* Q4 earnings due out Thursday after trading
* Losing accounts at Vanguard, London fund
BOSTON Feb 10 When asset manager
AllianceBernstein Holding LP (AB.N) reports quarterly results
after trading on Thursday, some analysts fear the worst on
No big asset manager has had a rougher ride of late than
New York-based AllianceBernstein, whose shares have fallen
nearly 25 percent in the past year.
Unlike other asset managers, the company has missed out on
the Standard & Poor's 500's .SPX ride up since the summer,
amid continued outflows of investor dollars from its funds and
questions about whether it can reverse the trend soon.
The company had $484.3 billion in assets as of Sept. 30, up
$26 billion from June 30, mostly on market gains.
But investors withdrew $18.9 billion in that period, and
some analysts are bracing for more outflows based on the $486
billion in assets AllianceBernstein reported as of Dec. 31,
just a slight rise from Sept. 30.
"Weak (assets under management) growth implies poor
relative flows for the quarter," said Credit Agricole
Securities analyst Chris Spahr.
Competitors have faced some of the same problems, but
shares of most, including Legg Mason Inc (LM.N) and T Rowe
Price (TROW.O), have risen over the past year.
Now customers are getting antsy. "Clearly investors are
starting to lose patience and are voting with their feet, which
certainly adds to the pressure" on the company, said
Morningstar Inc analyst Katie Rushkewicz.
AllianceBernstein spokesman John Meyers said Chief
Executive Officer Peter Kraus and other executives would not be
available for interviews until after the company's financial
results are released because of "quiet period" rules.
In a conference call with analysts in October, Kraus
pointed to improved equity fund performance, which should help
flows, and a new fixed-income series. "We're comfortable with
our strategy," he said.
Kraus is a former Goldman Sachs (GS.N) executive brought in
at the end of 2008 at the peak of the financial crisis to
replace longtime leader Lew Sanders.
Kraus has cut costs, but also has tried to improve
performance while introducing new products to meet client
demand. These include the Dynamic Asset Allocation tool for
individual investors that automatically adjusts the split
between equities and bonds in a portfolio based on capital
market volatility. He also rolled out target date funds with
income guarantees after retirement.
Rushkewicz also credits Kraus with personnel moves like
bringing in Janus Capital (JNS.N) executive Laurent Saltiel to
run AllianceBernstein's struggling international growth team.
But "turnarounds take time," Rushkewicz said. Even some
Kraus boosters say it can take a while for personnel moves to
"Internally there's a lot of stress and pressure associated
with" the departure of Sanders and others, said Tom Cowhey,
chief investment strategist of West Conshohocken,
Pennsylvania-based Hirtle Callaghan & Co, which keeps several
hundred million dollars with AllianceBernstein.
Still, Cowhey said he is a fan of current management and
said AllianceBernstein often tracks the S&P 500 less than other
asset managers, as recent stock moves have shown.
AllianceBernstein's funds also vary widely in performance.
Some of the largest have done well, with the $5.4 billion
Bernstein Diversified Municipal fund.SNDPX beating 89 percent
of peers over three years, according to Morningstar data as of
But others lag. The $4.9 billion Bernstein Tax-Managed
International fund .SNIVX has been beaten by 97 percent of
peers over three years, and the $2.6 billion AllianceBernstein
International Value (ABIYX.O), by 98 percent.
Poor performance has turned off some customers. In October,
Vanguard Group Inc said it had replaced AllianceBernstein as
manager of most of its $3.7 billion Vanguard U.S. Growth Fund
and on a smaller fund after a long period of underperformance.
Also last year, AllianceBernstein was among a group of fund
managers replaced by the Lambeth Pension Fund, for the inner
London borough of Lambeth, after returns lagged benchmarks.
The Illinois Municipal Pension Fund said in December it
would review the management of an account run so far by
AllianceBernstein because of its organizational changes. The
two organizations referred questions to each other.
Whatever flow figures the company reports, Kraus' task will
be to convince investors to give the stock a bit more time. One
sign of perseverance: AllianceBernstein spokesman Meyers said
the company will bid again for the contract in Illinois.
Technically the company owns just over a third of operating
partnership AllianceBernstein LP, with French insurer AXA Group
(AXAF.PA) holding most of the rest.
(Reporting by Ross Kerber; Editing by Lisa Von Ahn)