Bernstein International Strategic Equities Portfolio - SCB · NASDAQ:STESX
Bernstein International Strategic Equities Portfolio - SCB — Bernstein — Q1 2025 Earnings Presentation
48 slides from Bernstein International Strategic Equities Portfolio - SCB's earnings presentation, April 2025
Slide 1: Certainly Uncertain: 1Q 2025 Macro and Markets Review
Certainly Uncertain 1Q 2025 Macro and Markets Review This presentation is provided by Bernstein. This presentation booklet has been provided to you for use in a private and confidential meeting to discuss a potential or existing investment-advisory relationship. This presentation is not an advertise
Slide 2: What Are the Key Controversies?
What Are the Key Controversies? Our take on what market participants agree and disagree on It can, but a recession is now distinctly possible. Can the economy hold up amid tariff For now, we expect a slowdown and will wait to see how trade uncertainty? negotiations evolve. Will tariffs hurt profits,
Slide 3: What's Changed Since Year-end 2024?
What’s Changed Since Year-end 2024? • The Trump administration has moved quickly to implement 14% part of its policy agenda, notably tariffs and immigration 12% 12% • Tariffs remain front and center for investors, with all trade partners ‘in scope’ 10% • The equity market’s initial optimism that t
Slide 4: 1Q 2025: Certainly Uncertain
1Q 2025: Certainly Uncertain The Markets Price Tariff Effects A steep early April selloff helped erase 12 months of gains. The culprit was tariff fears and what may come from a re-alignment of the global order. In our view, a recession is distinctly possible, and inflation is likely elevated. Fed In
Slide 5: 2025 Macro Outlook
2025 Macro Outlook 1Q 2025 Macro and Markets Review 5
Slide 6: Our Key Economic and Market Expectations for 2025
Our Key Economic and Market Expectations for 2025 • US Growth: Growth is likely to slow as Bernstein the tariff effects bite. We took ~0.5% out 2025 of our original 2025 US GDP forecast. US GDP* 1.0% • Monetary Policy: With a now slower Policy Rate Change (0.75%)+ growth outlook, we think 3+ cuts ar
Slide 7: Trade Dynamics Are Complex
Trade Dynamics Are Complex Total US import value per category (all countries) Machinery Large share of 600 Electrical Machinery large category 500 China Import Value from Country (USD Billion) Vehicles 400 Mexico 100 USD Billions Electrical Mineral Fuels/Oils Mineral 50 300 Fuels/Oils Vehicles 20 Ve
Slide 8: The Tariff State of Play
The Tariff State of Play With trade policy this fluid, the latest figures should be written in pencil Country Imports Tariff Change What’s the Latest? Mexico $475.6 bil. 10% • As it currently stands, a baseline tariff of 10% has been China $427.2 bil. 145% announced upon all foreign importers Canada
Slide 9: Near-Term Inflation Expectations Increased, Longer-Term Anchored
Near-Term Inflation Expectations Increased, Longer-Term Anchored Inflation Breakeven Rates A rise in the 1-year breakeven rate without a corresponding rise in longer-term rates suggests the market believes the impact of tariffs will be one time (as opposed to prolonged) 4 3 2 1 0 1 year 5 year 10 ye
Slide 10: Federal Employees: Small Labor Force But Unemployment Moving Up
Federal Employees: Small Labor Force But Unemployment Moving Up Federal Employment as a Percent of Total Unemployment Claims in Virginia, Maryland, and DC (1-month average) 4.5% 8000 Note: It is estimated that roughly two contractor jobs are lost for 4.0% each federal employee job lost 7000 3.5% 3.0
Slide 11: European Purse Strings May Loosen, Particularly as US Pulls Back
European Purse Strings May Loosen, Particularly as US Pulls Back Surplus/Deficit as a Percent GDP • Greater spending on defense and 2.5% infrastructure would be a game changer in Europe given the 0.0% region’s historical austerity -2.5% • That said, the multiplier of defense spending is fairly limit
Slide 12: Markets Outlook
Markets Outlook 1Q 2025 Macro and Markets Review 12
Slide 13: Selloffs Like The Current One Have Happened Before
Selloffs Like The Current One Have Happened Before S&P 500 Drawdowns* 0% -10% Correction -20% Bear Market -30% -40% -50% -60% 1977 1980 1983 1986 1989 1992 1995 1998 2001 2004 2007 2010 2013 2016 2019 2022 2025 As of April 4, 2025. Past performance is not necessarily indicative of future results. Th
Slide 14: Uncertainty Has Weighed on an Otherwise Solid Economy
Uncertainty Has Weighed on an Otherwise Solid Economy Contributing Factors: Current and 2H Potential Solid Economy Uncertainty Geopolitical De-escalation Tax Fed Cuts Extension Or Cuts Solid AI Resilient Earnings Trade/Tariff Labor Market Development Growth Effects (Profits & Inflation) Cuts to Geop
Slide 15: The Trump Trade More Than Round Trips
The Trump Trade More Than Round Trips S&P 500 Price Index 10-Year US Treasury Yield, Percent DXY Currency 6400 5 112 6200 110 4.8 6000 108 4.6 5800 106 4.4 5600 104 4.2 5400 102 5200 4 100 5000 3.8 98 Nov 24 Dec 24 Jan 25 Feb 25 Mar 25 Apr 25 Nov 24 Dec 24 Jan 25 Feb 25 Mar 25 Apr 25 Nov 24 Dec 24 J
Slide 16: Recovery Quicker, Drawdown Less Acute For Non-Recessionary Declines
Recovery Quicker, Drawdown Less Acute For Non-Recessionary Declines 10%+ Sell-offs Since 1990 Growth of $100 COVID $140 No Recession Recession $130 $120 Count 8 4 $110 Avg. Peak –14.8% –29.8% $100 to Trough Decline $90 Largest (%)/Year –24.5%/2022 –55.3%/2007/09 $80 $70 Dot.com Avg. Time to Recover
Slide 17: Stocks Have Mostly Risen Despite Intra-Year Corrections
Stocks Have Mostly Risen Despite Intra-Year Corrections S&P 500 (%) by Calendar Year 40 Year’s Total Return 30 20 10 0 –10 –20 –30 –40 Intra-Year Peak-to-Trough Decline –50 1980 1983 1986 1989 1992 1995 1998 2001 2004 2007 2010 2013 2016 2019 2022 2025 As of April 4, 2025. Past performance does not
Slide 18: Penalties for Missing the Market's Best Days Are Stiff
Penalties for Missing the Market’s Best Days Are Stiff S&P 500 Total Return Annualized, January 1988–March 2025 All 9,386 Days 12.76% Excludes Best 10 Days 10.34% Excludes Best 20 Days 8.74% Excludes Best 30 Days 7.38% Excludes Best 40 Days 6.17% Excludes Best 50 Days 5.06% Annualized T-Bill Return
Slide 19: Our 2025 S&P 500 Base, Bull, and Bear Case Assumptions
Our 2025 S&P 500 Base, Bull, and Bear Case Assumptions Increasing the likelihood of the bear case while lowering our targets across the board Scenario Analysis: S&P 500, YE 2025—not incl. dividends Bull: Would necessitate a quick reversal on tariffs and TCJA 6,750 extension. Inflation falls toward S
Slide 20: Expect Positive Returns…Even If Yields Rise Above 5%
Expect Positive Returns…Even If Yields Rise Above 5% Expected 12-Month Municipal Returns Scenario Analysis 10-Year US Treasury Yield, Percent 5.5 10Y UST, 0.1% 5.3% 4.5 • Our year-end 2025 forecast is a 10Y UST, 4.0% 10Y yield at 3.5% 4.0% • If correct, munis should deliver a 3.5 10Y UST, 3.8% 5.2%
Slide 21: Diversification Benefits
Diversification Benefits 1Q 2025 Macro and Markets Review 21
Slide 22: What Have You Done for Me Lately
What Have You Done for Me Lately Diversification (re)emerges as beneficial so far in 2025 Performance YTD +17.6% +14.7% +15.1% +15.2% +15.5% +15.5% +3.6% 4.2% 1.3% 1.7% 1.7% 2.0% 2.1% +0.0% –10.8% –9.8% –13.4% –24.2% Mag 7* S&P 500 S&P 500 Bloomberg MSCI EAFE MSCI Bloomberg Bloomberg Bloomberg Equal
Slide 23: What Have You Done for Me Lately (Continued)
What Have You Done for Me Lately (Continued) Diversification (re)emerges as beneficial so far in 2025 Performance Since S&P 500 Peak on Feb. 19 +17.8% +19.0% +19.8% +13.3% +10.4% +11.6% +3.6% 2.5% 0.6% 1.7% +0.0% –4.0% –6.8% –5.7% –7.8% –13.6% –17.3% –25.1% Mag 7* S&P 500 S&P 500 Bloomberg MSCI EAFE
Slide 24: Equity Concentration Finally Bites
Equity Concentration Finally Bites S&P 500, Equal Weighted Index, and Mag 7 Cumulative Total Return, Percent 10.0% 5.0% 0.0% -5.0% -8.8% -10.0% -9.8% -13.4% -15.0% -20.0% -25.0% -24.2% Dec 24 Jan 25 Feb 25 Mar 25 S&P 500 S&P 500 Equal Weighted Mag 7* Other 493* As of April 4, 2025. *Magnificent 7 re
Slide 25: A Game Changer in Europe? A Rally with Catalysts
A Game Changer in Europe? A Rally with Catalysts European Markets 120 Better-than-expected earnings Falling yields Moderating inflation Further expected ECB cuts Merz’s “whatever it takes” 110 statement 100 White House meeting with Volodymyr Zelenskyy 90 Dec 24 Jan 25 Feb 25 Mar 25 Euro Spot Rate to
Slide 26: Why Be Balanced? Preparation for Varied Market Environments
Why Be Balanced? Preparation for Varied Market Environments Prudent diversification means an investor will never only own the best performer • Different sources of return +0.5% (thru Feb.)* • Diversification Private Alternatives • Attractive risk-adjusted returns • Attractive level of income +1.3% Y
Slide 27: Dislocations Have Emerged Across Private Markets
Dislocations Have Emerged Across Private Markets Rising interest rates have reduced liquidity across private markets, creating an attractive entry point for liquidity providers Decreased Transaction Volume Has Lack of Exits Has Contributed to Lack Traditional Lenders Have Pulled Back, an Limited Exi
Slide 28: Best Ideas for 2H 2025
Best Ideas for 2H 2025 PE & VC Opportunistic Credit Core Private Credit Opportunities Catalyzed by the Current Environment: Near-Term Volatility Upside participation with downside Target Return protection or the benefit of active tax- loss harvesting Real Estate, Peak Rates Debt & Equity The hiking
Slide 29: Appendix
Appendix 1Q 2025 Macro and Markets Review 29
Slide 30: Timing the Market Means Getting Out and Getting Back In
Timing the Market Means Getting Out and Getting Back In S&P 500 Rolling Three-Year Returns, Annualized, Jan 1988– Mar 2025 The Cost of Missing Out • Getting out in advance of a major sell-off is difficult to time. Getting back in is equally difficult. • Further, the after-tax impact makes the hurdle
Slide 31: Return Factors and Geography Are Cyclical
Return Factors and Geography Are Cyclical Geography Returns YTD 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 Developed Developed Emerging Emerging Emerging Emerging Emerging S&P 500 Int'l Small S&P 500 Int'l Small S&P 500 S&P 500 Int'l Smal
Slide 32: Warning Lights Are Flashing, but Alarms Are Not Blaring
Warning Lights Are Flashing, but Alarms Are Not Blaring It is simply too soon to say how DOGE and other policy shifts will impact the trajectory on net Federal Debt Held by the Public Click below for our latest white paper for more insights Percentage of GDP 180 160 140 120 Coronavirus World War II
Slide 33: Consumer Debt Causing Some Strain, Though Shouldn't Be Overstated
Consumer Debt Causing Some Strain, Though Shouldn’t Be Overstated Total Debt Balance and Its Composition Total Balance by Delinquency Status Trillions of Dollars Percent 12 18 61% of GDP 3% 10 9% 8 6 15 85% of GDP 7% 4 9% 2 0 2% 4Q03 4Q04 4Q05 4Q06 4Q07 4Q08 4Q09 4Q10 4Q11 4Q12 4Q13 4Q14 4Q15 4Q16 4
Slide 34: What's Going On with Gold?
What’s Going On with Gold? US Economic Policy Uncertainty Index Gold Spot Rate to USD Our Insights 400 3,200 • Central bank purchases have contributed to rising gold prices for 350 3,100 over a year now, but the safe-haven asset is now rallying further, hitting 300 multiple new highs this year 3,000
Slide 35: Geopolitics: Events Rarely Have a Lasting Market Impact
Geopolitics: Events Rarely Have a Lasting Market Impact Select geopolitical events since 1970 and S&P 500 returns (percent) First First Event Trading Day 1 Week 1 Month 1 Quarter 1 Year Event Trading Day 1 Week 1 Month 1 Quarter 1 Year Watergate 6/19/1972 –0.1 –1.4 0.4 –3.0 SARS† 2/11/2003 –0.1 –3.2
Slide 36: Expected Returns Across Allocations
Expected Returns Across Allocations Projected median 10-year annualized return* Last 10 Years† 6.1% 6.6% 5.5% 4.4% 3.1% All Bonds 30/70 60/40 80/20 All Stocks <2% <2% Probability of 20% Peak-to- Trough Loss Within 10 Years‡ 15% 38% 60% As of March 31, 2025. Neither past nor forecasted performance is
Slide 37: Ten-Year Capital Market Projections: Asset Classes
Ten-Year Capital Market Projections: Asset Classes Median 10-Year Mean Annual Mean Annual One-Year 10-Year Annual Growth Rate Return Income Volatility Equivalent Volatility Cash Equivalents 3.4% 3.5% 3.5% 0.5% 5.0% Short-Term Treasuries 3.9% 4.0% 3.8% 1.2% 4.2% Short-Term Taxables 4.1% 4.2% 4.2% 1.5
Slide 38: Notes on Wealth Forecasting System
Notes on Wealth Forecasting System 1. Purpose and Description of Wealth Forecasting Analysis Bernstein’s Wealth Forecasting Analysis is designed to assist investors in making their long-term investment decisions as to their allocation of investments among categories of financial assets. Our planning
Slide 39: Notes on Wealth Forecasting System
Notes on Wealth Forecasting System 2. Modeled Asset Classes The following assets or indexes were used in this analysis to represent the various model classes: Asset Class Modeled As Annual Turnover Cash Equivalents 3-month US Treasury bills 100% Short-Term Treasuries US Treasuries of 2-year maturity
Slide 40: Notes on Wealth Forecasting System
Notes on Wealth Forecasting System 3. Volatility Volatility is a measure of dispersion of expected returns around the average. The greater the volatility, the more likely it is that returns in any one period will be substantially above or below the expected result. The volatility for each asset clas
Slide 41: Notes on Wealth Forecasting System
Notes on Wealth Forecasting System 7. Tax Rates Bernstein’s Wealth Forecasting Analysis has used the following tax rates for this analysis: Federal Income Federal Capital State Income Tax State Capital Taxpayer Scenario Start Year End Year Tax Method Type Tax Rate Gains Tax Rate Rate Gains Tax Rate
Slide 42: Summary Notes on Our Capital Markets Engine
Summary Notes on Our Capital Markets Engine Effective investment planning requires an understanding of the plausible range of long-term investment outcomes. Through careful use of historical data and proprietary research, the AllianceBernstein Global Capital Markets Engine projects—via simulation—th
Slide 43: Glossary of Risk and Return Statistics
Glossary of Risk and Return Statistics Summary statistics are based on 10,000 simulated trials. Along each trial (or “path”), price changes and cash flows are projected at an annual interval, out to 50 years. Statistics are computed based on the ranges of outcomes across these paths. Median Annualiz
Slide 44: Index Descriptions
Index Descriptions The Bloomberg Global High Yield Index represents noninvestment-grade fixed-income securities of companies in the US, developed, and emerging markets. The Bloomberg US Treasury Index represents the performance of US Treasuries within the US government fixed-income market. The Bloom
Slide 45: Glossary
Glossary Active Management: Managing a portfolio through security selection designed to outperform the portfolio’s benchmark. Active Share: The degree of difference between a portfolio and its benchmark index, calculated using the weight of individual securities in the portfolio relative to the benc
Slide 46: Glossary (cont.)
Glossary (cont.) Inflation-Protected Bonds: Bonds whose values are indexed to inflation, normally adjusted on a semiannual basis. The most well known are Treasury Inflation-Protected Securities, or TIPS. Inflation-protected bonds are designed to shield investors from the negative impact of inflation
Slide 47: Disclosures and Important Information
Disclosures and Important Information Hypothetical, back-tested, or simulated performance has many inherent limitations, only some of which are described herein. The hypothetical performance shown herein has been constructed with the benefit of hindsight and does not reflect the impact that certain
Slide 48: AllianceBernstein service mark notice
The [A/B] logo is a registered service mark of AllianceBernstein and AllianceBernstein® is a registered service mark, used by permission of the owner, AllianceBernstein L.P. © 2025 AllianceBernstein L.P. BPWM-714853-2025-04-04