AB Secures First Client For Its Multi-Manager Target-Date Collective Investment Trust Portfolios Funding With $340 Million In Assets
Financial Services Client Moves from Passive to Hybrid Solution Including Active Management
NEW YORK, Sept. 14, 2016 /PRNewswire/ -- AllianceBernstein L.P. ("AB"), a leading global investment management firm, today announced it has secured its first client with funding of more than $340 million for its hybrid active/passive multi-manager target-date series in a collective investment trust (CIT) format. Announced last year, AB's Multi-Manager Retirement Trusts offer plan sponsors independent selection of funds from highly regarded investment managers in one portfolio at more attractive economics than many mutual fund offerings. Mercer, a leading global investment consultant, provides third-party manager research and selection for the portfolio assets and AB manages the glide path design and management. Actively managed strategies comprise about 60% of the portfolios with about 40% passively invested.
The client, a financial services firm, selected AB's target-date funds (TDFs) to replace its existing qualified default investment alternative (QDIA), passive TDFs. As part of the transition, the client did a plan re-enrollment, where participants are given the choice of selecting their investment options or being allocated into the age-appropriate target-date fund. This resulted in approximately 80% of plan assets being invested in AB's target-date fund, therefore more appropriately allocating participants' accounts than when they determine their investment on their own.
"The appeal of this new mandate demonstrates that many plan sponsors are interested in more sophisticated solutions that offer a range of assets classes that are simply not available or well-managed in a passive index strategy," said Dan Loewy, Chief Investment Officer and Co-Head of Multi-Asset Solutions at AB.
AB has long been known as a leader in customized target-date solutions, where it manages more than $32 billion. The launch of its CIT portfolios was a continued build out of AB's broader target-date platform which includes both custom and packaged solutions, like its multi-manager mutual fund series and a multi-insurer lifetime income solution.
"The goal of these new target-date trusts is to package the learning we have gained from managing over $30 billion in custom target-date assets for over twenty of the largest, most sophisticated plans in the industry and make that best thinking available to mid-sized plans that desire a commingled solution," said Richard Davies, Senior Managing Director and Global Head of Defined Contribution at AB.
To learn more about the AB's defined contribution solutions, go to www.abdc.com.
About AB's Multi-Asset Solutions Group
AB's Multi-Asset Solutions Group is a dedicated team of more than 25 investment professionals that utilizes its deep capital markets expertise, research insights and a full range of risk/return sources as building blocks to create integrated multi-asset investment solutions tailored to the needs of each client. These include glide path strategies like target-date and lifetime income solutions for defined contribution plans, asset allocation strategies and solutions targeting unique market index and factor exposures.
About AB
AB is a leading global investment management firm that offers high-quality research and diversified investment services to institutional investors, individuals and private wealth clients in major world markets.
At June 30, 2016, AB Holding owned approximately 35.9% of the issued and outstanding AB Units and AXA, a worldwide leader in financial protection, owned an approximate 63.8% economic interest in AB.
Additional information about AB may be found on our website, www.abglobal.com.
A WORD ABOUT RISK
Market Risk: The market values of the portfolio's holdings rise and fall from day to day, so investments may lose value. Credit Risk: A bond's credit rating reflects the issuer's ability to make timely payments of interest or principal—the lower the rating, the higher the risk of default. If the issuer's financial strength deteriorates, the issuer's rating may be lowered and the bond's value may decline. Municipal Market Risk: Debt securities issued by state or local governments may be subject to special political, legal, economic and market factors that can have a significant effect on the portfolio's yield or value. Interest Rate Risk: As interest rates rise, bond prices fall and vice versa—long-term securities tend to rise and fall more than short-term securities. Inflation Risk: Prices for goods and services tend to rise over time, which may erode the purchasing power of investments. Leverage Risk: Trying to enhance investment returns by borrowing money or using other leverage tools—magnify both gains and losses, resulting in greater volatility. Derivatives Risk: Investing in derivative instruments such as options, futures, forwards or swaps can be riskier than traditional investments, and may be more volatile, especially in a down market. Below Investment Grade Securities Risk: Investments in fixed-income securities with lower ratings (commonly known as "junk bonds") tend to have a higher probability that an issuer will default or fail to meet its payment obligations. Local Economy Risk: This portfolio may contain municipal securities issued by the Commonwealth of Puerto Rico as well as other local governments whose current economic conditions could exacerbate the risks associated with investing in these securities.
The Multi-Manager Retirement Trusts are only available for investment by qualified retirement plans and are not offered for sale to the general public. The Trusts are not mutual funds and their units are not deposits of AB Trust Company, LLC or any AB affiliate and are not insured by the Federal Deposit Insurance Corporation (FDIC) or any other agency. The Trusts are exempt from investment company registration under the Investment Company Act of 1940, and purchases and sales of Units are not subject to registration under the Securities Act of 1933.Management of the Trusts, however, is generally subject to the fiduciary duty and prohibited transaction requirements of the Employee Retirement Income Security Act of 1974, as amended (ERISA) and the rules and regulations of the United States Department of Labor promulgated thereunder. AllianceBernstein L.P. is the Trust's investment advisor and provides investment management services. AB Trust Company, LLC is the Trust's trustee and provides customized securities processing services.
SOURCE AllianceBernstein L.P.
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