27:03It seems like the retail channel is starting to look a little bit softer, including on the fixed income side, which has been historically a source of strength for you guys. So how do you expect the retail channel, I guess, to behave as we kind of deal with the current backdrop? Seth, curious in particular when it comes to non U. S. Retail given your distribution footprint there, how that channel is performing and the outlook there? Alexander BlosteinManaging Director at Goldman Sachs00:27:27Thanks. Onur ErzanHead of Global Client Group & Head of Bernstein Private Wealth at AllianceBernstein00:27:29Sure. Hi, Alex. Onur here. I'll take the question. In terms of I'll start with asset allocation then switch to non U. Onur ErzanHead of Global Client Group & Head of Bernstein Private Wealth at AllianceBernstein00:27:39S. Retail. What we are seeing is driven by largely what's happening with the treasuries and rates. Obviously, the continued Fed uncertainty with the rate cuts as well as the tariff policy uncertainty is creating some confusion in the market. As a result, we have seen starting in Q1 some outflows out of retail taxable fixed income, particularly in the overseas markets, our flagships like Hong Kong, Taiwan. Onur ErzanHead of Global Client Group & Head of Bernstein Private Wealth at AllianceBernstein00:28:17This is not a first time or a new thing. We have seen this trend in the past. There were times like COVID or 2022. When the rate cuts happen, when the shape of the yield curve gets solidified with the steeper yield curve, our strategy is go back to strong inflows. So as a result, although this current volatility is not going to help in the very short term, we believe it will continue to support us in the long term. Onur ErzanHead of Global Client Group & Head of Bernstein Private Wealth at AllianceBernstein00:28:47And as you recall, when there was an asset rebalancing into taxable fixed income, we were one of the first beneficiaries of that and we gathered close to $35,000,000,000 of net flows from taxable fixed income. So definitely, it will help us in the long term, while it might partially hurt us along with others in the short term. However, balancing some of that is the strength of our tax exempt franchise in The U. S. As well as our growing ETF franchise, which obviously caters to us like the different audience with the active ETFs being 100% U. Onur ErzanHead of Global Client Group & Head of Bernstein Private Wealth at AllianceBernstein00:29:26S. Today. So overall, we continue to see relative strength in our units U. S. Unit business hence overall we believe relatively confident about the long term prospects for taxable and tax exempt fixed income. Onur ErzanHead of Global Client Group & Head of Bernstein Private Wealth at AllianceBernstein00:29:46In terms of the non U. S. Geographies, I already touched on the fixed income. I'm not going to belabor further into that. In terms of equities, as you know, we run the largest active equity strategy in Japan. Onur ErzanHead of Global Client Group & Head of Bernstein Private Wealth at AllianceBernstein00:30:01And that strategy delivered very strong flows in first quarter. We continue to monitor what's happening not only with equity markets, but also with dollar yen dynamics. However, even if second quarter might be a little bit softer with again equity market and FX volatility, the structural trend in Japan is the growth of the retirement market with the Nisse accounts. And we play well into that retirement money, which tends to be stickier, more long term oriented, less short term. And we expect to have strong kind of growth in our Japan franchise leveraging that retirement trend. Seth BernsteinPresident and CEO at AllianceBernstein00:30:45Alex, I'd just add that, as I said in my earlier comments, we believe the fixed income thesis remains intact despite what has been remarkable volatility. And when you look at sort of yields of 8% out there and they could get higher for sure, but they look pretty good relative to any kind of long term expectations of equity returns right now. And I think risk aversion will probably remain present for a while. And so I think once the stability begins to reassert itself, I think there's pretty attractive opportunities out there for people who don't want to venture back into equities so quickly. But that will take some more time to figure out. Seth BernsteinPresident and CEO at AllianceBernstein00:31:34But it's also worth noting that our own retail flows have certainly stabilized in recent days at a better level. So look, we are monitoring it just like everyone else is and can't predict the future. But I like the mix of businesses we have and our emphasis on fixed income in a time like this. Alexander BlosteinManaging Director at Goldman Sachs00:31:56Yes. I agree with you there. Alexander BlosteinManaging Director at Goldman Sachs00:31:57Thanks. Alexander BlosteinManaging Director at Goldman Sachs00:31:58Great detail. For my follow-up question, I just wanted to ask you guys around the Equitable dynamics and now with the tender results now and participation was relatively limited. And I was curious if you could expand on maybe some of the structural benefits to Equitable from having AllianceBernstein as a public company? Do you ultimately see them willing to acquire more over time? Or kind of how do you think that relationship plays out over the next several years? Seth BernsteinPresident and CEO at AllianceBernstein00:32:29Thanks, Alex. Well, first thing I'd say is, you all cover Equitable and you should certainly ask them the question yourself. We took it, I take it as a vote of confidence in this business that they had decided to make such an endeavor to increase their holdings in AB in the manner that they did. I think the premium clearly didn't convince a ton of people to go tender into it. And I think a part of that is the very high distribution yield we offer remains pretty attractive, particularly in times like this to clients. Seth BernsteinPresident and CEO at AllianceBernstein00:33:10So I do think and know that Equitable understands the logic of maintaining the independence of AB, frankly, several reasons. One, our employees like the clear alignment and the recognition that a public security has for their endeavors. And we don't take that lightly from a deferred compensation perspective as well as a clear understanding of the business and its goals. Secondly, Equitable sees this as a more attractive currency potentially as we continue to look for opportunities to supplement our product or distribution, capabilities. And so we want that as do they as a potential option. Seth BernsteinPresident and CEO at AllianceBernstein00:34:04As you know, we've used it before, whether it was the purchase of CarVal or in other contexts. And I guess finally, I would say to you that they get it's a pretty tax advantageous position that they have today in their position as a private partner as well as owner of public units to have AB in the current status as a partnership. So there is no change in our view in that and I don't believe there's a change in their view. Alexander BlosteinManaging Director at Goldman Sachs00:34:43Great. That's super helpful. Thank you, guys. Operator00:34:49Your next question comes from the line of Craig Siegenthaler with Bank of America. Craig, please go ahead. Craig SiegenthalerManaging Director at Bank of America00:34:56Good morning, Seth, and I hope everyone's doing well. I had two follow ups to Alex's last question. The first one is, is EQH taking a more active role in Imaginative AB, which I thought was run fairly autonomously over the last twenty years across three CEOs? And then the follow-up would be, are there any limits in place to prevent EQH from buying more stock in the future? Seth BernsteinPresident and CEO at AllianceBernstein00:35:23There has been absolutely no change in the engagement or activities of Equitable versus the operations of AllianceBernstein. We continue to operate autonomously with independent members Board with independent members. We continue to set our own comp to revenue ratio in consultation, of course, with our Board. And we intend to have that continue. So there's been absolutely no change, Greg, in that regard and there's no change anticipated. Seth BernsteinPresident and CEO at AllianceBernstein00:35:59Additionally, Equitable, there is no technical restriction that I'm aware of that precludes Equitable from potentially buying more units. And indeed, as you might have wrecked or I'm sure you recognize that when we entered into the RGA transaction, we actually funded that acquisition through an investment equitable made in in units of the private units of AB to facilitate that. We raised $150,000,000 to do that. I can see that ownership stake rising or falling depending on our acquisition activity. And I'd point out that it had fallen as part of the acquisition of CarVal. Seth BernsteinPresident and CEO at AllianceBernstein00:36:45So there isn't a limitation, Craig, that I'm aware of. Craig SiegenthalerManaging Director at Bank of America00:36:52Thanks, Seth. Just a follow-up. Your retail muni SMA flows have been really, really strong. They might actually be the leading driver of organic growth at AB, but you can correct me there if I'm wrong. But we U. Craig SiegenthalerManaging Director at Bank of America00:37:06S. Lawmakers now are discussing the removal or even cap of the tax exemptions on muni bond interest. So if enacted, do you see that as a headwind to flows? Or do you think the secular drivers of munis in the SMA wrapper are so powerful that kind of sort of power right through that sort of issue? Seth BernsteinPresident and CEO at AllianceBernstein00:37:27Look, we we spend a lot of time focusing, as you might imagine, on what's going on in the reconciliation discussions in in in Washington. And, as you know, muni deductibility has come up before. Our own view is that, there won't be a repeal, and that's what we hear from from people we talk to in Washington, but it ain't over until it's over. So I recognize that. There may be areas within the high I'm sorry, within the muni market that might see some sort of restriction or other ways, for example, limiting higher income individuals' ability to take that deduction. Seth BernsteinPresident and CEO at AllianceBernstein00:38:14But our view is that the importance that muni financing has to states and municipalities is so critical and fundamental, that we don't think, that full repeal is on the table. But obviously, we're watching it carefully. To answer your question more directly, I think in the event that such a change happened and it was revealed, I think you would certainly see a one time reaction to that in the repricing of the sector to accommodate it. I think that would be a likely outcome. So there would be a shock to that market that would affect flows. Seth BernsteinPresident and CEO at AllianceBernstein00:38:55But ultimately, muni credit quality and credit migration is much slower, as you know, I think, than corporate migration. It has been a very comfortable place for people to keep a portion of their retirement savings. And the need for income, if anything, is even greater than it's been before, and I don't see a better substitute for it. Now it may what what constitutes a taxable American holdings may change to include non municipal fixed income assets. That may well happen. Seth BernsteinPresident and CEO at AllianceBernstein00:39:37But I think people are very comfortable investing in that space and it will continue to be an important part of people's retirement. Craig SiegenthalerManaging Director at Bank of America00:39:45Yeah. Onur ErzanHead of Global Client Group & Head of Bernstein Private Wealth at AllianceBernstein00:39:46And also the positive is in scenario where there are no major changes, which is probably the base case scenario, you would expect also some increased demand because there has been some volatility with some cautious over issuance of mini bonds in the first quarter. So there was a demand supply imbalance that created a yield outlook that is even stronger than before also relative to treasuries. So although negative scenarios are out there and there's definitely some risk, also there is an upside when the markets normalize in terms of tax protected yield and high net worth and ultra net worth clients kind of using it as they always did over the last decades. Craig SiegenthalerManaging Director at Bank of America00:40:40Thanks, Jonah. Operator00:40:46Your next question comes from the line of Bill Katz with TD Cowen. Bill, please go ahead. William KatzSenior Equity Analyst at TD Cowen00:40:52Okay. Thank you very much. And Tom, congratulations on the new role. Maybe start with on the expense side. I think if I heard you correctly, no change to the prior guide on non comp of $600,000,000 to $625,000,000 So is the first quarter just some delay of spend and that might accelerate into the back half of the year? William KatzSenior Equity Analyst at TD Cowen00:41:13Or what kind of flex would you have if the revenue backdrop were not to play out against your base assumptions? Tom SimeoneCFO at AllianceBernstein00:41:20Yes. Bill, this is Tom. Thank you. You have it right there. The 66.25%, we're going to remain sticking to that guide for now. Tom SimeoneCFO at AllianceBernstein00:41:26But Q1 is a bit lower. We do see some spend increasing throughout the remainder of the year. And based on that, if you annualize Q1, you'll see that we do have some flex. So we do have some levers that we can pull if we need to reduce expenses during the year. Seth BernsteinPresident and CEO at AllianceBernstein00:41:44Look, if we don't see that base case roll forward, we're going need to take a more cautious route in spending. William KatzSenior Equity Analyst at TD Cowen00:41:58Great. That was your Yes, yes, for sure. Thank you. And then maybe a big picture question, doing very well on the alt side. I think we're to unpack that a little bit. William KatzSenior Equity Analyst at TD Cowen00:42:07What's the allocation in the private wealth side now to alts? How much further do you think you have to sort of take that? I think last recollection was something around 10%, but just correct me on that. And then maybe you could unpack a little bit about some of the success factors you're having on the third party side, maybe which products you're seeing the most traction and where you see the greatest incremental distribution connectivity? Thank you. Onur ErzanHead of Global Client Group & Head of Bernstein Private Wealth at AllianceBernstein00:42:34Sure. Yes, your recollection is right. We tend to have around allocation in the client portfolios today if you look at our overall AUM, particularly for certain client segments like ultra network clients, obviously, offices, that target allocation is much greater, 20% or above. So there is definitely more upside and hence we have a pretty robust product pipeline, not only to drive allocations from existing clients, but also use new products to acquire new clients. I mean, actually if you look at our first quarter, if I were to quote the net new assets, which is different than net flows, so if you were to look at it like a wealth manager, our annualized organic growth rate was 6.5% on a net new asset basis. Onur ErzanHead of Global Client Group & Head of Bernstein Private Wealth at AllianceBernstein00:43:24So as a result, as the net new asset growth materializes that will benefit alternatives at the current rate at least 10% and with also our network and family office and even at a greater rate. In terms of the demand, it's broad based. Obviously private credit is a big part of the story. But also for our private wealth business, we onboard best in class managers that are additive in other adjacent asset classes, whether it's in real estate equity, venture capital, etcetera. So it's going to be relatively broad based in our private wealth channel. Onur ErzanHead of Global Client Group & Head of Bernstein Private Wealth at AllianceBernstein00:44:01But the trends in private credit, the strategies we offer whether it's middle market lending, whether it's the carve out strategies, the demands stayed strong in the first quarter and expect it to remain that way for the rest of the year. In terms of other channels and where we are seeing the demand broadening, insurance definitely has been an uptick. As you know, we have been focusing on building on insurance capabilities globally, leveraging some of the Equitable synergy. Equitable is now 13 almost $13,500,000,000 into their $20,000,000,000 overall commitments. And that helps us broaden the strategies we offer. Onur ErzanHead of Global Client Group & Head of Bernstein Private Wealth at AllianceBernstein00:44:50For instance, the new private placement ABS that we added in the fourth quarter of twenty twenty four already is contributing to our flows. Resi mortgage platform is broadening out of CarVal, So there are a lot of bright spots and we started to see an increased pool for from third party channels including third party insurers into our middle market lending strategy as we create different leverage levels for the product and insurers typically prefer lower leverage versions of the product. So we are definitely broadening the client base for direct lending in the insurance channel. So I expect the insurance to be a very strong contributor to our alternative growth in private credit across core direct lending, real estate debt as well as specialty finance and hard assets from Carvell. On the retail side, our interval fund and the BDC kind of product are in the markets. Onur ErzanHead of Global Client Group & Head of Bernstein Private Wealth at AllianceBernstein00:45:56Our focus in The U. S. Has been the interval funds given the broad appeal and ease of deploying that strategy. The minimums are low. It's a 40 act product. Onur ErzanHead of Global Client Group & Head of Bernstein Private Wealth at AllianceBernstein00:46:09So and the sub docs and the whole client experience is much smoother than some of the more complex solutions. We are approaching several hundred million dollars in that product already at the twelve month mark, which is in line with our plans. And hitting that threshold allows us to have broader conversations with larger broker dealers and warehouses and we expect to onboard a large broker dealer in that strategy this quarter, while seeing also continued demands from the RIAs. And in terms of product extensions or products that are getting interest in the overseas markets, there's definitely interest in non correlated assets. Some of the asset based finance is definitely interesting to our clients seeing strong demand as well as our aviation income, which is a little niche, but definitely seen as a less correlated product from the client base. William KatzSenior Equity Analyst at TD Cowen00:47:11Thank you very much for that. Operator00:47:16Your next question comes from the line of Ben Budish with Barclays. Ben, please go ahead. Benjamin BudishDirector at Barclays00:47:21Hi, good morning and thanks for taking the question. I wanted to check on your private markets fee expectation. I guess first Tom, it sounded like you indicated that the expectation for this year was a guide up. When I was looking at the transcript from the last call, think the commentary was 70,000,000 to $75,000,000 of recurring hurdle based performance fees. I just want make sure I have the right sort of apples to apples comparison. Benjamin BudishDirector at Barclays00:47:43And then the other piece I was curious about in the slides you indicate that AB PCI is the majority of private markets performance fees. Curious, could you remind us what were the other big pieces in 2023 and 2024 that drove higher private markets fees? And is there potential for that to recur if conditions are correct? Do you feel pretty good about the sort of 70,000,000 to 80,000,000 full year that you're looking at for 2025? Tom SimeoneCFO at AllianceBernstein00:48:07So the other performance fees in 2024 were carve out PCI and real estate. Is that what you're getting at there? Are you trying to understand the difference between $2,024,000,000 and projected 2025 Benjamin BudishDirector at Barclays00:48:21Yes, just the commentary. So the sorry, it's the commentary for '25 for what you gave last quarter versus what you're saying today. So how does the 70 to 75 compared to what you're saying today of 90 to 105? Like I assume the prior would not have included public markets. But Tom SimeoneCFO at AllianceBernstein00:48:39Yeah. We had some international SMID that that resulted in about $19,000,000 20 million dollars of performance fees in q one, and that's why well, that's what's leading to the revision upward. So the public markets forecast hasn't changed. The private markets forecast has not changed. But what increased it overall is because we had some public performance fees in Q1. Benjamin BudishDirector at Barclays00:49:05That's helpful. And then maybe a broader question on private markets. You talked a little bit about investment grade private credit. It's a huge thing we hear about from some of the other alternative managers. Just curious how much of your private markets activity today is investment grade? Benjamin BudishDirector at Barclays00:49:19And when you talk about sort of expanding to other third party insurance partners or other LPs sort of or even other wealth clients sort of outside your current your wealth business, how much how important is investment grade as part of that strategy? Thank you. Onur ErzanHead of Global Client Group & Head of Bernstein Private Wealth at AllianceBernstein00:49:35Yes. It's primarily an insurance story. When it comes to private wealth or third party retail, even the larger parts of the institutional markets, typically IG is not the dominant strategy, although it might be appealing in certain jurisdictions like Japan, etcetera, where they might be looking for some diversification from fixed income, but not the full risk exposure to the wider credit markets. Within insurance, definitely it's the highest growth part of our market. That's why we have been expanding our IG capabilities significantly either through team extensions as well as additional leadership by talents. Onur ErzanHead of Global Client Group & Head of Bernstein Private Wealth at AllianceBernstein00:50:21I mean that was one of the reasons why we brought Jeff Cornell from a large insurance company who was the CIO there to lead insurance efforts. That was back in May 24, as you might recall. And that has been a large part of our growth. In terms of specific percentages, I don't have it offhand. But again, in terms of net flows into private credit in insurance, IG has been the disproportionate amount and I will expect it to remain that way. Benjamin BudishDirector at Barclays00:50:55All right. Thank you very much. Very helpful. Operator00:51:00Your next question comes from the line of Dan Fannon with Jefferies. Dan, please go ahead. Daniel FannonManaging Director - Research Analyst at Jefferies00:51:06Thanks. Good morning. Just wanted one more clarification on the performance fee outlook. Is the public markets numbers this is just being conservative where you're assuming no performance fees because the performance is yet to be crystallized? Or is there a start of the year? Daniel FannonManaging Director - Research Analyst at Jefferies00:51:21Can you give us an update maybe on how those strategies are looking to give us a sense of what that might actually come to? Tom SimeoneCFO at AllianceBernstein00:51:26That's exactly right. The public markets, don't forecast generally because they need to be crystallized. Daniel FannonManaging Director - Research Analyst at Jefferies00:51:34Okay. Understood. And then just a follow-up on advisor productivity and just within the private wealth, you talked about that improving. Can you talk about the mix of new advisors versus existing advisors and whether the newer ones coming on board that you're actively recruiting more aggressively are the ones that are more productive or it's more broad based? Onur ErzanHead of Global Client Group & Head of Bernstein Private Wealth at AllianceBernstein00:51:55It's more broad based. Our strength in the private wealth channel has been the retention of our most tenured and most productive advisers. We have, I think, industry retention rates, and that has been a very strong contributor to productivity. And when we recruit, as you know, our recruiting mix tends to skew towards younger advisers where we train and developing our own model. Although we are adding more experienced advisers at a slow rate consciously, right now the recruiting mix remains heavily skewed towards younger advisers that we mold into our model. Onur ErzanHead of Global Client Group & Head of Bernstein Private Wealth at AllianceBernstein00:52:39But there's definitely some upside from adding more experienced advisers over time, and we have a dedicated team effort to accelerate that in the coming quarters. Daniel FannonManaging Director - Research Analyst at Jefferies00:52:50Thank you. Operator00:53:14And your next question comes from the line of Bill Katz with TD Cowen. Bill, please go ahead. William KatzSenior Equity Analyst at TD Cowen00:53:20Thanks. I just appreciate the follow-up. A couple of sort of modeling nits just tracking too. Tom, just a follow-up on the public side of performance fees. Is there a way to give us a sense of either AUM that are eligible for performance fees and or how these those relative funds those funds are doing either relative or absolute return at the end of the Q1 versus maybe twelvethirty one as we think through sort of the incremental upside? Tom SimeoneCFO at AllianceBernstein00:53:49I think you're asking about the private side there, Bill. And those are very predictable, and those are recurring and consistent. So that's why I'm William KatzSenior Equity Analyst at TD Cowen00:53:58I'm sorry to interrupt. No. It's more on the public side. Just trying to get a sense of what how to think through the upside to that 0 to $5,000,000 guide here on Page 12 of the slide deck. Think about just how is absolute relative performance sitting at threethirty one versus twelvethirty one? William KatzSenior Equity Analyst at TD Cowen00:54:14Or are there any high watermark issues that we have to sort of contemplate? Tom SimeoneCFO at AllianceBernstein00:54:19Yes. With the volatility in the market, it's hard to respond to that one right now from both an interest perspective and then just the equity markets and what they're doing. William KatzSenior Equity Analyst at TD Cowen00:54:28Okay. And just you've mentioned in your commentary that there could be some pressure on the base fee rate given the market backdrop and that makes sense. Is there a way that you could give us what the exit fee rate was on the base fee rate at $3.31 maybe versus the average for the quarter at the prior actual number? Tom SimeoneCFO at AllianceBernstein00:54:50You know what else I have in front of me and I'm sorry Bill is the fee rate for the quarter of thirty nine point five basis points. William KatzSenior Equity Analyst at TD Cowen00:54:57Okay. Thank you very much. Operator00:55:02Your next question comes from the line of John Donne with Evercore ISI. John, please go ahead. John DunnAnalyst at Evercore00:55:10Thank you. Maybe the pipeline being up is great. Can you just maybe give us a little more flavor of the temperature of different parts of the institutional side of the business? And also maybe kind of a look geographically, if there's any different appetite for risk in different regions? Onur ErzanHead of Global Client Group & Head of Bernstein Private Wealth at AllianceBernstein00:55:31Yes, sure. We feel very good about the continued strength in the pipeline. There has been definitely very strong kind of upside from particularly fixed income. Insurance, as I mentioned earlier, was a big contributor, but we also had increased allocation to our systematic fixed income capabilities, which we launched relatively recent in the last several years. And it's great to see that that's opening a new type of opportunities for us and we onboarded there in terms of the pipeline. Onur ErzanHead of Global Client Group & Head of Bernstein Private Wealth at AllianceBernstein00:56:06We added a significant international client, a European client to that strategy. So feeling good about the momentum there. In terms of other areas of pockets of strength, I mean, definitely the demand for asset based finance is strong across different geographies. I'm talking at this point more pre pipeline, but definitely in terms if I look at the client conversations, what comes to the CRM, definitely you would see a lot of asset based finance type conversations that is there. When it comes to equities, equities have been somewhat concentrated in the more under allocated areas, whether it's emerging markets, whether it's value strategies, whether it's the small mid cap, right? Onur ErzanHead of Global Client Group & Head of Bernstein Private Wealth at AllianceBernstein00:56:59Because it has been very dominated in the last several years with the large cap with the mix mega seven etcetera. So those are the areas that we have seen more increased clients interest if you will. John DunnAnalyst at Evercore00:57:17Got it. John DunnAnalyst at Evercore00:57:17And John DunnAnalyst at Evercore00:57:18then U. S. Growth equities in Japan, so distributed in Japan have been a nice tailwind for you guys. Are you seeing any kind of early signals of John DunnAnalyst at Evercore00:57:31non U. S. Investors avoiding doing business with The U. S? Onur ErzanHead of Global Client Group & Head of Bernstein Private Wealth at AllianceBernstein00:57:37Sorry, the last part of your question got muffled. Can you repeat the last part of your question, please? John DunnAnalyst at Evercore00:57:42Yes. You seeing Japanese or other non U. S. Investors avoiding investing in U. S. John DunnAnalyst at Evercore00:57:53Stocks? Onur ErzanHead of Global Client Group & Head of Bernstein Private Wealth at AllianceBernstein00:57:55No, we have not seen that broad trend. My guess is going to be a reaction more country by country. Definitely, we have not seen any major impact in our core geographies like Japan. Obviously, need to monitor what happens over time and maybe there could be some reaction to US exceptionalism. But so far looking at the activity since the Liberation Day, we have not picked up anything dominant. John DunnAnalyst at Evercore00:58:31You. Tom SimeoneCFO at AllianceBernstein00:58:35Hey, Bill, this is Tom. Let me just get back to Tom SimeoneCFO at AllianceBernstein00:58:37you on that one thing. Tom SimeoneCFO at AllianceBernstein00:58:37While we don't look at the exit fee rate, I will say the 39.5 basis points that we experienced for Q1, that ticked down a little bit in the later half of the quarter. So if that helps you in any way there. Operator00:58:59That concludes the conference call.Read moreParticipantsExecutivesIoanis JorgaliVice President of Investor RelationsSeth BernsteinPresident and CEOTom SimeoneCFOOnur ErzanHead of Global Client Group & Head of Bernstein Private WealthAnalystsAlexander BlosteinManaging Director at Goldman SachsCraig SiegenthalerManaging Director at Bank of AmericaWilliam KatzSenior Equity Analyst at TD CowenBenjamin BudishDirector at BarclaysDaniel FannonManaging Director - Research Analyst at JefferiesJohn DunnAnalyst at EvercorePowered by