NEW YORK, Dec. 13, 2018 /PRNewswire/ -- If you had the
option to invest in an actively managed mutual fund that only
charged more when it outperformed the index, while giving you
flexibility to pay low, ETF-like fees when it underperformed or
matched the index, would you consider it?
The answer is "yes," according to a large majority of financial
advisers who participated in a survey AllianceBernstein (AB)
conducted at the recent Schwab IMPACT Conference in Washington, D.C. Of the 150 advisers surveyed
by AB, nearly three quarters (74 percent) said they would consider
recommending to their clients an active mutual fund whose fees
start at passive-like levels and only increase when the fund
outperforms its benchmark.
In fact, advisers ranked lower or "flexible" fees that are
commensurate with performance (30 percent) nearly as important as
individual stock selection and downside protection (both 35
percent) as factors that could make active funds more competitive
with passive funds in 2019.
"There is continued interest in active strategies, but their
added value must be better demonstrated to fee-conscious investors
and their advisers," said Christopher
Thompson, Head of the Americas Client Group at AB. "A newly
designed, performance-based fee model takes fees out of the
equation and gives investors what they want – to pay only for
outperformance. We are committed to changing the active versus
passive debate and helping advisers understand the benefits of
performance-based fees for their clients."
Advisers were also confident that having actively managed
strategies in their portfolios helped clients outperform the
broader market in 2018. Of the advisors surveyed, 61 percent
indicated that some, if not all, of their active portfolios
outperformed the market this year. However, only 39 percent of
advisors indicated that their clients had increased their
allocation to active in 2018.
Added Thompson, "The continued market volatility and prospect of
lower future returns present investors and their advisers with
critical decisions. Investors should think twice about rotating out
of active strategies into passive ones, which could potentially
eliminate the opportunity to generate excess returns and protect
against downturns."
AB currently offers six mutual funds with performance-based
fees. The lineup includes equity and fixed income strategies that
have proven track records of strong investment performance. To
learn more: https://bit.ly/2xhzqcb.
About the Survey
The survey was conducted on
October 29 and 30, 2018 with
responses drawn from a random sample of 150 financial advisers
attending Schwab IMPACT in Washington,
D.C.
About AllianceBernstein
AllianceBernstein 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.
As of September 30, 2018, including both the general
partnership and limited partnership interests in AllianceBernstein,
AllianceBernstein Holding owned approximately 35.5% of
AllianceBernstein and AXA Equitable Holdings, Inc. ("EQH"),
directly and through various subsidiaries, owned an approximate
65.1% economic interest in AllianceBernstein.
Additional information about AB may be found on our
website, www.alliancebernstein.com.
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SOURCE AllianceBernstein L.P.