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AllianceBernstein CEO Discusses Q3 2010 Results – Earnings Call Transcript

AllianceBernstein CEO Discusses Q3 2010 Results â¿¿ Earnings Call Transcript

AllianceBernstein Holding (



Q3 2010 Earnings Conference Call

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October 28, 2010 9 AM ET


Avi Sharon – Acting Head of IR

Peter Kraus – Chairman and CEO

David Steyn – COO, General Parnter

John Howard – CFO and SVP, General Partner


Michael Kim – Sandler O’Neill

Craig Siegenthaler – Credit Suisse

Cynthia Mayer – Bank of America Securities

Marc Irizarry – Goldman Sachs



Thank you for standing by and welcome to the AllianceBernstein third quarter 2010 earnings review.

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Previous Statements by AB
» AllianceBernstein Holding L.P. Q2 2010 Earnings Call Transcript
» AllianceBernstein Holding L.P. Q1 2010 Earnings Call Transcript
» AllianceBernstein Holding L.P. Q4 2009 Earnings Call Transcript

At this time all participants are in a listen-only mode. After the formal remarks, there will be question-and-answer session and I will give you instructions on how to ask questions at that time. As a reminder, this conference is being recorded and will be replayed for one week.

I would now like to turn the conference over to the host for this call, Acting Head of Investor Relations, Mr. Avi Sharon. Please go ahead.

Avi Sharon

Good morning everyone and welcome to our third quarter 2010 earnings review. As a reminder, this conference call is being webcast and is supported by a slide presentation that can be found in the Investor Relations section of our website at\investorrelations.

Here in New York, we have our Chairman and Chief Executive Officer, Peter Kraus; and our Chief Financial Officer, John Howard. Joining us from our London offices is our Chief Operating Officer David Steyn.

I would like to take this opportunity to note that some of the information we present today is forward-looking in nature and is subject to certain SEC rules and regulations regarding disclosure. Our cautionary language regarding forward-looking statements can be found on page 2 of our presentation as well as in the MD&A of our 2009 10K and third quarter 2010 10-Q, which we filed earlier this morning. In light of the SEC’s Regulation FD, management may only address inquiries that are material in nature from the investment community in a public forum. Therefore, we encourage you to ask all such questions on this call.

Now I’ll turn the call over to Peter.

Peter Kraus

Thank you, Avi. Good morning everyone in New York, and those of you overseas, good afternoon and good evening.

Our third quarter AUM was up 6% over the last quarter, $484 billion versus $458 billion. Net flows however were off this quarter. Outflows increased $14 billion over our Q2 flows. Equity performance in the second quarter, I’m sure you noticed was poor. That very likely had an impact on the net flows of the third quarter. However, our equity performance in the third quarter was substantially better than that of the second on both a peer and relative to benchmark basis. We think this improved performance should help improve our net flows over time.

A year ago as we discussed, our objective is to expand our fixed income services and further tailor our investment services to meet our clients’ needs. We are delivering on those goals. Fixed income is a growing franchise for us. Our performance has been excellent both in the quarter and in the long term. Net flows for the nine months were over $10 billion. Dynamic Asset Allocation or DAA, as we call it, has been a focus for us this year. We rolled out this service in April, and already, over 50% of our private clients have signed on. DAA has delivered as promised, moderating risk in the portfolios of clients, providing incremental return, and creating a better overall experience.

With regards to target date and defined contribution, our efforts generally remain on track. We view ourselves as one of the more innovative, holistic providers of solutions to the retirement dilemma in the United States and globally. In keeping with this philosophy, we’ve recently introduced two new services: customized retirement service and multi-manager retirement strategies. Both are important new arrows in our quiver. This is a scalable business as all of you know and one of the major long-term growth engines for the firm.

As we’ve discussed in the past, our growing alternative platform is important to us. In particular, we talked about the fund of funds business as being a focus. This quarter we actually acquired a fund of funds business from SunAmerica, about which we’re very excited. David Steyn will discuss this in greater detail.

Also, I’m sure our investors have noticed that we liquidated the TAP program this year for very attractive returns, and we continue to be very successful in our PPIP partnership with the U.S. government. We can also continue to build our offerings in real estate and in energy and look forward to future opportunities in both of those places.

Performance continues to be our number one focus for our clients. Delivering alpha is our job. We believe our skills in security selection will provide attractive returns and will be consistent with those we delivered over time. We’re comfortable with our strategy. Our task in the future is to execute. David, over to you.

David Steyn

Thank you Peter, and perhaps I can start where you’ve left off with saying a few words on alternatives. We’ve made it clear over the past year and year and a half that we see the developments of a broad capability in alternative as being critical both to our private client business and to our institutional business, and in times to come, even to our retail business. How we’ve broadened that array is a work in progress. We’ve been broadening it out with our in-house liquid hedge fund capabilities, where we are building or have built capabilities of our value, our growth, our fixed income platforms.

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