AllianceBernstein Q1 Earnings Call Highlights

Key Points

• Proposed Equitable‑Corebridge merger is seen as a strategic accelerator for AllianceBernstein’s insurance channel, with the combined company holding >$350 billion of general account assets and AB expecting to manage at least $100 billion of general and separate account assets from Corebridge over time, with a close likely by year‑end.
• Flows were mixed: AB reported roughly $6 billion of firm‑wide active net outflows in Q1 (including about $11 billion in active equity and ~$2 billion in taxable fixed income) but offsetting growth included >$3 billion inflows into tax‑exempt fixed income, >$3 billion into alternatives/multi‑asset, private markets AUM of $85 billion (+13% YoY), SMAs at $63 billion, and ETFs exceeding $16 billion (+150% YoY).
• Financials remained resilient as AB reported adjusted EPS of $0.83 (+4% YoY) and $871 million of adjusted net revenues, raised its full‑year combined performance fee outlook to $95–$115 million, and maintained an adjusted operating margin of 33.4%.

AllianceBernstein NYSE: AB reported higher first-quarter 2026 earnings despite volatile markets, while leadership emphasized the strategic implications of the proposed Equitable-Corebridge merger and continued momentum in insurance, private markets, separately managed accounts (SMAs), and active ETFs. Management also acknowledged that outflows—particularly in active equities—remained a meaningful headwind during the quarter.

Management highlights proposed Equitable-Corebridge merger

Chief Executive Officer Seth Bernstein said the proposed merger between Equitable and Corebridge would “provide a step function acceleration of our flywheel and meaningfully enhance AB’s scale and growth outlook.” Bernstein said the combined company would have more than $350 billion of general account assets and generate $70 billion to $80 billion of new liabilities annually, which he said would elevate AB’s position in the insurance asset management channel.

Over time, Bernstein said the firm expects to manage at least $100 billion of general and separate account assets from Corebridge. During the Q&A, President Onur Erzan said the $100 billion estimate includes both general account and separate accounts, but the firm has not completed a “bottom-up build-up” of the amount given the early stage of the transaction. Erzan said the deal will “most likely” take about nine months to close, “roughly by year-end or fourth quarter,” and that the new AUM opportunity would be “more 2027 and beyond” given the timeline.

Erzan also said the initial mix is expected to skew toward public assets rather than private assets, given the inclusion of separate accounts and fixed income in the general account. Over time, he said growth in general account assets could create opportunities for private assets as liabilities expand through annuity origination.

Flows mixed as equity and taxable fixed income outflows offset growth engines

Bernstein said the firm posted approximately $6 billion of firm-wide active net outflows in the first quarter, concentrated in a subset of active equity strategies. Active equity outflows were roughly $11 billion across channels, which he attributed to recent performance challenges and client allocation decisions. Taxable fixed income saw nearly $2 billion of outflows as institutional engagement was offset by retail redemptions concentrated in Asia-Pacific.

Management highlighted areas of organic growth, including more than $3 billion of inflows in tax-exempt fixed income and more than $3 billion of inflows in alternatives and multi-asset strategies. Bernstein said AB’s private markets platform reached $85 billion in AUM, up 13% year-over-year, and its SMA business stood at $63 billion, growing organically at a 15% annualized rate in the first quarter. He also pointed to traction in taxable fixed income SMAs, including a recently funded $300 million mandate.

Bernstein said AB’s active ETF lineup includes 25 strategies with more than $16 billion in AUM, up more than 150% year-over-year, with eight ETFs above $1 billion in AUM. He also said the firm’s “Security of the Future” thematic portfolio surpassed $4 billion, nearly tripling from a year ago, with $1.7 billion of inflows in the first quarter.

Looking forward, Bernstein said the institutional channel is positioned for accelerating net flows in the second half of 2026, supported by what he called the firm’s “largest pipeline on record,” surpassing $27 billion.

Channel detail: retail outflows, institutional pipeline, private wealth momentum

In retail, Bernstein said growth sales rose sequentially and surpassed $23 billion for the first time in four quarters, but the channel recorded nearly $6 billion of net outflows due to elevated redemptions. Active equity and taxable fixed income each exceeded $4 billion in outflows, which he said was driven primarily by redemptions from select U.S. services in Asia-Pacific. Those outflows were partially offset by more than $3 billion of tax-exempt inflows and nearly $1 billion of alternatives and multi-asset inflows.

Institutional gross sales increased sequentially and year-over-year, Bernstein said, but net outflows were roughly $2 billion, driven primarily by more than $5 billion of active equity outflows. He said the channel recorded more than $2 billion of inflows in taxable fixed income, and alternatives multi-asset recorded positive inflows for the fifth consecutive quarter. He added that private credit engagement persisted, including nearly $1 billion of deployments, and said ABPCI secured a $500 million third-party institutional mandate reflected in the pipeline.

Bernstein said the institutional pipeline reached a record $27.5 billion in AUM, supported by $9 billion in new commitments, including expansion of insurance partnerships and an increase in Equitable commercial mortgage loan commitments to $12 billion from $10 billion. He noted the pipeline fee rate declined slightly to 19 basis points due to the addition of sizable fixed income and passive equity mandates; excluding roughly $5 billion in passive mandates, the fee rate for active AUM stood at 23 basis points.

In private wealth, Bernstein said Bernstein Private Wealth ended the quarter with $155 billion in AUM and contributes more than one-third of firm-wide revenues. He said quarterly gross sales set new records and that the channel registered its third consecutive quarter of organic growth. Erzan said redemption requests for private credit products offering periodic liquidity remained below the 2.5% quarterly cap, and he told analysts that the firm’s redemption rate in its BDC was less than 2%.

Erzan said advisor headcount is tracking ahead of the firm’s 5% annual growth target and added that the firm is integrating generative AI capabilities into workflows. On recruiting, Erzan said AB typically biases toward “new to industry, internal promotes, as well as mid-career switchers,” while remaining open to adding experienced advisors. He said a “rough” directional mix could be 75% traditional profile and 25% more experienced hires, and that it typically takes about four years for a new-to-industry advisor to reach breakeven.

Investment performance and product updates

Bernstein said bond markets posted modestly negative returns in the quarter amid geopolitical tension and shifting policy expectations. He said AB’s American Income and Global High Yield products underperformed their benchmarks in the first quarter, but added that more than half of fixed income assets outperformed over one year, 80% over three years, and 64% over five years.

In equities, Bernstein noted the S&P 500 returned negative 4.3% in the quarter and said AB’s equity track records “remain pressured and below our expectations.” He said 23% of equity AUM outperformed over one year, 24% over three years, and 44% over five years, citing the impact of larger U.S.-oriented growth strategies. He added that international and emerging markets strategies with smaller AUM bases “continue to perform well,” and said the firm has more than 25 strategies with nearly $40 billion of AUM outperforming over both the three- and five-year periods.

Addressing Asia-related fixed income distribution headwinds, Bernstein said the firm is reopening its Global High Yield strategy in Taiwan after receiving regulatory approval. Erzan added that AB is expanding its ETF footprint internationally, including the launch of fixed income ETFs in Taiwan and several UCITS ETFs in Europe.

Financial results: higher adjusted earnings; performance fee outlook raised

Chief Financial Officer Tom Simeone reported adjusted earnings of $0.83 per unit, up 4% year-over-year, and said AB distributed 100% of adjusted earnings to unit holders. Adjusted net revenues were $871 million, up 4% year-over-year, with base fees up 5% due to 8% higher average AUM, partially offset by a lower firm-wide fee rate from mix shift.

Performance fees were approximately $23 million, down $16 million year-over-year due to lower realizations from private market strategies, Simeone said. However, he raised the firm’s full-year combined performance fee outlook to $95 million to $115 million from $80 million to $100 million, citing stronger-than-expected public market contributions. He said the public markets performance fee outlook increased to $25 million to $35 million, driven by first-quarter realizations from the firm’s International SMID strategy, while the private markets outlook remained $70 million to $80 million.

On expenses, Simeone said total operating expenses were $580 million, up 4% year-over-year, with compensation and benefits up 4% and non-compensation expenses up 5%. The compensation ratio was 48.5% of adjusted net revenues, and Simeone said the firm expects to accrue at a 40.5% compensation-to-net-revenue ratio in the second quarter while staying mindful of volatility. AB maintained its full-year 2026 non-compensation expense guidance of $625 million to $650 million, which Simeone said reflects normalization and investments in technology and operational build-out.

Adjusted operating margin was 33.4%, down 30 basis points year-over-year due to investments including technology initiatives, onboarding new investment teams, and increasing financial advisor headcount. Simeone said margins remain at the high end of the firm’s investor day target range of 30% to 35%.

AB’s firm-wide fee rate was 38.1 basis points, which Simeone attributed to mix shift, including a lower share of retail active equities, taxable fixed income pressure from rates and FX volatility, and inflows into lower-fee municipal SMAs. When asked about forward fee rate dynamics, Simeone said the firm does not generally provide fee rate guidance and expects the trajectory to reflect the mix of organic growth and market movements.

About AllianceBernstein NYSE: AB

AllianceBernstein is a global investment management firm that offers a broad range of research-driven strategies across equities, fixed income, multi-asset solutions and alternative investments. The firm provides active and quantitative portfolio management, drawing on in-house research capabilities to serve the needs of institutional clients, private wealth investors and intermediaries. Its product lineup encompasses mutual funds, separately managed accounts and customized investment vehicles designed to meet diverse risk-return objectives.

The firm's roots date back to 1967 with the founding of Sanford C.

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