AllianceBernstein Q4 Earnings Call Highlights

Key Points

• AllianceBernstein finished 2025 with a record $867 billion in AUM, driven by growth in Bernstein Private Wealth ($156B), Private Markets ($82B, +18% YoY), and a partnership with Equitable expected to onboard more than $10 billion of long‑duration assets by year‑end 2026.
• Despite AUM growth, the firm reported $9.4 billion of net active outflows for 2025 (including $7.6B in Q4), led by $22.5 billion of active equity redemptions, while tax‑exempt and alternatives inflows partially offset those losses.
• Q4 adjusted earnings were $0.96 per unit (down 9% YoY) with full‑year adjusted EPS of $3.33 and an adjusted operating margin of 33.7%; management plans higher 2026 technology and non‑compensation spending, including a new platform expected to have ~$40 million cash impact over four years and generate $20–25 million in annual savings by 2030.

AllianceBernstein NYSE: AB executives highlighted record assets under management and continued expansion in private wealth and private markets during the firm’s fourth-quarter 2025 earnings review, while also pointing to persistent active equity outflows and softer retail demand in parts of taxable fixed income.

Record AUM and growth in targeted businesses

Chief Executive Officer Seth Bernstein said 2025 reflected “disciplined execution and strategic progress,” with year-end assets under management reaching a record $867 billion. He attributed the increase to market appreciation, strong sales, and organic growth in areas including ultra-high net worth, insurance general accounts, tax-exempt separately managed accounts (SMAs), and Private Markets.

Bernstein singled out several business lines as key contributors:

• Bernstein Private Wealth ended 2025 with $156 billion in AUM and contributed roughly 37% of firm-wide revenues during the year, according to management.
• Private Markets closed the year at $82 billion in AUM, up 18% year-over-year, supported by approximately $9 billion of deployments across channels in 2025.
• SMA franchise reached $62 billion in AUM and grew 12% organically, led by municipal capabilities.
• Active ETFs expanded to $14 billion across 24 strategies, delivering 65% organic growth in 2025 excluding conversions.

Bernstein also emphasized the firm’s partnership with Equitable, saying AllianceBernstein is investing to enhance commercial real estate lending capabilities. Management expects to onboard more than $10 billion of new long-duration assets from Equitable by year-end 2026, describing the effort as an expansion in commercial mortgage origination and servicing capabilities. The company said it managed over $59 billion for more than 90 third-party insurance clients at year-end, with general account assets up 36% year-over-year, and expects to add about $3 billion of new private asset mandates from strategic insurance partnerships in the first half of 2026.

Net flows: tax-exempt and alternatives offset by equity redemptions

Despite growth in targeted areas, management said firm-wide active net flows were negative for both the quarter and full year. AllianceBernstein reported $9.4 billion of total net active outflows in 2025, including $3.8 billion in fourth-quarter outflows.

Active equity redemptions remained a central driver of outflows. The firm reported $7.6 billion of active equity outflows in the fourth quarter and $22.5 billion for the year, noting that roughly half of those were tied to retail redemptions. Taxable fixed income saw $2.0 billion in outflows in the fourth quarter and $9.1 billion for the year, which management attributed to weaker overseas retail demand amid geopolitical uncertainty and a weaker dollar, as well as approximately $4 billion of institutional taxable outflows related to Equitable’s reinsurance transaction with RGA.

Management highlighted strength in other segments:

• Tax-exempt posted $3.9 billion of inflows in the fourth quarter and $11.6 billion for the year. Bernstein said the platform has delivered organic growth for 13 consecutive years.
• Alternatives and multi-asset had $1.9 billion of active net inflows in the fourth quarter and $10.6 billion in 2025, supported by private markets deployments.

Investment performance: fixed income strength, equity pressure

Bernstein described improving fixed income market conditions in the fourth quarter, noting declines in short-term rates following Federal Reserve rate cuts while long-end yields remained elevated, steepening the yield curve. He cited a year-end U.S. 10-year Treasury yield near 4.2%. He also noted the Bloomberg U.S. Aggregate Index returned 1.1% in the fourth quarter and 7.3% in 2025, while Bloomberg’s Global High Yield Index returned 2.4% in the quarter and 10% for the year.

Management said the firm’s one-year relative fixed income performance improved versus the prior quarter, supported by higher-quality exposure in global high yield, longer-duration positioning in American Income, and outperformance across municipal strategies. The firm said 86% of AUM outperformed over 1- and 3-year periods, and 67% outperformed over 5 years.

Equities were more challenged. Bernstein said equity performance “softened” in 2025, driven by underperformance in the firm’s largest U.S. equity franchises—particularly growth, defensive, and sustainable strategies—amid “speculative, momentum-driven names and narrow leadership.” He said 21% of AUM outperformed over 1 year, 37% over 3 years, and 51% over 5 years, with the greatest pressure in U.S. large cap growth-oriented strategies. He added that performance began to rebound entering 2026 as market breadth improved.

Financial results: adjusted earnings down in Q4, margins near target range

Chief Financial Officer Tom Simeone reported fourth-quarter adjusted earnings of $0.96 per unit, down 9% from the prior-year period, reflecting lower performance fees, investment gains, and other revenues. Full-year 2025 adjusted earnings were $3.33, up 2%, while full-year distributions were $3.38, up 4%.

Adjusted net revenues were $957 million in the fourth quarter, down 2% year-over-year, as higher base fees were offset by lower performance fees. Full-year revenues were $3.5 billion, flat year-over-year, and up 3% on a like-for-like basis excluding $96 million of Bernstein Research revenue recognized in 2024. Base fees increased 5% year-over-year in both the fourth quarter and full year.

Performance fees in the fourth quarter were $82 million, down from $133 million a year earlier. Simeone said full-year performance fees of $172 million declined 24% year-over-year but exceeded the company’s $130 million to $155 million guidance range. For 2026, management said it has “good visibility” for private market strategies to contribute $70 million to $80 million in performance fees and expects public market strategies to contribute at least $10 million to $20 million, cautioning that dispersion can materially affect outcomes.

On expenses, fourth-quarter operating expenses were $627 million, up 1% year-over-year, while full-year operating expenses were $2.3 billion, down 2%. The full-year adjusted operating margin was 33.7%, which management said was at the upper end of its 30% to 35% Investor Day target range, with a fourth-quarter adjusted margin of 34.5%.

2026 spending plans and technology investment

Simeone guided to 2026 non-compensation expenses of $625 million to $650 million, citing normalization in promotion and G&A costs after depressed 2025 levels and “discretionary investments in technology” and operational build-out of new strategies, including commercial mortgage lending. The company expects promotion and servicing costs to represent 20% to 30% of non-compensation expenses, with G&A making up 70% to 80%.

He also said the firm selected a new investment management platform intended to unify data and improve analysis and reporting. The implementation is expected to have approximately $40 million in total cash flow impact over the next four years and to generate $20 million to $25 million in annual net expense savings beginning in full-year 2030 after legacy systems are retired.

During Q&A, President Onur Erzan addressed demand trends for high-yield products in Asia, saying FX risk has created “ebbs and flows” but has not “dramatically impacted” structural fixed income demand. He also noted the firm’s efforts to globalize its ETF franchise in Asia and said Taiwan raised certain regulatory minimums from 70% to 90% for the firm based on commitments, which management believes will “unlock more opportunity” there. Erzan also described private wealth seasonality as primarily driven by second-quarter tax effects and said the firm continues to see strength tied to M&A-related liquidity events for business owners and entrepreneurs.

On private credit exposure to software, Erzan said it was not significant for the firm overall, noting that within the Private Markets platform, about 25% is corporate direct lending, and within that portfolio, software exposure is “typically around a quarter” of AUM, with no material change in loss experience described.

Seth Bernstein added that the company will revisit and potentially revise its $90 billion to $100 billion 2027 Private Markets AUM target with second-quarter earnings, saying management is “ambitious” and sees further opportunities to expand.

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.

This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to contact@marketbeat.com.