Q2 2026 AllianceBernstein Holding LP Earnings Call

July 28, 2026

Speaker #1: Hello everyone, and thank you for joining us. Welcome to the Alliance Bernstein Q2 2026 earnings review. At this time, all participants are in a listen-only mode.

Operator: Hello, everyone, and thank you for joining us. Welcome to the AllianceBernstein Q2 2026 Earnings Review. At this time, all participants are in a listen-only mode. After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please press star one to raise your hand. If you would like to withdraw your question, press star one again. As a reminder, this conference is being recorded and will be available for replay on our website shortly after the conclusion of this call. I would now like to turn the conference over to the host for this call, Head of Investor Relations for AB, Mr. Ioanis Jorgali. Please go ahead.

Speaker #1: After today's prepared remarks, we will host a Q&A session. If you would like to ask a question, please press *1 to raise your hand.

Speaker #1: If you would like to recall your question, withdraw your question, press *1 again. As a reminder, this conference is being recorded and will be available for replay on our website, shortly after the conclusion of this call.

Speaker #1: I would now like to turn the conference over to the host for this call, Head of Investor Relations for AB, Mr. Jannis Drugali. Please go ahead.

Speaker #2: Good morning, everyone, and welcome to our Q2 2026 earnings review. Today's conference call is being webcast and is accompanied by slide presentation available in the Investor Relations section of our website, at www.alliancebernstein.com.

Ioanis Jorgali: Good morning, everyone, and welcome to our Q2 2026 earnings review. Today's conference call is being webcast and is accompanied by a slide presentation available in the investor relations section of our website at www.alliancebernstein.com. Joining us today to discuss the company's quarterly results are Seth Bernstein, our Chief Executive Officer, and Thomas Simeone, our Chief Financial Officer. Onur Erzan, our President, will join us for the question and answer session following our prepared remarks. Some of the information we'll present today is forward-looking and subject to certain SEC rules and regulations regarding disclosure. I would like to point out the safe harbor language on slide two of our presentation. You can also find our safe harbor language in the MD&A of our 10-Q, which we'll file on Friday.

Ioanis Jorgali: Good morning, everyone, and welcome to our Q2 2026 earnings review. Today's conference call is being webcast and is accompanied by a slide presentation available in the investor relations section of our website at www.alliancebernstein.com. Joining us today to discuss the company's quarterly results are Seth Bernstein, our Chief Executive Officer, and Tom Simeone, our Chief Financial Officer. Onur Erzan, our President, will join us for the question and answer session following our prepared remarks. Some of the information we'll present today is forward-looking and subject to certain SEC rules and regulations regarding disclosure. I would like to point out the Safe Harbor language on slide two of our presentation. You can also find our Safe Harbor language in the MD&A of our 10-Q, which we'll file on Friday.

Speaker #2: Joining us today to discuss the company's Q2 results are Seth Bernstein, our Chief Executive Officer, and Tom Simeone, our Chief Financial Officer. Onur Arzhan, our President, will join us for the Q&A session following our prepared remarks.

Speaker #2: Some of the information we'll present today is forward-looking and subject to certain SEC rules and regulations regarding disclosure. So I would like to point out the Safe Harbor language on slide 2 of our presentation.

Speaker #1: Hello everyone, and thank you for joining us. Welcome to the AllianceBernstein second quarter 2026 earnings review. At this time, all participants are in a listen-only mode.

Speaker #2: You can also find our Safe Harbor language in the MD&A of our 10Q, which we will file on Friday. We base our distribution to unit holders on our adjusted results, which we provide in addition to and not as a substitute for our GAAP results.

Speaker #1: After today's prepared remarks, we will host a question-and-answer session. If you would like to ask a question, please press star one to raise your hand.

Ioanis Jorgali: We base our distribution to unit holders on our adjusted results, which we provide in addition to, and not as a substitute for, our GAAP results. Our standard GAAP reporting and a reconciliation of GAAP to adjusted results are in our presentation appendix, press release, and our 10-Q. Under Regulation FD, management may only address questions of material nature from the investment community in a public forum. Please ask all such questions during this call. Now, I'll turn it over to Seth.

Speaker #1: If you would like to recall your question, withdraw your question, press star 1 again. As a reminder, this conference is being recorded, and will be available for replay on our website, shortly after the conclusion of this call.

Speaker #2: Our standard GAAP reporting annual reconciliation of GAAP-to-adjusted results are in our presentation appendix, press release, and our 10Q. Under regulation FD, management may only address questions of material nature from the investment community in a public forum.

Speaker #1: I would now like to turn the conference over to the host for this call, Head of Investor Relations for AB, Mr. Ioanis Jorgali. Please go ahead.

Speaker #2: So please ask all such questions during this call. Now, I'll turn it over to Seth.

Speaker #2: Good morning, everyone, and welcome to our second quarter 2026 earnings review. Today's conference call is being webcast and is accompanied by a slide presentation available in the Investor Relations section of our website, at www.alliancebernstein.com.

Speaker #3: Good morning, and thank you for joining us today. Despite an uncertain geopolitical and policy backdrop, markets recovered during the Q2, supported by resilient economic growth and strong corporate earnings.

Seth Bernstein: Good morning, and thank you for joining us today. Despite an uncertain geopolitical and policy backdrop, markets recovered during Q2, supported by resilient economic growth and strong corporate earnings. Against this backdrop, AllianceBernstein generated its strongest sales quarter in five years, returned to positive organic growth, and reached its objective of $90 to $100 billion in private markets AUM more than a year ahead of our 2027 commitment. On slide three, I'll review the key business highlights of our Q2. First, assets under management ended the quarter at a record level, exceeding $905 billion. This milestone reflects both market appreciation and, more importantly, the returns on years of investment in strategic initiatives that are now driving organic growth across insurance, private wealth, private markets, retirement, SMAs, and active ETFs. Within insurance, we now manage nearly $218 billion, including $128 billion in general account assets.

Speaker #3: Against this backdrop, Alliance Bernstein generated its strongest sales quarter in 5 years, returned a positive organic growth and reached its objective of 90 to 100 billion in private markets AUM more than a year ahead of our 2027 commitment.

Speaker #2: Joining us today to discuss the company's quarterly results are Seth Bernstein, our Chief Executive Officer, and Thomas Simeone, our Chief Financial Officer. Onur Erzan, our President, will join us for the question-and-answer session following our prepared remarks.

Speaker #3: On slide 3, I'll review the key business highlights of our Q2. First, assets under management ended the quarter at a record level, exceeding $905 billion.

Speaker #2: Some of the information we'll present today is forward-looking and subject to certain SEC rules and regulations regarding disclosure. So I would like to point out a safe harbor language on slide 2 of our presentation.

Speaker #3: This milestone reflects both market appreciation and, more importantly, the returns on years of investment and strategic initiatives that are now driving organic growth across insurance, private wealth, private markets, retirement, SMAs, and active ETFs.

Speaker #2: You can also find our Safe Harbor language in the MD&A of our 10-Q, which we will file on Friday. We base our distribution to unitholders on our adjusted, and not as a substitute for our GAAP results.

Speaker #3: Within insurance, we now manage nearly $218 billion, including $128 billion in general account assets. We continue to see strong momentum in third-party insurance, where we manage $61 billion across roughly 100 clients.

Speaker #2: Our standard GAAP reporting and reconciliation of GAAP-to-adjusted results are in our presentation appendix, press release, and our 10-Q. Under Regulation FD, management may only address questions of a material nature from the investment community in a public forum.

Seth Bernstein: We continue to see strong momentum in third-party insurance, where we manage $61 billion across roughly 100 clients. This includes $34 billion of general account assets, which are up more 30% year over year. In H1 2026, we initiated seven new relationships and deployed nearly $3 billion of third-party insurance capital on a gross basis, while general account assets grew organically at a 6% annualized rate. As we discussed last quarter, the proposed combination of Equitable and Corebridge represents the next step function acceleration of our flywheel. Over time, we'll add at least $100 billion of corporate assets, meaningfully enhancing AB scale and providing an organic glide path toward $1 trillion in firm-wide AUM. While it's too early to be specific, we see synergies from partnering with Corebridge and the new Equitable that go well beyond just managing $100 billion of incremental assets.

Speaker #3: This includes 34 billion of general account assets, which are up more than 30% year over year. In the first half of 2026, we initiated 7 new relationships and deployed nearly $3 billion of third-party insurance capital on a gross basis, while general account assets grew organically at a 6% annualized rate.

Speaker #2: So please ask all such questions during this call. Now, I'll turn it over to Seth.

Speaker #3: Good morning, and thank you for joining us today. Despite an uncertain geopolitical and policy backdrop, markets recovered during the second quarter, supported by resilient economic growth and strong corporate earnings.

Speaker #3: As we've discussed last quarter, the proposed combination of equitable and corporate represents the next step function acceleration of our flywheel. Over time, we'll add at least $100 billion of corporate assets, meaningfully enhancing AB's scale and providing an organic glide path toward $1 trillion in firm-wide AUM.

Speaker #3: Against this backdrop, AllianceBernstein generated its strongest sales quarter in five years, returned to positive organic growth, and reached its objective of $90 to $100 billion in private markets AUM more than a year ahead of our 2027 commitment.

Speaker #3: While its too early to be specific, we see synergies from partnering with corporate and the new equitable that go well beyond just managing $100 billion of incremental assets.

Speaker #3: On slide 3, I'll review the key business highlights of our second quarter. First, assets under management ended the quarter at a record level, exceeding $905 billion.

Speaker #3: Bernstein Private Wealth continues to strengthen its position as a leading advice-led wealth platform, ending the quarter with $167 billion of assets and contributing nearly 40% of firm-wide revenue.

Speaker #3: This milestone reflects both market appreciation and, more importantly, the returns on years of investment in strategic initiatives that are now driving organic growth across insurance, private wealth, private markets, retirement, SMAs, and active ETFs.

Seth Bernstein: Bernstein Private Wealth continues to strengthen its position as a leading advice-led wealth platform, ending the quarter with $167 billion of assets and contributing nearly 40% of firm-wide revenue. By serving as our clients' trusted advisor, we build durable long-term relationships and deliver integrated solutions across traditional and alternative investments. Second, we continue to expand our investment and distribution footprint through strategic partnerships, tax-aware solutions, and vehicle innovation. A core element of our strategy is making our investment capabilities available in vehicles and formats that clients want. We continue to globalize our active ETF franchise. After initially launching three strategies in Taiwan, we've introduced five new strategies in Europe, where we pioneered a dual share class structure, offering active usage ETF shares alongside mutual funds. Our platform now spans 31 strategies and over $20 billion of AUM, with assets growing 73% organically over the past year.

Speaker #3: By serving as our client's trusted advisor, we build durable long-term relationships and deliver integrated solutions across traditional and alternative investments. Second, we continue to expand our investment and distribution footprint through strategic partnerships tax-aware solutions and vehicle innovation.

Speaker #3: Within insurance, we now manage nearly $218 billion including $128 billion in general account assets. We continue to see strong momentum in third-party insurance, where we manage $61 billion across roughly 100 clients.

Speaker #3: This includes $34 billion of general account assets, which are up more than 30% year over year. In the first half of 2026, we initiated 7 new relationships and deployed nearly $3 billion of third-party insurance capital on a gross basis, while general account assets grew organically at a 6% annualized rate.

Speaker #3: A core element of our strategy is making our investment capabilities available in vehicles and formats that clients want. We continue to globalize our active ETF franchise.

Speaker #3: After initially launching 3 strategies in Taiwan, we've introduced 5 new strategies in Europe, where we've pioneered a dual-share class structure, offering active usage ETF shares alongside mutual funds.

Speaker #3: As we've discussed last quarter, the proposed combination of equitable incorporate, represents the next step function acceleration of our flywheel. Over time, we'll add at least $100 billion of corporate assets, meaningfully enhancing AB's scale and providing an organic glide path toward $1 trillion in firm-wide AUM.

Speaker #3: Our platform now spans 31 strategies in over $20 billion of AUM, with assets growing 73% organically over the past year. From a near-standing start, nearly 4 years ago, this platform now generates an annualized run rate of approximately $100 million in management fees.

Seth Bernstein: From a near-standing start nearly four years ago, this platform now generates an annualized run rate of approximately $100 million in management fees. This growth reflects both client demand for active exposures and more efficient wrappers and our ability to globalize successful investment capabilities across channels. Our SMA platform reached $69 billion of AUM and generated 17% annualized organic growth over the last year. While municipals are still the foundation of our SMA business, we're encouraged by the early momentum from extending our capabilities into taxable fixed income. We see SMAs as a meaningful long-term growth opportunity as personalization, technology, and advisor demand continue to converge. Our customized retirement platform has grown to $117 billion in assets. As plan sponsors increasingly seek customized retirement solutions, lifetime income and access to broader asset classes, AB is well-positioned to help improve participant outcomes.

Speaker #3: While it's too early to be specific, we see synergies from partnering with Corporate and the new Equitable that go well beyond just managing $100 billion of incremental assets.

Speaker #3: This growth reflects both client demand for active exposures and more efficient wrappers, and our ability to globalize successful investment capabilities across channels. Our SMA platform reached 69 billion of AUM and generated 17% annualized organic growth over the last year.

Speaker #3: Bernstein Private Wealth continues to strengthen its position as a leading, advisor-led wealth platform, ending the quarter with $167 billion of assets and contributing nearly 40% of firm-wide revenue.

Speaker #3: While municipals are still the foundation of our SMA business, we're encouraged by the early momentum from extending our capabilities into taxable fixed income. We see SMAs as a meaningful long-term growth opportunity as personalization, technology, and advisor demand continue to converge.

Speaker #3: By serving as our clients' trusted advisor, we build durable, long-term relationships and deliver integrated solutions across traditional and alternative investments. Second, we continue to expand our investment and distribution footprint through strategic partnerships, tax-aware solutions, and vehicle innovation.

Speaker #3: Our customized retirement platform has grown to $117 billion in assets. As plans sponsors increasingly see customized retirement solutions, lifetime income, and access to broader asset classes, AB is well positioned to help improve participant outcomes.

Speaker #3: A core element of our strategy is making our investment capabilities available in vehicles and formats that clients want. We continue to globalize our active ETF franchise.

Speaker #3: After initially launching three strategies in Taiwan, we've introduced five new strategies in Europe, where we've pioneered a dual-share class structure, offering active usage ETF shares alongside mutual funds.

Speaker #3: A recent example is ABC1, our partnership with Brookfield in Carlisle, which combines private credit, private equity, and private real assets in a single diversified sleeve designed to sit alongside existing target-date funds and managed accounts.

Seth Bernstein: A recent example is ABC One, our partnership with Brookfield and Carlyle, which combines private credit, private equity, and private real assets in a single diversified sleeve designed to sit alongside existing target-date funds and managed accounts. We believe that this solution validates AB's role as a trusted asset allocator and thought leader in retirement solutions, broadening participant access to private markets through a scalable and efficient structure in partnership with market-leading alternative managers. Third, strong sales momentum translated into a return to organic growth. Firm-wide net flows were nearly $800 million in Q2, ending four consecutive quarters of outflows. This marked our strongest quarter of gross sales in five years, reflecting broad-based demands across most of our strategic growth areas. Fixed income was the key driver of inflows.

Speaker #3: Our platform now spans 31 strategies and over $20 billion in AUM, with assets growing 73% organically over the past year. From a near-standing start nearly four years ago, this platform now generates an annualized run rate of approximately $100 million in management fees.

Speaker #3: We believe that this solution validates AB's role as a trusted asset allocator and thought leader in the retirement solutions broadening participant access to private markets through a scalable and efficient structure in partnership with market-leading alternative managers.

Speaker #3: This growth reflects both client demand for active exposures and more efficient wrappers, and our ability to globalize successful investment capabilities across channels. Our SMA platform reached $69 billion of AUM and generated 17% annualized organic growth over the last year.

Speaker #3: Third, strong sales momentum translated into a return to organic growth. Firm-wide net flows were nearly $800 million in the Q2, ending 4 consecutive quarters of outflows.

Speaker #3: This marked our strongest quarter of gross sales in 5 years, reflecting broad-based demand across most of our strategic growth areas. Fixed income was the key driver of inflows.

Speaker #3: During the quarter, we funded a $9 billion passive fixed income mandate from Equitable, reflecting the continued expansion of our relationship beyond pre-announced commitments. In addition, strong demand for tax-efficient income and continued market share gains in our municipal franchise generated approximately $3 billion of inflows.

Seth Bernstein: During the quarter, we funded a $9 billion passive fixed income mandate from Equitable, reflecting the continued expansion of our relationship beyond pre-announced commitments. In addition, strong demand for tax-efficient income and continued market share gains in our municipal franchise generated approximately $3 billion of inflows. Alternatives and multi-asset solutions generated more than $4 billion of net inflows, marking this as our sixth consecutive quarter of positive organic growth. Institutional deployments into private market strategies accelerated during the quarter, supported by demand across private credit, commercial real estate debt, and insurance-oriented solutions. These inflows more than offset continued pressure in active equities and taxable fixed income. Active equity outflows were nearly $11 billion, while taxable fixed income outflows exceeded $4 billion. Both were largely driven by retail redemptions concentrated in Asia Pacific, where allocation preferences are increasingly favoring local equity markets given their strong recent performance.

Speaker #3: Our customized retirement platform has grown to 117 billion in assets. As plans sponsors increasingly see customized retirement solutions, lifetime income and access to broader asset classes, AB is well positioned to help improve participant outcomes.

Speaker #3: Alternatives and multi-asset solutions generated more than $4 billion of net inflows, marking this as our 6th consecutive quarter of positive organic growth. Institutional deployments into private market strategies accelerated during the quarter, supported by demand across private credit, commercial real estate debt, and insurance-oriented solutions.

Speaker #3: A recent example is ABC1, our partnership with Brookfield in Carlisle, which combines private credit, private equity, and private real assets in a single, diversified sleeve designed to sit alongside existing target-date funds and managed accounts.

Speaker #3: These inflows more than offset continued pressure and active equities and taxable fixed income. Active equity outflows were nearly $11 billion, while taxable fixed income outflows exceeded $4 billion.

Speaker #3: We believe that this solution validates AB's role as a trusted asset allocator and thought leader in retirement solutions, broadening participant access to private markets through a scalable and efficient structure in partnership with market-leading alternative managers.

Speaker #3: Both were largely driven by retail redemptions, concentrated in Asia Pacific, where allocation preferences are increasingly favoring local equity markets given their strong recent performance.

Speaker #3: Third, strong sales momentum translated into a return to organic growth. Firm-wide net flows were nearly $800 million in the second quarter, ending four consecutive quarters of outflows.

Speaker #3: Slide 4 provides an overview of our financial results, which Tom will discuss in greater detail shortly. Skipping the slide 5, I'll review our investment performance starting with fixed income.

Seth Bernstein: Slide four provides an overview of our financial results, which Tom will discuss in greater detail shortly. Skipping to slide five, I'll review our investment performance, starting with fixed income. Credit markets delivered healthy returns during the Q2 despite higher volatility. Following a temporary widening in spreads during April, risk assets recovered as corporate fundamentals remained resilient and investors continued to find value in attractive all-in yields despite tight spreads. Rates moved modestly higher as markets recalibrated their expectations for a higher long-term equilibrium rate. Against this backdrop, the Bloomberg US Agg returned 0.7%, while the Global High Yield Index returned 3.7% during the quarter. Our one-year relative performance improved sequentially, with 68% of AUM outperforming. Longer-term performance remains competitive, with 81% and 61% of AUM outperforming over the three-year and five-year periods respectively.

Speaker #3: This marked our strongest quarter of gross sales in 5 years, reflecting broad-based demand across most of our strategic growth areas. Fixed income was the key driver of inflows.

Speaker #3: Credit markets delivered healthy returns during the Q2 despite higher volatility. Following a temporary widening in spreads during April, risk assets recovered as corporate fundamentals remained resilient and investors continued to find value in attractive all-in yields, despite tight spreads.

Speaker #3: Rates moved modestly higher as markets recalibrated their expectations for a higher long-term equilibrium rate. Against this backdrop, the Bloomberg US Ag returned 0.7%, while the global high yield index returned 3.7% during the quarter.

Speaker #3: Alternatives and multi-asset solutions generated more than $4 billion of net inflows, marking this as our sixth consecutive quarter of positive organic growth. Institutional deployments into private market strategies accelerated during the quarter, supported by demand across private credit, commercial real estate debt, and insurance-oriented solutions.

Speaker #3: Our 1-year relative performance improved sequentially, with 68% of AUM outperforming. Longer-term performance remains competitive, with 81% and 61% of AUM outperforming over the 3-year and 5-year periods, respectively.

Speaker #3: These inflows more than offset continued pressure in active equities and taxable fixed income. Active equity outflows were nearly $11 billion, while taxable fixed income outflows exceeded $4 billion.

Speaker #3: Within our flagship income strategies, American income outperformed its benchmark and performed in line with its peer category, while global high yield outperformed its category and modestly lagged its benchmark during the Q2.

Seth Bernstein: Within our flagship income strategies, American income outperformed its benchmark and performed in line with its peer category, while global high yield outperformed its category and modestly lagged its benchmark during the Q2. Turning to equities, markets rebounded sharply in the Q2, with very strong returns across regions. Developed markets posted exceptional returns as the S&P 500 gaining 15%, its strongest quarterly advance in six years. Emerging markets were the standout performer globally as the MSCI Emerging Markets Index surged 24%. The global recovery was supported by de-escalation in the Middle East, leading to lower energy prices and continued enthusiasm around AI. Technology and semiconductor stocks again led the advance, extending a period of unusually narrow market leadership. Against this backdrop, our performance struggled with 23%, 28%, and 31% of equity AUM outperforming over the one, three, and five-year periods respectively.

Speaker #3: Both were largely driven by retail redemptions, concentrated in Asia-Pacific, where allocation preferences are increasingly favoring local equity markets given their strong recent performance.

Speaker #3: Turning to equities, markets rebounded sharply in the Q2, with very strong returns across regions. Developed markets posted exceptional returns as the S&P 500 gaining 15%, its strongest quarterly advance in 6 years.

Speaker #3: Emerging markets were standout performers globally, as the MSCI Emerging Market Index surged 24%. The global recovery was supported by de-escalation in the Middle East, leading to lower energy prices and continued enthusiasm around AI.

Speaker #3: Credit markets delivered healthy returns during the second quarter despite higher volatility. Following a temporary widening in spreads during April, risk assets recovered as corporate fundamentals remained resilient and investors continued to find value in attractive all-in yields, despite tight spreads.

Speaker #3: Technology and semiconductor stocks again led the advance, extending a period of unusually narrow market leadership. Against this backdrop, our performance struggled, with 23, 28, and 31% of equity AUM outperforming over the 1, 3, and 5-year periods, respectively.

Speaker #3: Our relative performance continues to reflect a market increasingly driven by a narrow set of beneficiaries from the AI build-out. Our largest US growth strategies, which emphasize quality, diversification, and valuation discipline, have been at a step with this environment, weighing on our AUM-weighted performance.

Seth Bernstein: Our relative performance continues to reflect a market increasingly driven by a narrow set of beneficiaries from the AI build-out. Our largest US growth strategies, which emphasize quality, diversification, and valuation discipline have been out of step with this environment, weighing on our AUM-weighted performance. Recent volatility among AI-linked equities and the unwind of leveraged positions have reinforced the importance of diversification and the risks associated with overreliance on a single market theme. More broadly, our equity platform remains diversified across styles, sectors, and geographies. We have over 25 services with more than $45 billion of assets under management that continue to outperform over both the three and five-year periods. This includes our $10 billion international strategic equity service, which ranks in the top percentile across one, three, and five-year periods.

Speaker #3: Our one-year relative performance improved sequentially, with 68% of AUM outperforming. Longer-term performance remains competitive, with 81% and 61% of AUM outperforming over the three-year and five-year periods, respectively.

Speaker #3: Recent volatility among AI-linked equities and in the unwind of leveraged positions have reinforced the importance of diversification and the risks associated with over-reliance on a single market theme.

Speaker #3: Within our flagship income strategies, American Income outperformed its benchmark and performed in line with its peer category, while Global High Yield outperformed its category and modestly lagged its benchmark during the second quarter.

Speaker #3: More broadly, our equity platform remains diversified across styles, sectors, and geographies. We have over 25 services with more than 45 billion of assets under management that continue to outperform over both the 3- and 5-year periods.

Speaker #3: Turning to equities, markets rebounded sharply in the second quarter, with very strong returns across regions. Developed markets posted exceptional returns, with the S&P 500 gaining 15%, its strongest quarterly advance in six years.

Speaker #3: This includes our $10 billion international strategic equity service which ranks in the top percentile across 1, 3, and 5-year periods. We believe diversification across fixed income and quality-oriented equities can help clients generate income, stay invested, and broaden their sources of return beyond a handful of market leaders over-leveraged to the AI build-out.

Speaker #3: Emerging markets were a standout performer globally, as the MSCI Emerging Markets Index surged 24%. The global recovery was supported by de-escalation in the Middle East, leading to lower energy prices and continued enthusiasm around AI.

Seth Bernstein: We believe diversification across fixed income and quality-oriented equities can help clients generate income, stay invested, and broaden their sources of return beyond the handful of market leaders over-leveraged to the AI build-out. Now turning to slide six. Retail net flows rebounded in Q2, driven by record sales momentum and continued demand for fixed income. Gross sales reached $31 billion, the highest level in 5 years, driving $900 million of net inflows in the channel's Q1 of positive organic growth since Q1 2025. Excluding fixed income mandate from Equitable, our gross sales were $22 billion, up 14% versus the same period in 2025. As noted, fixed income was the primary driver led by continued demand for tax-efficient income, in addition to the $9 billion fixed income index mandate mentioned earlier.

Speaker #3: Technology and semiconductor stocks again led the advance, extending a period of unusually narrow market leadership. Against this backdrop, our performance struggled, with 23%, 28%, and 31% of equity AUM outperforming over the 1-, 3-, and 5-year periods, respectively.

Speaker #3: Now turning the slide 6, retail net flows rebounded in the Q2, driven by record sales momentum and continued demand for fixed income. Gross sales reached $31 billion, the highest level in 5 years, driving $900 million of net inflows in the channel's first quarter of positive organic growth since the Q1 of 2025.

Speaker #3: Excluding fixed income mandate from Equitable, our gross sales were $22 billion, up 14% versus the same period in 2025. As noted, fixed income was the primary driver, led by continued demand for tax-efficient income, in addition to the $9 billion fixed income index mandate mentioned earlier.

Speaker #3: Recent volatility among AI-linked equities and the online of leveraged positions have reinforced the importance of diversification and the risk associated with over-reliance on a single market theme.

Speaker #3: Active equity outflows are still elevated, driven primarily by US large-cap growth redemptions across US and Japan. At the same time, we continue to build diversified sources of growth across the retail platform, including active ETFs and thematic strategies.

Seth Bernstein: Active equity outflows are still elevated, driven primarily by US large-cap growth redemptions across US and Japan. At the same time, we continued to build diversified sources of growth across the retail platform, including active ETFs and thematic strategies. For example, our Security of the Future surpassed $5 billion in assets under management and generated nearly $2 billion of inflows during the quarter. Moving to slide seven, I'll cover our institutional channel. Institutional flows also returned to positive territory in Q2, generating more than half a billion dollars of net inflows. Demand was driven by alternatives and multi-asset, with over $4 billion of net inflows, growing at an 11% annualized organic rate. This marked the sixth consecutive quarter of positive organic growth for the category.

Speaker #3: For example, our security of the futures surpassed $5 billion in assets under management and generated nearly $2 billion of inflows during the quarter. Moving to slide 7, I'll cover our institutional channel.

Speaker #3: This includes our $10 billion international strategic equity service, which ranks in the top percentile across 1-, 3-, and 5-year periods. We believe diversification across fixed income and quality-oriented equities can help clients generate income, stay invested, and broaden their sources of return beyond a handful of market leaders or overleverage to the AI build-out.

Speaker #3: Institutional flows also returned to positive territory in the Q2, generating more than half a billion dollars of net inflows. Demand was driven by alternatives of multi-asset with over $4 billion of net inflows, growing at an 11% annualized organic rate.

Speaker #3: Now turning to slide 6, retail net flows rebounded in the second quarter, driven by record sales momentum and continued demand for fixed income. Gross sales reached $31 billion, the highest level in five years, driving $900 million of net inflows in the channel's first quarter of positive organic growth since the first quarter of 2025.

Speaker #3: This marked the 6th consecutive quarter of positive organic growth for the category. Roughly $5 billion in deployments were broad-based across our private markets platform, including residential mortgages, commercial real estate debt, private placements, and NAB lending.

Seth Bernstein: Roughly $5 billion in deployments were broad-based across our private markets platform, including residential mortgages, commercial real estate debt, private placements, and NAV lending. Active equity outflows persisted but improved sequentially, declining to approximately $3 billion in the quarter. Earlier this month, we successfully onboarded $12 billion of commercial mortgage loans from Equitable ahead of schedule. Beyond the revenue contribution, the mandate roughly doubles our scale in the strategically important private asset class, expands our origination and servicing capabilities, and further strengthens the flywheel between long-duration insurance capital and AB's differentiated private markets platform. We expect to begin earning management fees on the established assets in Q4 at a high single-digit fee rate. The blended fee rate will increase over time as newer originations and servicing revenues are layered in.

Speaker #3: Active equity outflows persisted but improved sequentially, declining to approximately $3 billion in the quarter. Earlier this month, we successfully onboarded $12 billion of commercial mortgage loans from Equitable, ahead of schedule.

Speaker #3: Excluding the fixed income mandate from Equitable, our gross sales were $22 billion, up 14% versus the same period in 2025. As noted, fixed income was the primary driver, led by continued demand for tax-efficient income, in addition to the $9 billion fixed income index mandate mentioned earlier.

Speaker #3: Beyond the revenue contribution, the mandate roughly doubles our scale in the strategically important private asset class, expands our origination and servicing capabilities, and further strengthens the flywheel between long-duration insurance capital and AB's differentiated private markets platform.

Speaker #3: Active equity outflows are still elevated, driven primarily by U.S. large-cap growth redemptions across the U.S. and Japan. At the same time, we continued to build diversified sources of growth across the retail platform, including active ETFs and thematic strategies.

Speaker #3: We expect to begin earning management fees on the established assets in the Q4 at a high single-digit fee rate. The blended fee rate will increase over time as newer originations and servicing revenues are layered in.

Speaker #3: Our remaining pipeline totals approximately $14 billion and is well diversified, including roughly $5 billion in private alternatives, $3 billion in customized retirement, $3 billion in fixed income, and $2 billion in indexed equities.

Seth Bernstein: Our remaining pipeline totals approximately $14 billion and is well-diversified, including roughly $5 billion in private alternatives, $3 billion in customized retirement, $3 billion in fixed income, and $2 billion in indexed equities. I'd note that this pipeline does not include any of the $100 billion in expected assets from Corebridge. As a result, we have good visibility into future growth. Turning to slide eight, I will cover Bernstein Private Wealth. Private Wealth experienced a typical seasonal pressure on net flows during Q2, but underlying business momentum remains strong as we continue to deepen relationships with ultra-high-net-worth individuals and families. As expected, tax-related selling weighed on our quarterly net flows, which were -$700 million. However, net new assets have grown at a 6% annualized rate over the last 12 months. Client engagement remains strong, with demand concentrated in alternatives, tax-efficient solutions, and passive equities.

Speaker #3: Institutional flows also returned to positive territory in the second quarter, generating more than half a billion dollars of net inflows. Demand was driven by alternatives of multi-asset with over $4 billion of net inflows, growing at an 11% annualized organic rate.

Speaker #3: I'd note that this pipeline does not include any of the $100 billion in expected assets from corporates, as a result, we have good visibility into future growth.

Speaker #3: Turning the slide 8, I will cover Bernstein Private Wealth. Private Wealth experienced a typical seasonal pressure on net flows during the Q2, but underlying business momentum remained strong as we continued to deepen relationships with ultra-high net worth individuals and families.

Speaker #3: As expected, tax-related selling weighed on our quarterly net flows, which were a negative $700 million. However, net new assets have grown at a 6% annualized rate over the last 12 months.

Speaker #3: Client engagement remained strong, with demand concentrated in alternatives, tax-efficient solutions, and passive equities. Our ability to deliver customized, after-tax outcomes across both public and private markets continues to differentiate Bernstein with ultra-high net worth clients.

Seth Bernstein: Our ability to deliver customized after-tax outcomes across both public and private markets continues to differentiate Bernstein with ultra-high-net-worth clients. Product innovation also supported organic growth, including strong capital raise for our newly launched high-yield muni strategies designed to address increasingly sophisticated tax management needs of high-net-worth investors. More broadly, Bernstein Private Wealth remains one of our most important strategic growth vectors. It provides direct access to ultra-high-net-worth clients, expands opportunities to deliver holistic investment solutions, and serves as a valuable distribution channel for alternatives, tax-efficient equities, fixed income, and customized portfolio strategies. I'll now turn to slide nine, which highlights the continued growth and diversification of our private alternatives platform. I'm particularly proud to report that we've already reached $91 billion of private market assets under management, achieving our $90 to $100 billion investor day target more than a year ahead of our original 2027 commitment.

Speaker #3: Product innovation also supported organic growth, including strong capital raises for our newly launched high-yield muni strategies designed to address increasingly sophisticated tax management needs of high net worth investors.

Speaker #3: We expect to begin earning management fees on the established assets in the fourth quarter at a high single-digit fee rate. The blended fee rate will increase over time as newer originations and servicing revenues are layered in.

Speaker #3: More broadly, Bernstein Private Wealth remains one of our most important strategic growth vectors. It provides direct access to ultra-high net worth clients, expands opportunities to deliver holistic investment solutions, and serves as a valuable distribution channel for alternatives, tax-efficient equities, fixed income, and customized portfolio strategies.

Speaker #3: I'd note that this pipeline does not include any of the $100 billion in expected assets from corporates. As a result, we have good visibility into future growth.

Speaker #3: I'll now turn to slide 9, which highlights the continued growth and diversification of our private alternatives platform. I'm particularly proud to report that we've already reached $91 billion of private market assets under management, achieving our $90 to $100 billion investor-day target more than a year ahead of our original 2027 commitment.

Speaker #3: Turning to slide 8, I will cover Bernstein Private Wealth. Private Wealth experienced a typical seasonal pressure on net flows during the second quarter, but underlying business momentum remained strong as we continued to deepen relationships with ultra-high-net-worth individuals and families.

Speaker #3: This milestone reflects the success of our execution of a long-term strategy and the hard work of colleagues across our investment, distribution, operations, and client service teams.

Seth Bernstein: This milestone reflects the successful execution of a long-term strategy and the hard work of colleagues across our investment, distribution, operations, and client service teams. I want to thank everyone across the firm who helped make this achievement possible. Over the past several years, we've built a diversified private markets platform spanning corporate direct lending, alternative credit, commercial real estate debt, and private placements. Together, these capabilities provide differentiated sources of return and allow us to serve a broad range of client needs across institutional, insurance, retail, and private wealth channels. Importantly, we continue to see a strong growth trajectory. As I mentioned earlier, we successfully onboarded nearly $12 billion of commercial mortgage loans in July that are not reflected on this slide. Including those assets, our private market AUM would already exceed the upper end of our original target range.

Speaker #3: Client engagement remained strong, with demand concentrated in alternatives, tax-efficient solutions, and passive equities. Our ability to deliver customized after-tax outcomes across both public and private markets continues to differentiate Bernstein with ultra-high-net-worth clients.

Speaker #3: I want to thank everyone across the firm who helped make this achievement possible. Over the past several years, we've built a diversified private markets platform spanning corporate direct lending, alternative credit, commercial real estate debt, and private placements.

Speaker #3: Together, these capabilities provide differentiated sources of return and allow us to serve a broad range of client needs across institutional, insurance, retail, and private wealth channels.

Speaker #3: Importantly, we continue to see a strong growth trajectory. As I mentioned earlier, we successfully onboarded nearly $12 billion of commercial mortgage loans in July that are not reflected on the slide.

Speaker #3: More broadly, Bernstein Private Wealth remains one of our most important strategic growth vectors. It provides direct access to ultra-high-net-worth clients, expands opportunities to deliver holistic investment solutions, and serves as a valuable distribution channel for alternatives, tax-efficient equities, fixed income, and customized portfolio strategies.

Speaker #3: Including those assets, our private market AUM would already exceed the upper end of our original target range. Closing with slide 10, I'd like to bring together the themes we've discussed today.

Seth Bernstein: Closing with slide 10, I'd like to bring together the themes we've discussed today. The proposed combination of Aqua and Corebridge strengthens what we believe to be a unique competitive advantage for AB. At its core, the flywheel is straightforward. It starts with an asset-light approach that leverages long-duration insurance capital to seed and scale capabilities that can be extended across a much broader client base. The addition of Corebridge meaningfully expands that opportunity. As $100 billion is allocated over time, it will provide greater scale across the combined general account, enhancing our ability to originate differentiated assets, establish track records, develop new investment capabilities, and accelerate growth across the broader platform. Particularly, capabilities across private placements, residential and commercial mortgages, and asset-based finance are not one-off mandates. They become scalable investment platforms that can be distributed across third-party insurance clients, institutional investors, retail wealth, and over time, defined contribution.

Speaker #3: The proposed combination of equitable and corporate strengthens what we believe to be a unique competitive advantage for AB. At its core, the flywheel is straightforward.

Speaker #3: It starts with an asset-light approach that leverages long-duration insurance capital to seed and scale capabilities that can be extended across a much broader client base.

Speaker #3: The addition of corporates meaningfully expands that opportunity. As the $100 billion is allocated over time, it will provide greater scale across the combined general account, enhancing our ability to originate differentiated assets, establish track records, develop new investment capabilities, and accelerate growth across the broader platform.

Speaker #3: This milestone reflects the success of our execution of a long-term strategy and the hard work of colleagues across our investment, distribution, operations, and client service teams.

Speaker #3: Particularly, capabilities across private placements, residential, and commercial mortgages, and asset-based finance are not one-off mandates. They become scalable investment platforms that can be distributed across third-party insurance clients, institutional investors, retail wealth, and, over time, define contribution.

Speaker #3: We believe insurance private wealth, retirement, and private markets represent some of the largest and fastest-growing pools of capital globally. Increasingly, AB is differentiated at the intersection of these opportunities combining scale, customization, investment breadth, and direct client relationships in a way that our difficult-to-replicate.

Seth Bernstein: We believe insurance, private wealth, retirement, and private markets represent some of the largest and fastest-growing pools of capital globally. Increasingly, AB is differentiated at the intersection of these opportunities, combining scale, customization, investment breadth, and direct client relationships in a way that are difficult to replicate. In conclusion, the Q2 reinforces the direction of travel for AB. We reached record AUM, returned to positive organic growth, generated our strongest sales quarter in five years, and continued to scale the strategic growth platforms we've spent years building. Taken together, these results demonstrate the increasing earnings power of the franchise and the benefits of investing in areas where we see sustained client demand and long-term growth opportunities. Now I'll pass it to Tom to review our financial results. Tom?

Speaker #3: In conclusion, the Q2 reinforces the direction of travel for AB. We reached record AUM, returned to positive organic growth, generated our strongest sales quarter in 5 years, and continued to scale the strategic growth platforms we've spent years building.

Speaker #3: The proposed combination of Equitable and Corporates strengthens what we believe to be a unique competitive advantage for AB. At its core, the flywheel is straightforward.

Speaker #3: Taken together, these results demonstrate the increasing earnings power of the franchise and the benefits of investing in areas where we see sustained client demand and long-term growth opportunities.

Speaker #3: It starts with an asset-light approach that leverages long-duration insurance capital to seed and scale capabilities that can be extended across a much broader client base.

Speaker #3: Now I'll pass it to Tom to review our financial results. Tom?

Speaker #3: The addition of corporates meaningfully expands that opportunity. As the 100 billion is allocated over time, it will provide greater scale across the combined general account, enhancing our ability to originate differentiated assets, establish track records, develop new investment capabilities, and accelerate growth across the broader platform.

Speaker #1: Thank you, Seth. Good morning, everyone, and thank you for joining our call. Adjusted earnings for the Q2 of 2026 were $82 per unit, representing an 8% increase year-over-year.

Thomas Simeone: Thank you, Seth. Good morning, everyone, and thank you for joining our call. Adjusted earnings for Q2 2026 were $0.82 per unit, representing an 8% increase year over year. Distributions grew uniformly with EPU as we distribute 100% of our adjusted earnings to unit holders. The quarter was defined by three key themes: solid base fee growth, disciplined expense management, and continued operating leverage. At the same time, we remain focused on investing selectively in initiatives that strengthen the platform and expand its long-term earnings power. On slide 12, we present our adjusted results, which excludes certain items not considered part of our core operating business. For a detailed reconciliation of GAAP and adjusted financials, please refer to our presentation appendix or our 10-Q. In Q2, adjusted net revenues reached $888 million, a 5% increase year over year.

Tom Simeone: Thank you, Seth. Good morning, everyone, and thank you for joining our call. Adjusted earnings for Q2 2026 were $0.82 per unit, representing an 8% increase year over year. Distributions grew uniformly with EPU as we distribute 100% of our adjusted earnings to unit holders. The quarter was defined by three key themes: solid base fee growth, disciplined expense management, and continued operating leverage. At the same time, we remain focused on investing selectively in initiatives that strengthen the platform and expand its long-term earnings power. On slide 12, we present our adjusted results, which excludes certain items not considered part of our core operating business. For a detailed reconciliation of GAAP and adjusted financials, please refer to our presentation appendix or our 10-Q. In Q2, adjusted net revenues reached $888 million, a 5% increase year over year.

Speaker #1: Distributions grew uniformly with EPU as we distribute 100% of our adjusted earnings to unit holders. The quarter was defined by three key themes: solid-based fee growth, disciplined expense management, and continued operating leverage.

Speaker #3: Particularly, capabilities across private placements, residential and commercial mortgages, and asset-based finance are not one-off mandates. They become scalable investment platforms that can be distributed across third-party insurance clients, institutional investors, retail wealth, and, over time, defined contribution.

Speaker #1: At the same time, we remain focused on investing selectively in initiatives that strengthen the platform and expand its long-term earnings power. On slide 12, we present our adjusted results, which exclude certain items not considered part of our core operating business.

Speaker #3: We believe insurance, private wealth, retirement, and private markets represent some of the largest and fastest-growing pools of capital globally. Increasingly, AB is differentiated at the intersection of these opportunities: combining scale, customization, investment breadth, and direct client relationships in a way that is difficult to replicate.

Speaker #1: For a detailed reconciliation of gap and adjusted financials, please refer to our presentation appendix or our 10-Q. In the Q2, adjusted net revenues reached $888 million.

Speaker #3: In conclusion, the second quarter reinforces the direction of travel for AB. We reached record AUM, returned to positive organic growth, generated our strongest sales quarter in five years, platforms we've spent years building.

Speaker #1: A 5% increase year-over-year. Base fees grew 7% year-over-year, reflecting higher average AUM across the platform. Partially offset by the impact of changes in product and channel mix on our firm-wide fee rate.

Thomas Simeone: Base fees grew 7% year over year, reflecting higher average AUM across the platform, partially offset by the impact of changes in product and channel mix on our firm-wide fee rate. Performance fees totaled approximately $24 million compared with $30 million in the prior year, as strong contributions from public market strategies were offset by lower private market realizations. Dividend and interest revenue, along with broker-dealer-related interest expense, declined year over year, reflecting lower cash and margin balances within private wealth. Investment gains totaled approximately $2 million, while other revenues were unchanged from the prior year period. Turning to expenses, Q2 total operating expenses were $595 million, up 4% year over year, reflecting disciplined investment in strategic growth initiatives while maintaining a stable compensation ratio.

Tom Simeone: Base fees grew 7% year over year, reflecting higher average AUM across the platform, partially offset by the impact of changes in product and channel mix on our firm-wide fee rate. Performance fees totaled approximately $24 million compared with $30 million in the prior year, as strong contributions from public market strategies were offset by lower private market realizations. Dividend and interest revenue, along with broker-dealer-related interest expense, declined year over year, reflecting lower cash and margin balances within private wealth. Investment gains totaled approximately $2 million, while other revenues were unchanged from the prior year period. Turning to expenses, Q2 total operating expenses were $595 million, up 4% year over year, reflecting disciplined investment in strategic growth initiatives while maintaining a stable compensation ratio.

Speaker #1: Performance fees totaled approximately $24 million compared with $30 million in the prior year, a strong contribution from public market strategies or offset by lower private market realizations.

Speaker #3: Now I'll pass it to Tom to review our financial results. Tom?

Speaker #2: Thank you, Seth. Good morning, everyone, and thank you for joining our call. Adjusted earnings for the second quarter of 2026 were $82 per unit, representing an 8% increase year-over-year.

Speaker #1: Dividend and interest revenue, along with broker-dealer-related interest expense, declined year-over-year, reflecting lower cash and margin balances within private wealth. Investment gains totaled approximately $2 million, while other revenues were unchanged from the prior year period.

Speaker #2: Distributions grew uniformly with EPU, as we distribute 100% of our adjusted earnings to unitholders. The quarter was defined by three key themes: solid base fee growth, disciplined expense management, and continued operating leverage.

Speaker #1: Turning to expenses, Q2 total operating expenses were $595 million, up 4% year-over-year, reflecting disciplined investment in strategic growth initiatives while maintaining a stable compensation ratio.

Speaker #2: At the same time, we remained focused on investing selectively in initiatives that strengthen the platform and expand its long-term earnings power. On slide 12, we present our adjusted results, which exclude certain items not considered part of our core operating business.

Speaker #1: Total compensation and benefits rose 5% year-over-year, with a compensation ratio of 48.5% of adjusted net revenues, consistent with both the prior year period and our guidance.

Thomas Simeone: Total compensation and benefits rose 5% year over year, with a compensation ratio of 48.5% of adjusted net revenues, consistent with both the prior period and our guidance. We expect to continue accruing at a 48.5% compensation to net revenue ratio in Q3 while retaining flexibility to adjust as market conditions evolve. Promotion and servicing expenses declined 3% year over year, while G&A expenses increased 2%. Given our continued expense discipline and operating efficiency, we are lowering our full-year non-compensation expense outlook to $620 million to $640 million, compared with our prior range of $625 million to $650 million. Promotion and servicing expenses are still expected to represent approximately 20% to 30% of non-compensation expenses, with G&A comprising the remaining 70% to 80%. Interest expense on borrowings was essentially unchanged from the prior year period. ABLP's effective tax rate was 5.8% during the quarter.

Tom Simeone: Total compensation and benefits rose 5% year over year, with a compensation ratio of 48.5% of adjusted net revenues, consistent with both the prior period and our guidance. We expect to continue accruing at a 48.5% compensation to net revenue ratio in Q3 while retaining flexibility to adjust as market conditions evolve. Promotion and servicing expenses declined 3% year over year, while G&A expenses increased 2%. Given our continued expense discipline and operating efficiency, we are lowering our full-year non-compensation expense outlook to $620 million to $640 million, compared with our prior range of $625 million to $650 million. Promotion and servicing expenses are still expected to represent approximately 20% to 30% of non-compensation expenses, with G&A comprising the remaining 70% to 80%. Interest expense on borrowings was essentially unchanged from the prior year period. ABLP's effective tax rate was 5.8% during the quarter.

Speaker #2: For a detailed reconciliation of GAAP and adjusted financials, please refer to our presentation appendix or our 10-Q. In the second quarter, adjusted net revenues reached $888 million.

Speaker #1: We expect to continue accruing at a 48.5% compensation-to-net-revenue ratio in the Q3, while retaining flexibility to adjust as market conditions evolve. Promotion and servicing expenses declined 3% year-over-year, while G&A expenses increased 2%.

Speaker #2: A 5% increase year-over-year. Base fees grew 7% year-over-year, reflecting higher average AUM across the platform, partially offset by the impact of changes in product and channel mix on our firm-wide fee rate.

Speaker #1: Given our continued expense discipline and operating efficiency, we are lowering our full-year non-compensation expense outlook to $620 million to $640 million, compared with our prior range of $625 million to $650 million.

Speaker #2: Performance fees totaled approximately $24 million, compared with $30 million in the prior year, a strong contribution from public market strategies were offset by lower private market realizations.

Speaker #1: Promotion and servicing expenses are still expected to represent approximately 20% to 30% of non-compensation expenses, with G&A comprising the remaining 70% to 80%. Interest expense on borrowings was essentially unchanged from the prior year period.

Speaker #2: Dividend and interest revenue, along with broker-dealer-related interest expense, declined year-over-year, reflecting lower cash and margin balances within Private Wealth. Investment gains totaled approximately $2 million, while other revenues were unchanged from the prior-year period.

Speaker #1: ABLP's effective tax rate was 5.8% during the quarter. Given the favorable earnings mix and updated outlook, we are lowering our expected full-year ABLP tax rate to 5% to 6% from our prior range of 6% to 7%.

Thomas Simeone: Given the favorable earnings mix and updated outlook, we are lowering our expected full-year ABLP tax rate to 5% to 6% from our prior range of 6% to 7%. Operating income totaled $293 million, an increase of 7% versus the prior year period. Our adjusted operating margin expanded 70 basis points year over year to 33% as revenue growth outpaced expense growth despite continued investment across strategic growth initiatives. Importantly, margins remain above the midpoint of our 30% to 35% target, which we originally expected to achieve by 2027. As our strategic growth initiatives continue to scale, we believe the firm is increasingly well-positioned to generate operating leverage while continuing to reinvest for future growth. As demonstrated by this quarter's results, several of our newer growth initiatives have attractive economics despite carrying lower headline fee rates. In Q2, our firm-wide fee rate was 37.7 basis points.

Tom Simeone: Given the favorable earnings mix and updated outlook, we are lowering our expected full-year ABLP tax rate to 5% to 6% from our prior range of 6% to 7%. Operating income totaled $293 million, an increase of 7% versus the prior year period. Our adjusted operating margin expanded 70 basis points year over year to 33% as revenue growth outpaced expense growth despite continued investment across strategic growth initiatives. Importantly, margins remain above the midpoint of our 30% to 35% target, which we originally expected to achieve by 2027. As our strategic growth initiatives continue to scale, we believe the firm is increasingly well-positioned to generate operating leverage while continuing to reinvest for future growth. As demonstrated by this quarter's results, several of our newer growth initiatives have attractive economics despite carrying lower headline fee rates. In Q2, our firm-wide fee rate was 37.7 basis points.

Speaker #2: Turning to expenses, second quarter total operating expenses were $595 million, up 4% year-over-year, reflecting disciplined investment in strategic growth initiatives while maintaining a stable compensation ratio.

Speaker #1: Operating income totaled $293 million, an increase of 7% versus the prior year period. Our adjusted operating margin expanded 70 basis points year-over-year to 33%, as revenue growth outpaced expense growth despite continued investment across strategic growth initiatives.

Speaker #2: Total compensation and benefits rose 5% year over year, with a compensation ratio of 48.5% of adjusted net revenues, consistent with both the prior year period and our guidance.

Speaker #2: We expect to continue accruing at a 48.5% compensation-to-net-revenue ratio in the third quarter, while retaining flexibility to adjust as market conditions evolve. Promotion and servicing expenses declined 3% year-over-year, while G&A expenses increased 2%.

Speaker #1: Importantly, margins remain above the midpoint of our 30% to 35% target, which we originally expected to achieve by 2027. As our strategic growth initiatives continue to scale, we believe the firm is increasingly well-positioned to generate operating leverage while continuing to reinvest for future growth.

Speaker #2: Given our continued expense discipline and operating efficiency, we are lowering our full-year non-compensation expense outlook to $620 million to $640 million, compared with our prior range of $625 million to $650 million.

Speaker #1: As demonstrated by this quarter's results, several of our newer growth initiatives have attractive economics despite carrying lower headline fee rates. In the Q2, our firm-wide fee rate was 37.7 basis points.

Speaker #2: Promotion and servicing expenses are still expected to represent approximately 20% to 30% of non-compensation expenses, with G&A comprising the remaining 70% to 80%.

Speaker #1: As we have noted previously, the fee rate is highly dependent on where clients are allocating capital and how those assets are funded over time.

Thomas Simeone: As we have noted previously, the fee rate is highly dependent on where clients are allocating capital and how those assets are funded over time. As Seth discussed, we see growth in strategic areas such as insurance asset management, SMAs, retirement, institutional solutions, and private markets. While several of these categories carry lower headline fee rates than our firm-wide average, they represent scalable, long-duration sources of capital with attractive margin characteristics and strong earnings potential once fully funded and operating at scale. I would also note that this quarter's fee rate was negatively affected by the timing of onboarding the $9 billion passive fixed income mandate from Equitable, which funded on 30 June. While this mandate contributed to period end AUM, it generated little management fee revenue during the quarter, creating a temporary disconnect between asset growth and revenue realization.

Tom Simeone: As we have noted previously, the fee rate is highly dependent on where clients are allocating capital and how those assets are funded over time. As Seth discussed, we see growth in strategic areas such as insurance asset management, SMAs, retirement, institutional solutions, and private markets. While several of these categories carry lower headline fee rates than our firm-wide average, they represent scalable, long-duration sources of capital with attractive margin characteristics and strong earnings potential once fully funded and operating at scale. I would also note that this quarter's fee rate was negatively affected by the timing of onboarding the $9 billion passive fixed income mandate from Equitable, which funded on 30 June. While this mandate contributed to period end AUM, it generated little management fee revenue during the quarter, creating a temporary disconnect between asset growth and revenue realization.

Speaker #1: As Seth discussed, we see growth in strategic areas such as insurance asset management, SMAs, retirement institutional solutions, and private markets. While several of these categories carry lower headline fee rates than our firm-wide average, they represent scalable, long-duration sources of capital with attractive margin characteristics and strong earnings potential once fully funded and operating at scale.

Speaker #2: Interest expense on borrowings was essentially unchanged from the prior-year period. AB LP's effective tax rate was 5.8% during the quarter. Given the favorable earnings mix and updated outlook, we are lowering our expected full-year AB LP tax rate to 5% to 6% from our prior range of 6% to 7%.

Speaker #2: Operating income totaled $293 million, an increase of 7% versus the prior year period. Our adjusted operating margin expanded 70 basis points year-over-year to 33%, as revenue growth outpaced expense growth despite continued investment across strategic growth initiatives.

Speaker #1: I would also note that this quarter's fee rate was negatively affected by the timing of onboarding the $9 billion passive fixed income mandate from Equitable, which funded on June 30th.

Speaker #1: While this mandate contributed to period-end AUM, it generated little management fee revenue during the quarter, creating a temporary disconnect between asset growth and revenue realization.

Speaker #2: Importantly, margins remain above the midpoint of our 30 to 35 percent target, which we originally expected to achieve by 2027. As our strategic growth initiatives continue to scale, we believe the firm is increasingly well-positioned to generate operating leverage while continuing to reinvest for future growth.

Speaker #1: As Seth mentioned, approximately 11.8 billion dollars of Equitable commercial mortgage loans were successfully onboarded in July, ahead of our original plan. These assets will begin generating management fees during the Q4 at a high single-digit fee rate.

Thomas Simeone: As Seth mentioned, approximately $11.8 billion of Equitable commercial mortgage loans were successfully onboarded in July ahead of our original plan. These assets will begin generating management fees during Q4 at a high single-digit fee rate. The fee rate will increase over time as we originate new loans. Importantly, we view both mandates as highly attractive opportunities that enhance the scale, durability, and earnings power of the platform. While they create modest near-term pressure on the reported fee rate, they will contribute positively to revenue growth, operating leverage, and long-term profitability. We reached $91 billion of private markets AUM during the quarter, surpassing the low end of our $90 billion to $100 billion target more than a year ahead of schedule and before the onboarding of the commercial mortgage lending mandate.

Tom Simeone: As Seth mentioned, approximately $11.8 billion of Equitable commercial mortgage loans were successfully onboarded in July ahead of our original plan. These assets will begin generating management fees during Q4 at a high single-digit fee rate. The fee rate will increase over time as we originate new loans. Importantly, we view both mandates as highly attractive opportunities that enhance the scale, durability, and earnings power of the platform. While they create modest near-term pressure on the reported fee rate, they will contribute positively to revenue growth, operating leverage, and long-term profitability. We reached $91 billion of private markets AUM during the quarter, surpassing the low end of our $90 billion to $100 billion target more than a year ahead of schedule and before the onboarding of the commercial mortgage lending mandate.

Speaker #2: As demonstrated by this quarter's results, several of our newer growth initiatives have attractive economics, despite carrying lower headline fee rates. In the second quarter, our firm-wide fee rate was 37.7 basis points.

Speaker #1: The fee rate will increase over time as we originate new loans. Importantly, we view both mandates as highly attractive opportunities that enhance the scale, durability, and earnings power of the platform.

Speaker #2: As we have noted previously, the fee rate is highly dependent on where clients are allocating capital, and how those assets are funded over time.

Speaker #1: While they create modest near-term pressure on the reported fee rate, they will contribute positively to revenue growth, operating leverage, and long-term profitability. We reached $91 billion of private markets AUM during the quarter, surpassing the low end of our $90 billion to $100 billion target, more than a year ahead of schedule and before the onboarding of the commercial mortgage lending mandate.

Speaker #2: As Seth discussed, we see growth in strategic areas such as insurance asset management, SMAs, retirement, institutional solutions, and private markets. While several of these categories carry lower headline fee rates than our firm-wide average, they represent scalable, long-duration sources of capital with attractive margin characteristics, and strong earnings potential once fully funded and operating at scale.

Speaker #1: With the addition of approximately $12 billion of CML assets in July, private markets AUM now exceeds the high end of that target range. This milestone validates our multi-year investment strategy across private markets.

Thomas Simeone: With the addition of approximately $12 billion of CML assets in July, private markets AUM now exceeds the high end of that target range. This milestone validates our multiyear investment strategy across private markets. These capabilities required upfront investments as we built the necessary scale, infrastructure, and distribution. With fundraising momentum accelerating, deployment activity increasing, and asset growth continuing to compound, we believe private markets will continue to be a key driver of growth. Finally, turning to slide 13 and our outlook, we now expect total performance fees for fiscal year 2026 of $115 million to $135 million, compared with our prior outlook of $95 million to $115 million. This increase is primarily driven by our public market strategies. We now expect public market performance fees of $60 million to $70 million, compared with our prior outlook of $25 million to $35 million.

Tom Simeone: With the addition of approximately $12 billion of CML assets in July, private markets AUM now exceeds the high end of that target range. This milestone validates our multiyear investment strategy across private markets. These capabilities required upfront investments as we built the necessary scale, infrastructure, and distribution. With fundraising momentum accelerating, deployment activity increasing, and asset growth continuing to compound, we believe private markets will continue to be a key driver of growth. Finally, turning to slide 13 and our outlook, we now expect total performance fees for fiscal year 2026 of $115 million to $135 million, compared with our prior outlook of $95 million to $115 million. This increase is primarily driven by our public market strategies. We now expect public market performance fees of $60 million to $70 million, compared with our prior outlook of $25 million to $35 million.

Speaker #2: I would also note that this quarter's fee rate was negatively affected by the timing of onboarding the $9 billion passive fixed income mandate from Equitable, which funded on June 30th.

Speaker #1: These capabilities required upfront investments as we built the necessary scale, infrastructure, and distribution. With fundraising momentum accelerating, deployment activity increasing, and asset growth continuing to compound, we believe private markets will continue to be a key driver of growth.

Speaker #2: While this mandate contributed to period-end AUM, it generated little management fee revenue during the quarter, creating a temporary disconnect between asset growth and revenue realization.

Speaker #2: As Seth mentioned, approximately 11.8 billion dollars of Equitable commercial mortgage loans were successfully onboarded in July, ahead of our original plan. These assets will begin generating management fees during the fourth quarter at a high single-digit fee rate.

Speaker #1: Finally, turning the slide 13 and our outlook, we now expect total performance fees for fiscal year 2026 of $115 million to $135 million, compared with our prior outlook of $95 million to $115 million.

Speaker #2: The fee rate will increase over time as we originate new loans. Importantly, we view both mandates as highly attractive opportunities that enhance the scale, durability, and earnings power of the platform.

Speaker #1: This increase is primarily driven by our public market strategies. We now expect public market performance fees of $60 million to $70 million compared with our prior outlook of $25 million to $35 million.

Speaker #2: While they create modest near-term pressure on the reported fee rate, they will contribute positively to revenue growth, operating leverage, and long-term profitability. We reached $91 billion of private markets AUM during the quarter, surpassing the low end of our $90 billion to $100 billion target more than a year ahead of schedule and before the onboarding of the commercial mortgage lending mandate.

Speaker #1: The increase reflects Q2 realizations from our Alpha-generating US select strategy in addition to improved visibility into potential Q4 realizations from our consistently outperforming financial services opportunities fund.

Thomas Simeone: The increase reflects Q2 realizations from our alpha-generating U.S. Select strategy, in addition to improved visibility into potential Q4 realizations from our consistently outperforming Financial Services Opportunities Fund. For our private markets, we now expect performance fees of $55 million to $65 million, compared with our prior range of $70 million to $80 million, which still represents a healthy level of performance fee contribution, even as we take a proactive and conservative approach to marking our exposures and re-underwriting portfolio loss assumptions. As mentioned earlier, we are also reducing our full year non-compensation expense outlook to $620 million to $640 million and our expected ABLP tax rate to 5% to 6%. Let me conclude by summarizing some of the key themes from this call.

Tom Simeone: The increase reflects Q2 realizations from our alpha-generating U.S. Select strategy, in addition to improved visibility into potential Q4 realizations from our consistently outperforming Financial Services Opportunities Fund. For our private markets, we now expect performance fees of $55 million to $65 million, compared with our prior range of $70 million to $80 million, which still represents a healthy level of performance fee contribution, even as we take a proactive and conservative approach to marking our exposures and re-underwriting portfolio loss assumptions. As mentioned earlier, we are also reducing our full year non-compensation expense outlook to $620 million to $640 million and our expected ABLP tax rate to 5% to 6%. Let me conclude by summarizing some of the key themes from this call.

Speaker #1: For our private markets, we now expect performance fees of $55 million to $65 million compared with our prior range of $70 million to $80 million.

Speaker #2: With the addition of approximately $12 billion of CML assets in July, private markets AUM now exceeds the high end of that target range. This milestone validates our multi-year investment strategy across private markets.

Speaker #1: Which still represents a healthy level of performance fee contribution, even as we take a proactive and conservative approach to marking our exposures and re-underwriting portfolio loss assumptions.

Speaker #1: As mentioned earlier, we are also reducing our full-year non-compensation expense outlook to $620 million to $640 million, and our expected ABLP tax rate to 5% to 6%.

Speaker #2: These capabilities required upfront investments as we built the necessary scale, infrastructure, and distribution. With fundraising momentum accelerating, deployment activity increasing, and asset growth continuing to compound, we believe private markets will continue to be a key driver of growth.

Speaker #1: Let me conclude by summarizing some of the key themes from this call. We were able to improve our financial outlook while continuing to build momentum across several strategic growth areas, including insurance, wealth, private markets, SMAs, and active ETFs.

Speaker #2: Finally, turning the slide 13 and our outlook, we now expect total performance fees for fiscal year 2026 of $115 million to $135 million, compared with our prior outlook of $95 million to $115 million.

Thomas Simeone: We were able to improve our financial outlook while continuing to build momentum across several strategic growth areas, including insurance, wealth, private markets, SMAs, and active ETFs. Our success in private markets provides a good example. We achieved our target of $90 to $100 billion of AUM more than a year ahead of schedule and continue to see a strong pipeline for sustained growth. Looking forward, the addition of $100 billion of Corebridge general account and separate account assets will further expand our insurance platform, increase our scale, and provide a meaningful new source of long-duration capital for years to come. The Corebridge assets can be onboarded onto our existing infrastructure with relatively limited incremental expense. As a result, while they may have a lower average fee rate, they have high incremental margins and will be accretive to earnings.

Tom Simeone: We were able to improve our financial outlook while continuing to build momentum across several strategic growth areas, including insurance, wealth, private markets, SMAs, and active ETFs. Our success in private markets provides a good example. We achieved our target of $90 to $100 billion of AUM more than a year ahead of schedule and continue to see a strong pipeline for sustained growth. Looking forward, the addition of $100 billion of Corebridge general account and separate account assets will further expand our insurance platform, increase our scale, and provide a meaningful new source of long-duration capital for years to come. The Corebridge assets can be onboarded onto our existing infrastructure with relatively limited incremental expense. As a result, while they may have a lower average fee rate, they have high incremental margins and will be accretive to earnings.

Speaker #1: Our success in private markets provides a good example. We achieved our target of $90 to $100 billion of AUM more than a year ahead of schedule and continue to see a strong pipeline for sustained growth.

Speaker #2: This increase is primarily driven by our public market strategies. We now expect public market performance fees of $60 million to $70 million, compared with our prior outlook of $25 million to $35 million.

Speaker #1: Looking forward, the addition of $100 billion of core bridge general account and separate account assets will further expand our insurance platform, increase our scale, and provide a meaningful new source of long-duration capital for years to come.

Speaker #2: The increase reflects second-quarter realizations from our alpha-generating U.S. Select Strategy, in addition to improved visibility into potential fourth-quarter realizations from our consistently outperforming Financial Services Opportunities Fund.

Speaker #1: The core bridge assets can be onboarded onto our existing infrastructure with relatively limited incremental expense. As a result, while they may have a lower average fee rate, they have high incremental margins and will be a creative to earnings.

Speaker #2: For our private markets, we now expect performance fees of $55 million to $65 million compared with our prior range of $70 million to $80 million.

Speaker #2: Which still represents a healthy level of performance fee contribution, even as we take proactive and conservative approach to marking our exposures and re-underwriting portfolio loss assumptions.

Speaker #1: We will continue to be disciplined in investing to build new sources of growth, recognizing that it may take time for platforms to scale and reach their full earnings potential.

Thomas Simeone: We will continue to be disciplined in investing to build new sources of growth, recognizing that it may take time for platforms to scale and reach their full earnings potential. With that, operator, please open the line for questions.

Tom Simeone: We will continue to be disciplined in investing to build new sources of growth, recognizing that it may take time for platforms to scale and reach their full earnings potential. With that, operator, please open the line for questions.

Speaker #1: With that, Operator, please open the line for questions.

Speaker #2: As mentioned earlier, we are also reducing our full-year noncompensation expense outlook to $620 million to $640 million, and are expected ABLP tax rate to 5 to 6 percent.

Speaker #2: We will now begin the question and answer session. Please limit your initial questions to two in order to provide all callers with an opportunity to ask questions.

Operator: We will now begin the question and answer session. Please limit your initial questions to two in order to provide all callers with an opportunity to ask questions. You are welcome to return to the queue to ask follow-up questions. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Now please stand by while we compile the Q&A roster. Your first question comes from the line of Craig Siegenthaler with Bank of America. Your line is open. Please go ahead.

Speaker #2: You are welcome to return to the queue to ask follow-up questions. If you would like to ask a question, please press star 1 to raise your hand.

Speaker #2: Let me conclude by summarizing some of the key themes from this call. We were able to improve our financial outlook while continuing to build momentum across several strategic growth areas, including insurance, wealth, private markets, SMAs, and active ETFs.

Speaker #2: To withdraw your question, press star 1 again. We ask that you pick up your handset when asking a question to allow for optimum sound quality.

Speaker #2: If you are muted locally, please remember to unmute your device. Now please stand by while we compile the Q&A roster. Your first question comes from the line of Craig Siegenthaler with Bank of America.

Speaker #2: Our success in private markets provides a good example. We achieved our target of $90 to $100 billion of AUM more than a year ahead of schedule and continue to see a strong pipeline for sustained growth.

Speaker #2: Looking forward, the addition of $100 billion of corporate general account and separate account assets will further expand our insurance platform, increase our scale, and provide a meaningful new source of long-duration capital for years to come.

Speaker #2: Your line is open. Please go ahead.

Speaker #3: Good morning, Seth. Hope everyone's doing well. Our question is on the merger of EQH and core bridge and core bridge's general accounts are managed by a number of third-party managers which have various contracts.

Craig Siegenthaler: Good morning, Seth. Hope everyone's doing well. Our question is on the merger of EQH and Corebridge. Corebridge's general accounts are managed by a number of third-party managers which have various contracts. I heard your low fee rate, high margin comment, but can you update us on your ability to manage more of Corebridge's general accounts? Specifically, could AB one day manage the whole $200 billion? Actually, it'll probably be bigger than $200 billion when we think about that day in the future.

Speaker #2: The corporate assets can be onboarded onto our existing infrastructure with relatively limited incremental expense. As a result, while they may have a lower average fee rate, they have high incremental margins and will be a creative to earnings.

Speaker #3: And I heard your low fee rate, high margin comment, but can you update us on your ability to manage more of core bridge's general accounts, specifically could AB one day manage the whole $200 billion?

Speaker #2: We will continue to be disciplined in investing to build new sources of growth, recognizing that it may take time for platforms to scale and reach their full earnings potential.

Speaker #3: And actually, it'll probably be bigger than $200 billion when we think about that day in the future.

Speaker #2: With that, operator, please open the line for questions.

Speaker #4: Hi, Craig. Good morning. It's an honor letting me take that question. As you pointed out, the equitable core bridge merger represents a big AUM opportunity for Alliance Bernstein.

Onur Erzan: Hi, Craig. Good morning. It's Onur. Let me take that question. As you pointed out that the Equitable Corebridge merger represents a big AUM opportunity for AllianceBernstein. As it was announced at the time of the merger announcement, we expected at least $100 billion of AUM post the close of the transaction over a couple of years time period. That comes from both general account assets and separate account assets. To put things into perspective, the combined general account assets will be around $350 billion. Separate account assets will be around $200 billion. The AUM base of the combined entity is very, very significant. On top of that, the origination on the liability side is around $70 to $80 billion per year.

Speaker #1: We will now begin the question and answer session. Please limit your initial questions to two in order to provide all callers with an opportunity to ask questions.

Speaker #4: As it was announced at the time of the merger announcement, we expected this $100 billion of AUM post the close of the transaction over a couple of years' time period.

Speaker #1: You are welcome to return to the queue to ask follow-up questions. If you would like to ask a question, please press star 1 to raise your hand.

Speaker #1: To withdraw your question, press star 1 again. We ask that you pick up your handset when asking a question to allow for optimum sound quality.

Speaker #4: And that comes from both general account assets and separate account assets. To put things into perspective, the combined general account assets will be around $350 billion.

Speaker #1: If you are muted locally, please remember to unmute your device. Now, please stand by while we compile the Q&A roster. Your first question comes from the line of Craig Siegenthaler with Bank of America.

Speaker #4: Separate account assets will be around $100 sorry, $200 billion. So the AUM base of the combined entity is very, very significant. And on top of that, the origination on the liability side is around 7% to 80 billion dollars per year.

Speaker #1: Your line is open. Please go ahead.

Speaker #3: Good morning, Seth. Hope everyone's doing well. Our question is on the merger of EQH and corporate, and corporate's general accounts are managed by a number of third-party managers, which have various contracts.

Speaker #4: So it will have a lot of money in motion. So given that large AUM base and the liability origination, we believe even in the existence of other asset managers, managing GA assets, we will have significant amount of upside in terms of growing our share in that total AUM.

Onur Erzan: It will have a lot of money in motion. Given that large AUM base and the liability origination, we believe even in the existence of other asset managers managing GA assets, we will have significant amount of upside in terms of growing our share in that total AUM. Obviously, the merger has not closed yet. It's expected roughly by year-end. We will not be able to provide much more granularity in terms of the bottom-up. We remain very confident and optimistic about its impact, both on our AUM revenue and profitability. In terms of the profitability by category, again, it's going to be very asset class dependent. There's going to be higher fee private alternatives kind of opportunities, as well as high fee equity type of opportunities depending on the channel and underlying vehicle.

Speaker #3: And I heard your low fee rate, high margin comment, but can you update us on your ability to manage more of corporate's general accounts specifically?

Speaker #3: Could AB one day manage the whole $200 billion and actually it'll probably be bigger than $200 billion when we think about that day in the future?

Speaker #4: Obviously, the merger has not closed yet. It's expected roughly by year-end. And hence, we will not be able to provide much more granularity in terms of the bottom-up.

Speaker #4: Hi, Craig. Good morning. It's Onur Erzan. Let me take that question. As you pointed out, the Equitable corporate merger represents a big AUM opportunity for AllianceBernstein.

Speaker #4: But we remain very confident and optimistic about its impact both on our AUM revenue and profitability. And in terms of the profitability by category, again, it's going to be very asset-class dependent.

Speaker #4: As was announced at the time of the merger announcement, we expected this $100 billion of AUM post the close of the transaction over a couple of years' time period.

Speaker #4: There's going to be higher fee private alternatives kind of opportunities as well as high fee equity type of opportunities depending on the channel and underlying vehicle.

Speaker #4: And that comes from both general account assets and separate account assets. To put things into perspective, the combined general account assets will be around $350 billion.

Speaker #4: But the core fixed income part of the portfolio which might be easier, faster to move that tends to be lower fee that said very scalable as well.

Onur Erzan: The core fixed income part of the portfolio, which might be easier, faster to move, that tends to be lower fee. That said, very scalable as well.

Speaker #3: Thanks, Jonah. I have a follow-up on Asia. So I think we all know AB has a strong retail and institutional business across Asia. You have many US and global funds like American Income, American Growth, Global High Yield, which you saw across the region.

Craig Siegenthaler: Thanks, Onur. I have a follow-up on Asia. I think we all know AB has a strong retail and institutional business across Asia. You have many US and global funds, like American Income, American Growth, Global High Yield, which you saw across the region. In the last two years, we had a trade war escalation, and then this year with the Iran conflict. Through these events, I'm curious on how overall appetite and allocations for US assets have trended across Asia.

Speaker #4: So, it will have a lot of money in motion. Given that large AUM base and the liability origination, we believe that—even with the existence of other asset managers managing GA assets—we will have a significant amount of upside in terms of growing our share in that total AUM.

Speaker #3: Now, in the last two years, we had a trade war escalation and then this year with the Iran conflict. So through these events, I'm curious on how overall appetite and allocations for US assets have trended across Asia.

Speaker #4: Yeah, sure. Great question. I'll dig into it and a little bit separate between asset class and channel. Starting with American Income and GHY, which are our taxable fixed income franchises in the region, the demand there has been less strong.

Onur Erzan: Yeah, sure. Great question. I'll dig into it and a little bit separate between asset class and channel. Starting with American Income and GHY, which are our taxable fixed income franchises in the region. The demand there has been less strong. To your point, with the Middle East crisis, with the lingering inflation fears and the uncertainty in the rate outlook, some of the retail clients basically rotated into high-performing local equity markets and stayed away from some of the income-generating fixed income strategies. Some of them diversified into multi-assets to have that equity exposure in addition to some income generation. Within that, we had outflows from American Income Portfolio and GHY, as you are aware.

Speaker #4: Obviously, the merger has not closed yet. It's expected roughly by year-end, and hence we will not be able to provide much more granularity in terms of the bottom-up.

Speaker #4: But we remain very confident and optimistic about its impact both on our AUM, revenue, and profitability. And in terms of the profitability by category, again, it's going to be very asset-class dependent.

Speaker #4: To your point with the Middle East crisis, with the lingering inflation fears and the uncertainty in the rate outlook, some of the clients, retail clients, basically rotated into high-performing local equity markets.

Speaker #4: There's going to be higher fee private alternatives kind of opportunities as well as high fee equity type of opportunities depending on the channel and underlying vehicle.

Speaker #4: And stayed away from some of the income-generating fixed income strategies. And some of them diversified into multi-assets to have that equity exposure in addition to some income generation.

Speaker #4: But the core fixed income part of the portfolio, which might be easier and faster to move, that tends to be lower fee, that's, as Seth said, very scalable as well.

Speaker #4: Within that, we had outflows from American Income portfolio and GHY, as you are aware. However, we benefited from that in several other categories like our all-market income, multi-asset product, which gathered significant assets, as well as some of the more international type strategies like international equities, emerging markets, etc.

Speaker #3: Thanks, Onur. I have a follow-up on Asia. So, I think we all know AB has a strong retail and institutional business across Asia. You have many US and global funds like American Income, American Growth, and Global High Yield, which you sell across the region.

Onur Erzan: However, we benefited from that in several other categories, like our All Market Income multi-asset product, which gathers significant assets, as well as some of the more international type strategies like international equities, Emerging Markets, et cetera. On the broader picture, we have definitely seen some broadening of appetite away from US-only equity strategies to regional and global. Definitely, we have seen a bit of that client demand for diversification across retail institutional. Finally, on the institutional side, the demand for fixed income actually remains strong. If I think about the pipeline and the pre-pipeline, I think the demand I'm seeing from Asia, ex-Japan and Japan institutional clients, including fixed income, is quite robust, and it's robust across both fundamental investment-grade fixed income, as well as our systematic franchise. Actually, we added fixed income mandates from institutional clients to our pipeline in the quarter.

Speaker #4: On the broader picture, we have definitely seen some broadening of appetite away from US-only equity strategies to regional and global. So definitely we have seen a little bit of that client demand for diversification.

Speaker #4: Across retail institutional, and then finally, on the institutional side, the demand for fixed income actually remains strong. If I think about the pipeline and the pre-pipeline, I think the demand I'm seeing from Asia ex-Japan and Japan institutional clients, including fixed income, is quite robust and it's robust across both fundamental investment grade fixed income as well as our systematic franchise.

Speaker #4: To your point about the Middle East crisis, with lingering inflation fears and uncertainty in the rate outlook, some of our retail clients have basically rotated into high-performing local equity markets.

Speaker #4: Actually, we added fixed income mandates from institutional clients to our pipeline in the quarter. And then finally, on alts, the retail alts particular retail private credit demand is again very muted.

Speaker #4: And stayed away from some of the income-generating fixed income strategies. Some of them diversified into multi-asset approaches to have that equity exposure in addition to some income generation.

Onur Erzan: Finally on alts, the retail alts, part of the retail private credit demand is again, very muted. There's been a lot of news around this. A lot of the retail clients rotated out of private credit in the short term, while the institutional clients remain invested. We have seen some uptick on the hedge fund strategies in the region from retail clients. Again, it tends to be pretty fast-moving money there. That's a bit of the broad picture for you.

Speaker #4: There's been a lot of news around this. A lot of the retail clients rotated out of private credit in the short term. While institutional clients remain invested, there is we have seen some uptick on the hedge fund strategies in the region from retail clients.

Speaker #4: Within that, we had outflows from the American Income portfolio and GHY, as you are aware. However, we benefited from that in several other categories, like our All Market Income multi-asset product, which gathered significant assets, as well as some of the more international-type strategies, like international equities and emerging markets, etc.

Speaker #4: Again, it tends to be pretty fast-moving money there. So that's a bit of the broad picture for you.

Speaker #3: I guess, Craig, it's Seth. I just would add that we have seen what I would call cyclical rotations in and out in prior periods.

Seth Bernstein: I guess, Craig and Seth, I just would add that we have seen what I would call cyclical rotations in and out in prior periods. Despite the trade stuff, which is disrupted for sure, and the war, or the activities in the Gulf. I'd say that, at least in our view, the lack of interest in the fixed income strategies has more to do with pretty compelling local markets alternatives, as Onur alluded to, than anything particular to US dollar fixed income. Most of the markets we really are successful in Asia are tethered either explicitly or implicitly to the dollar. That is the alternative, and we don't see any buyer strike. I just think it's a cyclical phenomenon.

Speaker #4: On the broader picture, we have definitely seen some broadening of appetite away from US-only equity strategies to regional and global. So, definitely, we have seen a little bit of that client demand for diversification.

Speaker #3: And despite the trade stuff, which is disruptive for sure, and the war or the activities in the Gulf, I'd say that at least in our view, the lack of interest in the fixed income strategies has more to do with pretty compelling local markets alternatives as owner alluded to than anything particular to US dollar fixed income.

Speaker #4: Across retail institutional, and then finally, on the institutional side, the demand for fixed income actually remains strong. If I think about the pipeline and the pre-pipeline, I think the demand I'm seeing from Asia extra pan and Japan institutional clients, including fixed income, is quite robust and it's robust across both fundamental investment grade fixed income as well as our systematic franchise.

Speaker #3: Most of the markets we really are successful in Asia are tethered either explicitly or implicitly to the dollar. So that is the alternative. And we don't see any buyer strike.

Speaker #4: Actually, we added fixed income mandates from institutional clients to our pipeline in the quarter. And then finally, on alts—the retail alts, particularly retail private credit—demand is again very muted.

Speaker #3: I just think it's a cyclical phenomenon.

Speaker #2: Seth, thank you very much. Owner very comprehensive. Thank you.

Craig Siegenthaler: Seth, thank you very much. Onur, very comprehensive. Thank you.

Speaker #4: Thank you.

Onur Erzan: Thank you.

Speaker #1: Your next question comes from the line of Bill Katz, with TD Securities. Your line is open. Please go ahead.

Operator: Your next question comes from the line of Bill Katz with TD Securities. Your line is open. Please go ahead.

Speaker #4: There's been a lot of news around this. A lot of the retail clients rotated out of private credit in the short term. While institutional clients remain invested, we have seen some uptick on the hedge fund strategies in the region from retail clients.

Speaker #5: Okay. Thank you very much and good morning, everybody. Just a couple of questions, maybe to start off with owner perhaps. I want to zero in on the private client side.

Bill Katz: Okay. Thank you very much. Good morning, everybody. Just a couple questions, maybe start off with Onur, perhaps. Want to zero in on the private client side. I was wondering if you could maybe comment on what you're seeing in terms of the competition for sort of third-party financial advisors. A number of your peers are sort of speaking to very elevated competition. I'm sort of curious if you're seeing it at the higher end. Maybe a conceptual question for you as well. Could you sort of highlight how much alts are as a percentage of the private client AUM, and where you think that ratio can go to over time? Thank you.

Speaker #5: I was wondering if you could maybe comment on what you're seeing in terms of the competition for sort of third-party financial advisors. I know it appears as sort of speaking to very elevated competition.

Speaker #4: Again, it tends to be pretty fast-moving money there. So that's a little bit of the broad picture for you.

Speaker #3: I guess, Craig, it's Seth. I would just add that we have seen what I would call cyclical rotations in and out in prior periods.

Speaker #5: I'm sort of curious if you're seeing it at the higher end. And then maybe a conceptual question for you as well. Could you sort of highlight how much alts are as a percentage of the private client AUM and where you think that ratio can go to over time?

Speaker #3: And despite the trade stuff, which is disrupted for sure, and the war or the activities in the Gulf, I'd say that at least in our view, the lack of interest in the fixed income strategies has more to do with pretty compelling local markets alternatives as owner alluded to than anything particular to US dollar fixed income.

Speaker #5: Thank you.

Speaker #4: Sure. Thanks, Bill. Yeah, our private wealth business remains very resilient and robust. So we have not been broadly impacted by the competitive pressures, both on the advisor recruiting side or on the client retention side of things.

Onur Erzan: Sure. Thanks, Bill. Our private wealth business remains very resilient and robust. We have not been broadly impacted by the competitive pressures, both on the advisor recruiting side or on the client retention side of things. To me, the proof points are the advisor productivity continues to go up. We are on track on our advisor recruiting. Our advisor headcount is up 4% relative to end of year 2025, so definitely seeing strong results there. In terms of the alternatives side of things, we had a very strong alts fundraise in Q2. It was around $900 million for private wealth, significantly higher than the same period prior year as well as Q1, despite all the headlines. Our private credit strategies continue to hold up really well with low kind of redemption.

Speaker #3: Most of the markets where we really are successful in Asia are tethered—either explicitly or implicitly—to the dollar. So that is the alternative. And we don't see any buyer strike.

Speaker #4: To me, the proof points are the advisor productivity continues to go up. We are on track on our advisor recruiting. Our advisor headcount is up 4% relative to end of year '25.

Speaker #3: I just think it's a cyclical phenomenon.

Speaker #4: So definitely seeing strong results there. And then in terms of the alternative side of things, we had a very strong alts fundraise in the second quarter.

Speaker #2: Seth, thank you very much. Onur, very comprehensive. Thank you.

Speaker #4: Thank you.

Speaker #1: Your next question comes from the line of Bill Katz with TD Securities. Your line is open. Please go ahead.

Speaker #4: It was around $900 million. For private wealth, significantly higher than the same period prior year, as well as the first quarter, despite all the headlines.

Speaker #5: Okay, thank you very much, and good morning, everybody. Just a couple of questions. Maybe I'll start off with Onur, perhaps. I want to zero in on the private client side.

Speaker #4: And our private credit strategies continue to hold up really well with low kind of redemption. So overall, feeling very robust about the business performance across clients, advisors, as well as the asset mix.

Speaker #5: I was wondering if you could maybe comment on what you're seeing in terms of the competition for sort of third-party financial advisors. A number of your peers are sort of speaking to very elevated competition.

Onur Erzan: Overall, feeling very robust about the business performance across clients, advisors, as well as the asset mix. In terms of alternatives, there is definitely some upside in terms of great reallocation. We have been using alternatives in our client portfolios for a long time. I think it is already approaching roughly 10%, and I can definitely see that based on our target asset allocation going up to mid-teens over time. I mean, ultimately, we are a fiduciary. We are client need and demand driven. We are not going to shoot for a precise number. Given the client demands and the robust product set we have, we will see that go up.

Speaker #5: I'm sort of curious if you're seeing that at the higher end. And then maybe a conceptual question for you as well—could you sort of highlight how much alts are as a percentage of the private client AUM, and where you think that ratio can go over time?

Speaker #4: In terms of alternatives, there's definitely some upside in terms of greater allocation, we have been using alternatives in our client portfolios for a long time.

Speaker #5: Thank you.

Speaker #4: I think it is already approaching roughly 10%. And I can definitely see that based on our target asset allocation going up to mid-teens over time.

Speaker #4: I mean, ultimately, we are a fiduciary. We are client need and demand driven. We are not going to shoot for a precise number. But given the client demand and the robust product set we have, we will see that go up.

Speaker #4: To me, the proof points are that advisor productivity continues to go up. We are on track with our advisor recruiting. Our advisor headcount is up 4% relative to the end of year '25.

Speaker #4: I mean, to give an example, I mean, in the second quarter alone, we launched multiple new products ranging from long short hedge fund strategies to a muni private credit fund.

Onur Erzan: To give an example, in Q2 alone, we launched multiple new products ranging from long short hedge fund strategies to a muni private credit fund, new vintages of some of the private equity and venture capital funds. As a result, our platform continues to broaden and it attracts more assets from existing clients and also brings new clients.

Speaker #4: So definitely seeing strong results there. And then, in terms of the alternative side of things, we had a very strong alts fundraise in the second quarter.

Speaker #4: And then new vintages of some of the private equity and venture capital funds. So as a result, our platform continues to broaden and it attracts more assets from existing clients and also brings new clients.

Speaker #4: It was around $900 million. For private wealth, significantly higher than the same period prior year, as well as the first quarter, despite all the headlines.

Speaker #4: And our private credit strategies continue to hold up really well, with low levels of redemption. So overall, feeling very robust about the business performance across clients, advisors, as well as the asset mix.

Speaker #5: Great. Thank you. And then maybe just a follow-up for Tom. Can you unpack maybe the decline in the private market performance fee opportunity set?

Bill Katz: Great. Thank you. Maybe just a follow-up for Tom. Can you unpack maybe the decline in the private market performance fee opportunity set? I would have thought it would more be on base rates, it is sounding more like some kind of write-down. Just wondering if you could maybe click in a couple sentences and give a little more detail what is driving the decline versus the prior guide. Thank you.

Speaker #5: I would have thought it would more be on base rates, but it sounds like more like some kind of write-down. Just wondering if you could maybe click in a couple of sentences and give a little more detail of what's driving the decline versus the prior guy.

Speaker #4: In terms of alternatives, there's definitely some upside in terms of rate reallocation. We have been using alternatives in our client portfolios for a long time.

Speaker #5: Thank you.

Speaker #4: Yeah. There's primarily two things going on there, Bill. It's unrealized mark in the portfolio and then there were some tax events inside the fund at the investor level that flow through to our performance fee collection there.

Thomas Simeone: Yeah. There's primarily two things going on there, Bill. It's unrealized mark in the portfolio, and then there were some tax events inside the fund at the investor level that flows through to our performance fee collection there.

Tom Simeone: Yeah. There's primarily two things going on there, Bill. It's unrealized mark in the portfolio, and then there were some tax events inside the fund at the investor level that flows through to our performance fee collection there.

Speaker #4: I think it is already approaching roughly 10%. And I can definitely see that, based on our target asset allocation, going up to the mid-teens over time.

Speaker #4: I mean, ultimately, we are a fiduciary. We are client-need and demand-driven. We are not going to shoot for a precise number, but given the client demands and the robust product set we have, we will see that go up.

Speaker #5: Thank you.

Bill Katz: Thank you.

Speaker #4: You're welcome.

Thomas Simeone: You're welcome.

Tom Simeone: You're welcome.

Speaker #1: Your next question comes from the line of Alex Blosting with Goldman Sachs. Your line is open. Please go ahead.

Operator: Your next question comes from the line of Alex Blostein with Goldman Sachs. Your line is open. Please go ahead.

Speaker #5: Hi. Hi. Good morning, everybody. I wanted to get your thoughts on the interplay between the fee rate dynamics versus profitability over time, especially as corporate assets come on.

Alex Blostein: Hi. Good morning, everybody. I wanted to get your thoughts on the interplay between the fee rate dynamics versus profitability over time, especially as corporate assets come on. I think initially at a pretty low basis point, kind of ten-ish range or so, I believe, but obviously you highlighted pretty high incremental margin. As you think about the profitability in the business as a whole relative to the margins where they are today, where do you guys see them going over time?

Speaker #4: I mean, to give an example—in the second quarter alone, we launched multiple new products, ranging from long/short hedge fund strategies to a muni private credit fund.

Speaker #5: I think initially at a pretty low basis point, kind of 10-ish range or so, I believe. But obviously, you highlighted pretty high incremental margin.

Speaker #4: And then new vintages of some of the private equity and venture capital funds. So as a result, our platform continues to broaden, and it attracts more assets from existing clients and also brings in new clients.

Speaker #5: So as you think about the profitability and the business as a whole relative to the margins where they are today, what do you guys see them going over time?

Speaker #4: Yeah. Hi, Alex. Owner, let me take that. As I referred earlier in the Q&A, we don't have a bottom-up view of the exact AUM split by asset class.

Onur Erzan: Yeah. Hi, Alex. Onur. Let me take that. As I referred earlier in the Q&A, we don't have a bottom-up view of the exact AUM split by asset class. Obviously, the fee rate will be a blended average. Starting from the other side of your question, from a profitability perspective, we expect the profitability of that incremental AUM to be robust. Definitely in line with our current margin or even better, depending on the asset class. As a result, we remain quite optimistic and bullish about the impact of that AUM on our business economics. An effective fee rate, although is an important metric that we track, as you kind of imply, it's not necessarily a predictor of margin by itself. We have a lot of persistent lower fee asset classes that are highly profitable, like our industry-leading muni platform.

Speaker #5: Great, thank you. And then maybe just a follow-up for Tom. Can you unpack, maybe, the decline in the private market performance fee opportunity set?

Speaker #4: Obviously, the fee rate will be a blended average. Starting from the other side of your question, from a profitability perspective, we expect the profitability of that incremental AUM to be robust.

Speaker #5: I would have thought it would be more on base rates, but it sounds like more of a write-down. Just wondering if you could maybe click in for a couple of sentences and give a little more detail on what's driving the decline versus the prior guy.

Speaker #4: I mean, definitely in line with our current margin or even better, depending on the asset class. So as a result, we remain quite optimistic and bullish about the impact of that AUM on our business economics.

Speaker #5: Thank you.

Speaker #4: And then effective fee rate, although is a important metric that we track, as you kind of imply, it's not necessarily a predictor of margin by itself.

Speaker #5: Thank you.

Speaker #4: Go ahead.

Speaker #1: Your next question comes from the line of Alex Blosting with Goldman Sachs. Your line is open. Please go ahead.

Speaker #4: And we have a lot of persistent lower fee asset classes that are highly profitable, like our industry-leading muni platform. So as a result, we should think about fee rates and margin as two separate things, and not necessarily see a one-to-one link between the two.

Speaker #5: Hi. Hi. Good morning, everybody. I wanted to get your thoughts on the interplay between the fee rate dynamics versus profitability over time, especially as corporate assets come on.

Onur Erzan: As a result, we should think about fee rate and margin as two separate things and not necessarily see a one-to-one link between the two. On the GA assets, given in the short term, as I mentioned earlier, there's going to be significant amount of potential core fixed income assets we can onboard that would tend to have a negative impact on the effective fee rate, not necessarily on the margin.

Speaker #4: On the GA assets, given in the short term, as I mentioned earlier, there's going to be significant amount of potential core fixed income assets we can onboard.

Speaker #5: I think initially at a pretty low basis point—kind of in the 10-ish range or so, I believe. But obviously you highlighted pretty high incremental margin.

Speaker #5: So as you think about the profitability and the business as a whole relative to the margins where they are today, what do you guys see them doing over time?

Speaker #4: That would tend to have a negative impact on the effective fee rate, not necessarily on the margin.

Speaker #4: Yeah. Hi, Alex. Onur, let me take that. As I referred to earlier in the Q&A, we don't have a bottom-up view of the exact AUM split by asset class.

Speaker #5: Yeah. No, totally. I would have thought it would actually be a much better impact on the margin than the profitability would be quite a bit higher than the existing margin.

Alex Blostein: Yeah. No, totally. I would have thought it would actually be a much better impact on the margin, and the profitability would be quite a bit higher than the existing margin. I was just kind of thinking through once it's all onboarded, where the profitability of the business could kind of shake out over time.

Speaker #5: So I was just kind of thinking through once it's all onboarded, where the profitability of the business could kind of shake out over time.

Speaker #4: Yeah, definitely. There's more upside from an incremental margin perspective.

Onur Erzan: Yeah, definitely there's more upside from an incremental margin perspective.

Speaker #5: Yeah. Makes sense. All right. For my follow-up, I was hoping to get your thoughts on some of the recent focus from the Treasury Department on tax advantage investments.

Alex Blostein: Yeah, makes sense. All right. For my follow-up, I was hoping to get your thoughts on some of the recent focus from the Department of the Treasury on tax advantage investments. I think that's been a focus area of growth for you guys as well. Maybe just give us a broader view of sort of exposures across the platform to tax advantage strategies. Obviously, maybe outside of munis, but the more kind of explicitly focused tax advantage products, and how do you think about growth in this part of the market?

Speaker #4: I mean, definitely in line with our current margin or even better depending on the asset class. So as a result, we remain quite optimistic and bullish about the impact of that AUM on our business economics.

Speaker #5: I think that's been a focus area of growth for you guys as well. So maybe just give us a broader view of sort of exposures across the platform to tax advantage strategies.

Speaker #4: And then effective fee rate, although it's an important metric that we track, as you kind of imply, it's not necessarily a predictor of margin by itself.

Speaker #5: Obviously, maybe outside of munis, but the more kind of explicitly focused tax advantage products and how do you think about growth in this part of the market?

Speaker #4: And we have a lot of persistent, lower fee asset classes that are highly profitable, like our industry-leading muni platform. So, as a result, we should think about fee rate and margin as two separate things and not necessarily see a one-to-one link between the two.

Speaker #4: Yeah, absolutely. So unlike some of the other publicly listed asset managers, our exposure to some of the higher risk categories is very small. Obviously, Treasury and IRS made some comments that led to some concern in the marketplace.

Onur Erzan: Yeah, absolutely. Unlike some of the other publicly listed asset managers, our exposure to some of the higher risk categories is very small. Obviously, Department of the Treasury and IRS made some comments that led to some concern in the marketplace, but the focus areas of those comments, those transaction or product types for us is very small as a percentage of total. I don't see it as a material risk for our business. I think they were very clear. They're not targeting the broader tax-aware investing or tax-loss harvesting strategies if done properly. Great majority of our assets fall in those categories. As you mentioned, munis is the most significant part, and that was not referenced. Direct indexing platform, which we have over $10 billion, is the loan only. As a result, our exposure to those other categories is very small.

Speaker #4: On the GA assets, given that in the short term, as I mentioned earlier, there's going to be a significant amount of potential core fixed income assets we can onboard.

Speaker #4: But the focus areas of those comments does transaction or product types for us is very, very small as a percentage of total. So I don't see there's a material risk for our business.

Speaker #4: That would tend to have a negative impact on the effective fee rate, not necessarily on the margin.

Speaker #4: I think they were very clear. They're not targeting the broader tax aware investing or tax loss harvesting strategies, if done properly. And great majority of our assets fall in those categories, as you mentioned, munis is the most significant part, and that was not referenced.

Speaker #5: Yeah, no, totally. I would have thought it would actually have a much better impact on the margin, and that profitability would be quite a bit higher than the existing margin.

Speaker #5: So I was just kind of thinking through, once it's all onboarded, where the profitability of the business could kind of shake out over time.

Speaker #4: And direct indexing platform, which we have over $10 billion, is the long only. So as a result, our exposure to those other categories is very, very small.

Speaker #4: Yeah, definitely. There's more upside from an incremental margin perspective.

Speaker #5: Yeah, makes sense. All right, for my follow-up, I was hoping to get your thoughts on some of the recent focus from the Treasury Department on tax-advantaged investments.

Speaker #5: Great. All right. Thank you very much.

Alex Blostein: Great. All right. Thank you very much.

Speaker #5: I think that's been a focus area of growth for you guys as well. So maybe just give us a broader view of exposures across the platform to tax-advantaged strategies.

Speaker #1: Your next question comes from the line of Dan Fannon with Jefferies. Your line is open. Please go ahead.

Operator: Your next question comes from the line of Dan Fannon with Jefferies. Your line is open. Please go ahead.

Speaker #5: Thanks. Good morning. So I wanted to follow up on that last set of questions just around the profitability versus fee rate. I think one of the comments in the prepared remarks was one's fully funded and operating at scale.

Speaker #5: Obviously, maybe outside of munis, but the more kind of explicitly focused tax advantage products and how do you think about growth in this part of the market?

Dan Fannon: Thanks. Good morning. Wanted to follow up on that last set of questions just around the profitability versus fee rate. I think one of the comments in the prepared remarks was once fully funding and operating at scale, that's where I think the profitability starts to increase. Curious as to how you guys define scale in some of these newer strategies, and what is it a reasonable time period for which you think you can hit that?

Speaker #5: That's where I think the profitability starts to increase. So curious as to how you guys define scale and some of these newer strategies. And what is it a reasonable time period for which you think you can hit that?

Speaker #4: Yeah. So I mean, ultimately, scale is very product-specific. It's hard to generalize to AUM. Number, ultimately, historically, what we have seen is in periods where we had material AUM growth, we tended to see higher margin relative to our existing margin.

Speaker #4: But the focus areas of those comments—those transaction or product types—for us is very, very small as a percentage of total. So I don't see there's a material risk for our business.

Onur Erzan: Ultimately, scale is very product specific. It's hard to generalize to a AUM number. Ultimately, historically, what we have seen is in periods where we had material AUM growth, we tended to see higher margin relative to our existing margin. That was typically even as high as 45% to 50%. At the end, history is supportive of the fact that typically our AUM growth translates into profitability. That being said, it's very asset class dependent. We also want to take a long-term growth view, and there will be areas that we will continue to invest in terms of new asset classes, like private alternatives. Some of those asset classes, as we build the business, will have lower margin. Overall, we are focused on our overall margin and our targets, as Tom would remind us, is in the 30% to 35% range.

Speaker #4: I think they were very clear. They're not targeting the broader tax-aware investing or tax-loss harvesting strategies if done properly. And the great majority of our assets fall in those categories. As you mentioned, munis is the most significant part.

Speaker #4: So that was typically even as high as 45, 50 percent. So at the end, history, it's supportive of the fact that typically our AUM growth translates into profitability.

Speaker #4: And that was not referenced. And direct indexing platform, which we have over $10 billion, is the long only. So as a result, our exposure to those other categories is very, very small.

Speaker #4: That being said, it's very asset class dependent. We also want to take a long-term growth view. And there will be areas that we will continue to invest in terms of new asset classes like private alternatives and some of those asset classes as we build the business will have lower margins.

Speaker #5: Great. All right. Thank you very much.

Speaker #1: Your next question comes from the line of Dan Fannon with Jefferies. Your line is open. Please go ahead.

Speaker #4: So overall, we are focused on our overall margin and our targets as Tom would remind us is in the 30 to 35 percent range.

Speaker #5: Thanks. Good morning. So, I wanted to follow up on that last set of questions just around the profitability versus fee rate. I think one of the comments in the prepared remarks was once fully funded and operating at scale.

Speaker #4: We are right in the middle of that. So we feel And we, again, see upside potential from existing large categories like munis, like institutional fixed income, systematic fixed income.

Onur Erzan: We are right in the middle of that, we feel comfortable with it. We again see upside potential from existing large categories like munis, like institutional fixed income, systematic fixed income. There are several categories that benefit from scale or active equities. We don't have a very explicit margin target by asset class or a specific scale number by product.

Speaker #4: So there are several categories that benefit from scale or active equities. We don't have a very explicit margin target by asset class or a specific scale number by product.

Speaker #4: Yeah. So I mean, ultimately, scale is very product-specific. It's hard to generalize to an AUM. Number, ultimately, historically, what we have seen is in periods where we had material AUM growth, we tended to see higher margin relative to our existing margin.

Speaker #5: Yeah. And if I could just add to that, owner, we don't necessarily have to invest in new infrastructure or teams. We already have them here.

Thomas Simeone: Yes, if I could just add to that, Onur. We don't necessarily have to invest in new infrastructure or teams. We already have them here, so we're going to be able to take on those assets with very little incremental cost, and that's why there's 45% to 50% dropping down to the bottom line in incremental margin, as Onur noted. As far as timing of when we can begin to take on these assets, we're really focused on just getting the deal closed between Corebridge and Equitable at this point. We do think around 20% to 30% of those assets would come online in 2027, then accelerate from there into 2028 to complete the first $100 billion that we expect.

Tom Simeone: Yes, if I could just add to that, Onur. We don't necessarily have to invest in new infrastructure or teams. We already have them here, so we're going to be able to take on those assets with very little incremental cost, and that's why there's 45% to 50% dropping down to the bottom line in incremental margin, as Onur noted. As far as timing of when we can begin to take on these assets, we're really focused on just getting the deal closed between Corebridge and Equitable at this point. We do think around 20% to 30% of those assets would come online in 2027, then accelerate from there into 2028 to complete the first $100 billion that we expect.

Speaker #5: So we're going to be able to take on those assets with very little incremental cost. And that's why there's 45 to 50 percent dropping down to the bottom line in incremental margin as owner noted.

Speaker #4: So that was typically even as high as 45, 50 percent. So at the end, history is supportive of the fact that typically our AUM growth translates into profitability.

Speaker #5: And then as far as timing of when we can begin to take on these assets, we're really focused on just getting the deal closed between corporate and equitable at this point.

Speaker #5: But we do think around 20 to 30 percent of those assets would come online in 2027, then accelerate from there into 2028 to complete the first $100 billion that we expect.

Speaker #5: Great. That's helpful. And then just, I guess, following up on areas of investment and some of the expense guidance, so guidance coming down a bit, curious about where some of the savings are coming from and then in terms of seems like you're spending or still investing in several growth areas.

Dan Fannon: Great. That's helpful. Just, I guess, following up on areas of investment and some of the expense guidance. Guidance coming down a bit. Curious about where some of the savings are coming from, in terms of seems like you're spending or still investing in several growth areas. Maybe highlight the areas where the spend is growing and maybe where you're seeing some of those savings come from.

Speaker #4: So overall, we are focused on our overall margin and our targets as Tom would remind us is in the 30 to 35 percent range.

Speaker #4: We are right in the middle of that, so we feel comfortable with it. And we, again, see upside potential from existing large categories like munis, institutional fixed income, and systematic fixed income.

Speaker #5: So maybe highlight kind of the areas where the spend is growing and maybe where you're seeing some of those savings come from.

Speaker #4: Sure. I'll start with where we're spending some of our capital here. We're spending in private markets, ETFs. We continue to expand in the insurance vertical.

Thomas Simeone: Sure. I'll start with where we're spending some of our capital here. We're spending in private markets, ETFs. We continue to expand in the insurance vertical. We're spending there as well as expanding private wealth advisor base. As far as where we're seeing the savings, we're seeing it in all non-controllable comp expenses, both on the promo and servicing side, as well as general and accounting. This quarter, we did reduce our guidance $5 to $10 million. That's all we have line of sight into now. We continue to look and challenge the businesses, and they continue to challenge us. If anything more shakes out, we'll certainly give you an update in Q3.

Tom Simeone: Sure. I'll start with where we're spending some of our capital here. We're spending in private markets, ETFs. We continue to expand in the insurance vertical. We're spending there as well as expanding private wealth advisor base. As far as where we're seeing the savings, we're seeing it in all non-controllable comp expenses, both on the promo and servicing side, as well as general and accounting. This quarter, we did reduce our guidance $5 to $10 million. That's all we have line of sight into now. We continue to look and challenge the businesses, and they continue to challenge us. If anything more shakes out, we'll certainly give you an update in Q3.

Speaker #4: So, there are several categories that benefit from scale or active equities. We don't have a very explicit margin target by asset class, or a specific scale number by product.

Speaker #4: So we're spending there as well as expanding private wealth advisor base. As far as where we're seeing the savings, we're seeing it in all non-controllable comp expenses both on the promo and servicing side as well as general and accounting.

Speaker #5: Yeah, if I could just add to that, Onur, we don't necessarily have to invest in new infrastructure or teams—we already have them here.

Speaker #4: And this quarter, we did reduce our guidance 5 to 10 million dollars. That's all we have line of sight into now. But we continue to look and challenge the businesses, and they continue to challenge us.

Speaker #5: So we're going to be able to take on those assets with very little incremental cost. And that's why there's 45% to 50% dropping down to the bottom line in incremental margin, as Onur noted.

Speaker #4: So if anything more shakes out, we'll certainly give you an update in 3Q.

Speaker #5: Great. Thank you.

Speaker #5: And then as far as timing of when we can begin to take on these assets, we're really focused on just getting the deal closed between corporate and equitable at this point.

Dan Fannon: Great. Thank you.

Speaker #1: Your next question comes from the line of John Dunn with Evercore. Your line is open. Please go ahead.

Operator: Your next question comes from the line of John Dunn with Evercore. Your line is open. Please go ahead.

Speaker #5: But we do think around 20% to 30% of those assets would come online in 2027, then accelerate from there into 2028 to complete the first $100 billion that we expect.

Speaker #5: Thank you. You mentioned that future security and future fund. Maybe are there any other areas in active equities on the retail side you'd point to that can be partial offsets?

John Dunn: Thank you. You mentioned the Security Future Fund. Maybe, are there any other areas in active equities on the retail side you'd point to that can be partial offsets? Maybe, same thing for institutional side, any areas of demand you could point to?

Speaker #5: And then maybe same thing for institutional side. Any areas that you could point to?

Speaker #4: Yeah. Sure. As you pointed out, we had several equity products that had really strong investment performance, which translated into very strong commercial performance. Security of the future, which is a thematic product.

Onur Erzan: Yeah, sure. As you pointed out, we had several equity products that had really strong investment performance, which translated into very strong commercial performance. Security of the Future, which is a thematic product, just exceeded $7 billion, and it's a relatively new product. It is a great evidence of our ability to innovate and scale. Similarly, our technology-oriented Disruptor Strategy has done very well. That ETF is around $3 billion. Really has strong track record, but also really attracting new clients. Really excited about that. As I mentioned earlier in the Q&A, we have also seen a broadening of the client appetite for non-US strategies. We have definitely seen positive momentum in some of the international strategies, Emerging Markets, as well as international equities.

Speaker #5: So maybe highlight kind of the areas where the spend is growing and maybe where you're seeing some of those savings come from.

Speaker #4: Sure. I'll start with where we're spending some of our capital here. We're spending in private markets and ETFs. We continue to expand in the insurance vertical.

Speaker #4: Just exceeded $7 billion. And it's a relatively new product. So it is a great evidence of our ability to innovate and scale. Similarly, our technology-oriented disruptor strategy has done very well.

Speaker #4: So we're spending there as well as expanding our private wealth advisor base. As far as where we're seeing the savings, we're seeing it in all non-controllable comp expenses.

Speaker #4: That ETF is around $3 billion. So really has strong track record, but also really attracting new clients. So really excited about that. As I mentioned earlier in the Q&A, we have also seen a broadening of the client appetite for non-US strategies.

Speaker #4: Both on the promo and servicing side, as well as general and accounting. And this quarter, we did reduce our guidance by $5 to $10 million.

Speaker #4: That's all we have line of sight into now. But we continue to look and challenge the businesses. And they continue to challenge us. So if anything more shakes out, we'll certainly give you an update in 3Q.

Speaker #4: So we have definitely seen positive momentum in some of the international strategies, emerging markets, as well as international equities. Finally, there are several products historically that didn't have a lot of visibility, but given the long-standing track records of some of those more maybe historically niche products, we are also seeing some success on those, like for instance, we had a good institutional client coming into our REIT, Global REIT strategy, this quarter.

Speaker #5: Great. Thank you.

Speaker #1: Your next question comes from the line of John Dunn with Evercore. Your line is open. Please go ahead.

Onur Erzan: Finally, there are several products historically that didn't have a lot of visibility, but given the long-standing track records of some of those more maybe historically niche products, we are also seeing some success on those. For instance, we had a good institutional client coming into our REITs, Global REIT Strategy this quarter, definitely that was great to see as well, investing in the public REIT market in equities. On the institutional side, as I briefly referenced earlier, we continue to see strong demand on the private alternative side. If you think about our insurance third-party general account business, that grew by 33% year over year, a really robust growth on the third-party side. This excludes our shareholder Equitable. Really pleased with that, and it's broad-based in terms of the deployment across different types of private alternatives. Really excited about that.

Speaker #5: Thank you. You mentioned the Future Security and Future Fund. Maybe, are there any other areas in active equities on the retail side you'd point to that can be partial offsets?

Speaker #5: And then maybe same thing for the institutional side. Any areas of demand you could point to?

Speaker #4: So definitely that was great to see as well investing in the public REIT market, in equities. And on the institutional side, as briefly referenced earlier, we continue to see strong demand on the private alternative side.

Speaker #4: Just exceeded $7 billion, and it's a relatively new product, so it is great evidence of our ability to innovate and scale. Similarly, our technology-oriented disruptor strategy has done very well.

Speaker #4: If you think about our insurance third-party general account business, that grew by 33% year over year, really robust growth on the third-party side. And this excludes our shareholder equitable.

Speaker #4: That ETF is around $3 billion, so it really has a strong track record, but is also really attracting new clients. So we're really excited about that. As I mentioned earlier in the Q&A, we have also seen a broadening of client appetite for non-U.S. strategies.

Speaker #4: So really pleased with that. And it's broad-based in terms of the deployment across different types of private alternatives. So really excited about that. And then we definitely see broadening of the investor demand on the fixed income side.

Onur Erzan: We definitely see a broadening of the investor demand. On the fixed income side, we have seen strong demand on the systematic fixed income in addition to our fundamental fixed income strategy.

Speaker #4: We have seen strong demand on the systematic fixed income in addition to our fundamental fixed income strategy.

Speaker #4: So, we have definitely seen positive momentum in some of the international strategies, emerging markets, as well as international equities. Finally, there are several products that historically didn't have a lot of visibility, but given the long-standing track records of some of those, maybe more historically niche products, we are also seeing some success in those. For instance, we had a good institutional client come into our Global REIT strategy this quarter.

Speaker #5: Just staying on equities though, international small and mid-cap, that drove the performance these US select. We've had a number of strategies that have continued to perform very well.

Thomas Simeone: Just staying on equities, though, international, small- and mid-cap, that drove the performance fees, U.S. Select. We've had a number of strategies that have continued to perform very well. Ultimately, despite having really good performance, U.S. large-cap value being an excellent example of that, it's what the clients are really interested in buying that really drives those flows.

Tom Simeone: Just staying on equities, though, international, small- and mid-cap, that drove the performance fees, U.S. Select. We've had a number of strategies that have continued to perform very well. Ultimately, despite having really good performance, U.S. large-cap value being an excellent example of that, it's what the clients are really interested in buying that really drives those flows.

Speaker #5: But ultimately, despite having really good performance, US large-cap value being an excellent example of that, it's what, as you know, what the clients are really interested in buying that really drives those flows.

Speaker #5: Got it. And then just as active ETFs become more of a contributor, maybe could you talk about your kind of strategy around where to put fee rates, what the profitability is?

John Dunn: Got it. Just as active ETFs become more of a contributor, maybe could you talk about your strategy around where to put fee rates, what the profitability is, and what client segments are you going after and just a flavor of the sales process, how you're finding it.

Speaker #4: So, definitely, that was great to see as well—investing in the public REIT market in equities. And on the institutional side, as briefly referenced earlier, we continue to see strong demand on the private alternative side.

Speaker #5: And what client segments are you going after? And just a flavor of the sales process, how you're finding it.

Speaker #4: No, absolutely. Yeah. As you pointed out, our ETF franchise hits $20 billion. It's a $12 billion increase from a year ago. So it's an incredible growth rate.

Onur Erzan: Absolutely. As you pointed out, our ETF franchise hits $20 billion. It's a $12 billion increase from a year ago, so it's an incredible growth rate. We are very excited about it. The platform started to globalize as well. Our Taiwan ETF assets tripled in a very short period of time, obviously from a small base. The effective fee rate on that business is around 50 basis points, so now our annual run rate revenue for the ETF franchise is $100 million. For a business that is only four years old, we are very excited about the scaling of that platform globalization and the prospects as the ETF adoption in the world on the active side widens.

Speaker #4: If you think about our insurance third-party general account business, that grew by 33% year over year—really robust growth on the third-party side. And this excludes our shareholder Equitable.

Speaker #4: We are very excited about it. The platform started to globalize as well. Our also Taiwan ETF assets tripled in a very short period of time.

Speaker #4: Obviously, from a small base. The effective fee rate on that business is around 50 basis points. So now our annual run rate revenue for the ETF franchise is $100 million.

Speaker #4: We have seen strong demand in systematic fixed income, in addition to our fundamental fixed income strategy.

Speaker #4: For a business that is only four years old, we are very excited about the scaling of that platform, globalization, and the prospects as the ETF adoption in the world on the active side widens.

Speaker #5: Just staying on equities though, international small and mid-cap, that growth and performance fees, US Select—we've had a number of strategies that have continued to perform very well.

Speaker #5: And a really small portion of that were reboots of existing strategies, most of them were new strategies.

Thomas Simeone: A really small portion of that were reboots of existing strategies. Most of them were new strategies.

Tom Simeone: A really small portion of that were reboots of existing strategies. Most of them were new strategies.

Speaker #5: But ultimately, despite having really good performance—US large-cap value being an excellent example of that—it's what, as you know, what the clients are really interested in buying that really drives those flows.

Speaker #4: Absolutely.

Onur Erzan: Absolutely.

Speaker #5: And Bernstein. Thank you. So it's good. Excellent. Thanks.

Thomas Simeone: Bernstein-

Tom Simeone: Bernstein-

John Dunn: Thank you.

Thomas Simeone: helps us capture, so it's good.

Tom Simeone: helps us capture, so it's good.

John Dunn: Excellent. Thanks.

Speaker #1: And your next question comes from the line of Mason Fleming with Barclays. Your line is open. Please go ahead.

Speaker #5: Got it. And then just as active ETFs become more of a contributor, maybe could you talk about your kind of strategy around where to put fee rates, what the profitability is?

Operator: Your next question comes from the line of Mason Fleming with Barclays. Your line is open. Please go ahead.

Speaker #5: Hi. This is actually Ben Budishan. One of maybe a follow-up on the private markets piece, just curious maybe a two-parter, I guess first, could you kind of remind us of the normal composition of private markets performance fees?

Ben Budish: Hi, this is actually Ben Budish. Wanted maybe a follow-up on the private markets piece. Just curious, maybe a two-parter. I guess first, could you kind of remind us of the normal composition of private markets performance fees? I think most of it comes from credit, but between part one fees, sort of recurring performance fees, and realization-related revenues, what's the typical mix? Is there any more color you can share on the unrealized marks? I know we've seen some of the non-traded BDCs start to report a little bit, but curious what you're seeing in your portfolio.

Ben Budish: Hi, this is actually Ben Budish on. Wanted maybe a follow-up on the private markets piece. Just curious, maybe a two-parter. I guess first, could you kind of remind us of the normal composition of private markets performance fees? I think most of it comes from credit, but between part one fees, sort of recurring performance fees, and realization-related revenues, what's the typical mix? Is there any more color you can share on the unrealized marks? I know we've seen some of the non-traded BDCs start to report a little bit, but curious what you're seeing in your portfolio.

Speaker #5: And what client segments are you going after? And just like a flavor of the sales process, how you're finding it?

Speaker #4: No, absolutely. Yeah. As you pointed out, our ETF franchise has reached $20 billion. That's a $12 billion increase from a year ago, so it's an incredible growth rate.

Speaker #5: And I think most of it comes from credit, but between part one fees sort of recurring performance fees and realization-related revenues. What's the typical mix?

Speaker #5: And is there any more color you can share on the unrealized marks? I know we've seen some of the non-traded BDCs start to report a little bit, but curious what you're seeing in your portfolio.

Speaker #4: We are very excited about it. The platform started to globalize as well. Also, our Taiwan ETF assets tripled in a very short period of time.

Speaker #4: Obviously, from a small base. The effective fee rate on that business is around 50 basis points. So now our annual run-rate revenue for the ETF franchise is $100 million.

Speaker #4: So what we're seeing in private credit is we are seeing the slight decrease in what we saw last year. I think we saw last year was in the mid to upper teens.

Thomas Simeone: What we're seeing in private credit is we are seeing a slight decrease in what we saw last year. I think what we saw last year was in the mid to upper teens. You saw the step down in Q1 and Q2. I expect that to more normalize in Q3 and Q4, but not to necessarily the levels of last year, but certainly a step up from Q1 and Q2. I think your question was on the marks. One thing I should have added on the earlier question from Bill is the marks are not related to credit events. These are just unrealized marks that we go out and get the portfolio marked by a third party every quarter, and that's what's driving the reduction in the guidance that we're providing now.

Tom Simeone: What we're seeing in private credit is we are seeing a slight decrease in what we saw last year. I think what we saw last year was in the mid to upper teens. You saw the step down in Q1 and Q2. I expect that to more normalize in Q3 and Q4, but not to necessarily the levels of last year, but certainly a step up from Q1 and Q2. I think your question was on the marks. One thing I should have added on the earlier question from Bill is the marks are not related to credit events. These are just unrealized marks that we go out and get the portfolio marked by a third party every quarter, and that's what's driving the reduction in the guidance that we're providing now.

Speaker #4: You saw the step-down in Q1 and Q2. I expect that to more normalize in Q3 and Q4, but not to necessarily the levels of last year, but certainly step up from Q1 to Q2.

Speaker #4: For a business that is only four years old, we are very excited about the scaling of that platform, globalization, and the prospects as ETF adoption in the world on the active side widens.

Speaker #4: And then I think your question was on the marks. One thing I should have added on the earlier call from Bill, the earlier question from Bill is the marks are not related to credit events.

Speaker #5: And a really small portion of that where reboots of existing strategies, most of them were new strategies.

Speaker #4: These are just unrealized marks that we go out and get the portfolio marked by a third-party every quarter. And that's what's driving the reduction in the guidance that we're providing now.

Speaker #4: Absolutely.

Speaker #5: And Bernstein, thank you. So, it's good. Excellent. Thanks.

Speaker #1: And your next question comes from the line of Mason Fleming with Barclays. Your line is open. Please go ahead.

Speaker #5: Okay. Understood. Maybe a follow-up on the retirement side. You announced the partnership with Brookfield and Carlisle earlier in the quarter. Just curious, what are your near-term expectations?

Ben Budish: Okay, understood. Maybe a follow-up on the retirement side. You announced the partnership with Brookfield and Carlyle earlier in the quarter. Just curious, what are your near-term expectations? How should we think about things evolving, or how are you thinking about the next, say, 12 to 18 months, where things could maybe start to rotate into more private markets and target date funds? Thank you.

Speaker #5: Hi. This is actually Ben Budishan. One of maybe a follow-up on the private markets piece, just curious maybe a two-parter. I guess first, could you kind of remind us of the normal composition of private markets performance fees?

Speaker #5: How should we think about things evolving or how are you thinking about the next say 12 to 18 months where things could maybe start to rotate into more private markets and target date funds?

Speaker #5: Thank you.

Speaker #5: And I think most of it comes from credit, but between part one fees, sort of recurring performance fees, and realization-related revenues, what's the typical mix?

Speaker #4: Yeah, sure. We are very excited about our partnership with Brookfield and Carlisle on the new multi-manager, multi-alt product. We launched for the DC channel.

Onur Erzan: Yeah, sure. We're very excited about our partnership with Brookfield and Carlyle on the new multi-manager, multi-alt product we launched for the DC channel. We also have several other products in the pipeline in the private credit space. Ultimately, it's a slow-moving part of the industry, given the trustees' kind of fiduciary requirements and some of the committee and other dynamics that kind of takes a pretty long time from consideration to deployment in DC. It's very hard to put precise numbers, particularly over a relatively short 12 to 18-month period. I would say we are very strongly positioned in the DC channel, given we have a robust custom retirement platform. We have the ability to customize glide paths. With those glide path-aware expertise, we can create very differentiated alternatives products by ourselves as well as in collaboration with others.

Speaker #5: And is there any more color you can share on the unrealized marks? I know we've seen some of the non-traded BDCs start to report a little bit, but I'm curious what you're seeing in your portfolio.

Speaker #4: We also have several other products in the pipeline in the private credit space. Ultimately, it's a slow moving part of the industry given the trustees kind of fiduciary requirements and some of the committee and other dynamics that kind of takes a pretty long time from consideration to deployment in DC.

Speaker #4: So what we're seeing in private credit is we are seeing the slight decrease in what we saw last year, I think we saw last year was in the mid to upper teens.

Speaker #4: You saw the step-down in Q1 and Q2. I expect that to more normalize in Q3 and Q4, but not necessarily to the levels of last year, but certainly a step up from Q1 and Q2.

Speaker #4: So it's very hard to put precise numbers, particularly over a relatively short 12 to 18 mind period. I would say we are very strongly positioned in the DC channel given we have a robust credit story custom retirement platform.

Speaker #4: And then I think your question was on the marks. One thing I should have added on the earlier call from Bill—the earlier question from Bill—is the marks are not related to credit events.

Speaker #4: These are just unrealized marks. We go out and get the portfolio marked by a third party every quarter, and that's what's driving the reduction in the guidance that we're providing now.

Speaker #4: So we have the ability to customize GlidePads. With those GlidePad aware, expertise, we can create very differentiated alternative products by ourselves as well as in collaboration with others.

Speaker #5: Okay, understood. Maybe a follow-up on the retirement side: you announced the partnership with Brookfield and Carlyle earlier in the quarter. Just curious, what are your near-term expectations?

Speaker #4: So as the DC market adopts private, we're going to be a formidable competitor combining the strength of our DC solutions business with our private alternatives experience.

Onur Erzan: As the DC market adopts privates, we're going to be a formidable competitor, combining the strength of our DC solutions business with our private alternatives experience. That said, probably this is a more medium-term opportunity versus something that we will play out in the next couple of quarters.

Speaker #5: How should we think about things evolving, or how are you thinking about the next, say, 12 to 18 months, where things could maybe start to rotate into more private markets and target date funds?

Speaker #4: That said, probably this is a more medium-term opportunity versus something that we will play out in the next couple of quarters.

Speaker #5: Thank you.

Speaker #4: Yeah, sure. We are very excited about our partnership with Brookfield and Carlyle on the new multi-manager, multi-alt product we launched for the DC channel.

Speaker #5: Okay. Great. Thank you very much.

Ben Budish: Okay, great. Thank you very much.

Speaker #1: There are no further questions at this time. Mr. Dragali, I will now turn the call back over to you.

Operator: There are no further questions at this time. Mr. Jorgali, I will now turn the call back over to you.

Speaker #4: We also have several other products in the pipeline in the private credit space. Ultimately, it's a slow-moving part of the industry, given the trustees' kind of fiduciary requirements and some of the committee and other dynamics, that kind of take a pretty long time from consideration to deployment in DC.

Speaker #5: Thank you, Tracy. And thank you for everyone joining our call. We look forward to catching up with you next quarter. Have a great day.

Ioanis Jorgali: Thank you, Tracy, and thank you for everyone joining our call. We look forward to catching up with you next quarter. Have a great day.

Operator: This concludes today's call. Thank you for attending. You may now disconnect.

Speaker #4: So it's very hard to put precise numbers, particularly over a relatively short 12- to 18-month period. I would say we are very strongly positioned in the DC channel given we have a robust custom retirement platform.

Speaker #4: So we have the ability to customize glide paths. With those glide path-aware expertise, we can create very differentiated alternative products by ourselves, as well as in collaboration with others.

Speaker #4: So, as the DC market adopts private, we're going to be a formidable competitor, combining the strength of our DC Solutions business with our private alternatives experience.

Speaker #4: That said, probably this is a more medium-term opportunity, versus something that we will play out in the next couple of quarters.

Speaker #5: Okay, great. Thank you very much.

Speaker #1: There are no further questions at this time. Mr. Jorgali, I will now turn the call back over to you.

Speaker #5: Thank you, Tracy. And thank you to everyone for joining our call. We look forward to catching up with you next quarter. Have a great day.

Q2 2026 AllianceBernstein Holding LP Earnings Call

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