AllianceBernstein Holding L.P. (NYSE:AB) Q3 2018 Earnings Conference Call Transcript

Oct 24, 2018 • 08:00 am ET


AllianceBernstein Holding L.P. (NYSE:AB) Q3 2018 Earnings Conference Call Transcript


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Thank you for standing by and welcome to the AllianceBernstein Third Quarter 2018 Earnings Review. At this time, all participants are in a listen-only mode. After the 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 available for replay for one week.

I would now like to turn the call over to the host for this call, the Director of Investor Relations for AB, Ms. Andrea Prochniak. Please go ahead.

Andrea Prochniak

Thank you, Jack. Good morning, everyone and welcome to our third quarter 2018 earnings review. This conference call is being webcast and accompanied by a slide presentation as posted in the Investor Relations section of our website, Seth Bernstein, our President and CEO; John Weisenseel, our CFO; and Jim Gingrich, our COO, will present our results and take questions after our prepared remarks.

(Forward-Looking Cautionary Statements)

Under regulation FD management may only address questions of a material nature from the investment community in a public forum, so please ask all such questions during this call. We are also live tweeting today's earnings call. You can follow us on Twitter using our handle, @AB_insights.

Now I will turn it over to Seth.

Seth Bernstein

Thank you, Andrea. Good morning. Our third quarter performance demonstrated once again that our relentless focus on long-term growth strategy is paying off. We are maintaining strong momentum with clients across our business, which is translating to organic growth in both our fee rate and assets.

Our portfolio fee rate increased by nearly 2% year on year, thanks largely to continued growth in higher fee alternative and active equities. And equity net flows of $2.9 billion drove our total active net inflows of $2.5 billion. Essentially flat active fixed income net flows during the quarter represented a $5.5 billion improvement from the prior quarter. These are very strong results in challenging times.

Let's get into the specifics. Starting with a firm-wide overview on slide 3. Gross sales of $19.3 billion in the third quarter were down slightly year-on-year and up slightly sequentially. Client activity remained robust in active equities and alternatives and taxable fixed income sales improved markedly in both institutional and retail.

Firm-wide net inflows were $1.3 billion due to strength in both retail and institutional active equities. Total active inflows of $2.5 billion well exceeded passive outflows of $1.2 billion. Both quarter-end and average assets under management were up sequentially and year-on-year in the third quarter. Sequential growth came from both net inflows and markets, while the year-on-year increase was from markets alone.

Slide 4, gives more detail on our flows by channel. Here, you can see the sequential improvement in our flows, especially in institutional where we had one large second quarter redemption. We returned to positive net flows in our retail business and we logged our seventh straight net flow positive quarter in private client where gross sales have been consistently strong and