Bernstein International Strategic Equities Portfolio - SCB · NASDAQ:STESX
Bernstein International Strategic Equities Portfolio - SCB — Bernstein Private Wealth Management — Q4 2023 Earnings Presentation
45 slides from Bernstein International Strategic Equities Portfolio - SCB's earnings presentation, January 2024
Slide 1: Pivot Party: 4Q23 Macro and Markets Perspective
Pivot Party 4Q23 Macro and Markets Perspective 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 advertisement a
Slide 2: A Review of Our Forecasts During 2023
A Review of Our Forecasts During 2023 What we expected vs. what occurred Our Forecasts During Year 2023 Outcome Overall: “By year-end 2023 we expect the investing Overall: Inflation slowed and policy visibility improved, leaving landscape to be much improved.” (December 2022) a much better investing
Slide 3: Despite Strong 2023, More Modest Returns over Last Three Years
Despite Strong 2023, More Modest Returns over Last Three Years Some asset classes have recovered fully, but not all Equity and Fixed Income Returns: 2023 vs. Last Three Years, Annualized 2023 Equity Returns 26% 2023 Bond Returns 24% 2021–2023 Annualized Return 22% 18% 17% 14% 14% 12% 10% 9% 7% 5% 6%
Slide 4: Our 2024 Perspective: Pivot Party
Our 2024 Perspective: Pivot Party Fed Pivot Sparks Year-End Rally Markets welcomed the FOMC’s verbal pivot on rates at the last meeting of 2023—rates fell, bonds and stocks rallied. The dovish tone provides an improved backdrop for 2024. 2024: The Economic Slowdown Should Finally Arrive After not ma
Slide 5: Cash Investors Lose Out in 2023
Cash Investors Lose Out in 2023 Make it a priority to be invested in your strategic allocation for the long term Investors Sought Stability and Pretax Yield in Cash But Cash Underperformed for the Year Money Market Funds, Total Asset Level (USD) Growth of $1M during 2023 $1.20 $6.1 Tn 80/20: $1,180,
Slide 6: 2024 Macro Outlook
2024 Macro Outlook Bernstein Private Wealth Management 6
Slide 7: Wall Street's Key Economic and Market Expectations for 2024
Wall Street’s Key Economic and Market Expectations for 2024 AB’s View: Low Consensus High Bernstein Global growth: Growth is slowing and will continue to do so, but we do not expect a US GDP* -0.9% 0.7% 2.0% 1.0% disruptive hard landing. Inflation: Gradual disinflation is likely to Global GDP* 1.9%
Slide 8: Key Industries Have Already Pulled Back
Key Industries Have Already Pulled Back Bank Lending ISM PMI Manufacturing ISM PMI Services Sr. Loan Survey C&I Credit Standard for Large/Mid Banks 75 65 70 65 70 60 60 65 55 55 60 50 50 55 45 45 50 40 40 1/22 5/22 9/22 1/23 5/23 9/23 12/20 6/21 12/21 6/22 12/22 6/23 12/23 12/20 6/21 12/21 6/22 12/2
Slide 9: The Consumer Slowdown Should Continue as Labor Market Softens
The Consumer Slowdown Should Continue as Labor Market Softens... Labor Market Softening US Retail Sales Weakening Delinquency Rate on Credit Card Initial and Continuing Jobless Claims YoY, % Change Loans* (%, Seasonally Adjusted) 5,000 20 3.0 950 18 4,500 850 16 4,000 2.5 750 14 3,500 12 650 3,000 1
Slide 10: And Particularly as Excess Savings Has Been Spent Down
...And Particularly as Excess Savings Has Been Spent Down Sizable post-pandemic financial cushion for households has been pared down to normal Total Household Liquid Assets and Long-Term Trend USD Billions 16,000 Total Household Liquid Assets 14,000 12,000 10,000 Long-Term Trend 8,000 6,000 4,000 2,
Slide 11: And Yet, Economy Has Few Excesses That Would Cause Acute Recession
And Yet, Economy Has Few Excesses That Would Cause Acute Recession Government debt and deficits bear watching Debt by Sector relative to GDP vs. Start of GFC 180% 130% Start of GFC 80% Q4 2007 30% –20% –70% 1990 1994 1998 2002 2006 2010 2014 2018 2022 Households Financial Sector Nonfinancial Corpora
Slide 12: Inflation Should Slow Nearly to Target by Year-End
Inflation Should Slow Nearly to Target by Year-End FOMC and tighter financial conditions continue to bring inflation to heel 9 8 7 6 5 4 AB US Inflation Forecast 2024 3 YE: 2.5% 2 Fed Target 1 2.0% 0 06/21 12/21 06/22 12/22 06/23 12/23 06/24 12/24 Core Inflation (3 mo avg annualized) Fed Funds Rate
Slide 13: 2024 Markets Outlook
2024 Markets Outlook Bernstein Private Wealth Management 13
Slide 14: As Economy and Inflation Slow, Rates Should Decline Somewhat Further
As Economy and Inflation Slow, Rates Should Decline Somewhat Further Fed Funds Rate and 2024 Forecast 10 Year US Treasury Yield and 2024 Forecast 5.6 5.5 5.4 5.0 5.2 Current 5.0 (12/31/2023): 4.5 5.25%–5.5% 4.8 4.0 4.6 4.4 3.5 Current (12/31/23): 4.2 3.88% AB 2024 YE 3.0 AB 2024 YE 4.0 Forecast: For
Slide 15: Bonds Begin to Rally in Advance of First Cut
Bonds Begin to Rally in Advance of First Cut Fixed-income returns in rate-cut cycles since 1980, indexed to nine months before first cut Municipal Bond Returns Taxable Bond Returns Cumulative return, indexed to nine months prior to rate cuts Cumulative return, indexed to nine months prior to rate cu
Slide 16: Bond Total Return Should Outpace Yield Alone in 2024
Bond Total Return Should Outpace Yield Alone in 2024 10-Year US Treasury Yield (%) Total Return, 12 months forward* (Percent) 5 5.2% 4 10-Year US Treasury Yield (%) AB Forecast, 2.0% 3 YE 2024 3.25% 2 3.2% 1 0 2018 2019 2020 2021 2022 2023 2024 Muni Intermediate Duration Income Price Appreciation As
Slide 17: A Diverse Bond Platform, Based on Long-term Objective
A Diverse Bond Platform, Based on Long-term Objective Yields and After-Tax Yields For Various FI Services 6 Cash Short Duration Intermediate Duration 5.5 YEAR 5.8% 5 Gov. MM SD Income 5.2% 5.2% 4.5 4 Yield (%) …After-Tax* Tax-Aware Muni 3.5 3.8 3.4% Tax-Aware FI (TAFI) Muni High Quality 3 3.5% ID Mu
Slide 18: Corporate Earnings Picture Improves by Year-End and into 2025
Corporate Earnings Picture Improves by Year-End and into 2025 S&P 500 Trailing 12-Month Earnings Per Share 260 240 2023 YE: AB 2025 YE $218 Forecast: 220 AB 2024 YE $245 Forecast: 200 $227 180 160 140 120 100 2018 2019 2020 2021 2022 2023 2024 2025 As of December 30, 2023. Current analysis and forec
Slide 19: Much of 2024 Equity Returns Were Pulled Forward into 2023
Much of 2024 Equity Returns Were Pulled Forward into 2023 Cone around our base case is now narrower given greater visibility into economic landscape Scenario Analysis: S&P 500, YE 2024—not incl. dividends 5,500 5,300 5,250 5,000 5,000 4,750 SPX as of YE 2023 : $4,769.83 4,800 4,500 4,400 4,250 4,000
Slide 20: Best Ideas: Prepare for Slowdown While Taking What Market Provides
Best Ideas: Prepare for Slowdown While Taking What Market Provides PE & VC Private Credit Opportunities Catalyzed by the Current Environment: Near-Term Volatility Mitigating downside risk, while Target Return allowing for upside participation Peak Rates Real Estate, The hiking cycle will end soon an
Slide 21: Asset Allocation 101: Be Diversified
Asset Allocation 101: Be Diversified Well-Diversified Allocation Should Have Exposure to Assets That Work In Varied Environments Base Case Immaculate Disinflation Modest Deceleration Inflation slows further, but without an Hard Landing Scenario Slowdown arrives, pulling inflation toward economic slo
Slide 22: What to Know About Election Years
What to Know About Election Years It’s Hard to Find a Causal Relationship Year Winner S&P Return Year Winner S&P Return 1928 Hoover 38% 1992 Clinton 8% 1932 Roosevelt –15% 1996 Clinton 23% 1936 Roosevelt 34% 2000 Bush (W.) –9% 1940 Roosevelt –10% 2004 Bush (W.) 11% 1944 Roosevelt 20% 2008 Obama –37%
Slide 23: Appendix
Appendix Bernstein Private Wealth Management 23
Slide 24: Private Credit: Filling the Lending Vacuum
Private Credit: Filling the Lending Vacuum With banks in defensive mode, the door is open for private investors Banks in Retreat Favorable Terms to Fill the Gap A Still Promising 2024 Loans by All Commercial Banks—Annual Private Credit Illustrative Yield Profiles* Growth Rate % • After fears sparked
Slide 25: Exogenous Shock: Perhaps the Economy's Greatest Un-forecastable Risk
Exogenous Shock: Perhaps the Economy’s Greatest Un-forecastable Risk US GDP (% Change from Preceding Period) Energy Global Inflation/ Spike/Fed Valuation Financial Trying to forecast the Fed Error Tightening Bubble Crisis Pandemic unforeseeable: 15 • Some shock risks can be identified in advance (e.
Slide 26: The Economy Has Digested Countless Headwinds
The Economy Has Digested Countless Headwinds Issue Reason for Resilience Small economic countries + limited gas impact on Europe due to mild 20+ months of war in Ukraine winter ~45% commodity price spike (1H2022) ~20% decline since China’s zero-covid Policy and soft reopening Economic resilience els
Slide 27: Our Expectation for Mild Slowdown Requires Delicate Balancing Act
Our Expectation for Mild Slowdown Requires Delicate Balancing Act Our base case remains a gradually weakening economy to characterize the next few quarters, but we do not forecast a hard landing. Hiring and/or Inflation Wages Expectations China Debt Geopolitical Reaccelerate De-anchor Debacle Risk E
Slide 28: Beyond Leaders, Valuations More Reasonable
Beyond Leaders, Valuations More Reasonable 12-Month Forward Price/Earnings Ratio 34x 26x 20x 16x 13x Magnificent 7* S&P 500 S&P 500 Equal Weight Russell 2000 MSCI ACWI ex US As of December 31, 2023. Past performance does not guarantee future results. Simulated or hypothetical performance results hav
Slide 29: Stock Valuations Relative to Interest Rates
Stock Valuations Relative to Interest Rates Forward P/E multiples* and interest rates since 1978 30 Post–Global Financial Crisis Dot-Com Bubble 25 All Other Periods Since 1978 Dec 2023 Forward S&P 500 P/E 20 Dec 2021 15 10 5 10Y Rate: 3.0%–4.5% 0 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 10-Year US T
Slide 30: International Leadership Is Episodic; You Want to Be There When It Turns
International Leadership Is Episodic; You Want to Be There When It Turns Growth of a Dollar Dev Int: Emerging US: Emerging Markets: US: Apr 1984– Markets: Dec 1994–Mar Apr 2000–Dec 2007 Jan 2008–Dec 2023 Dec 1987 Jan 1988–Nov 1994 2000 3.5 6.5 3.5 3.5 4.5 3.5 2.5 4.5 2.5 2.5 2.5 1.5 2.5 1.5 1.5 1.5
Slide 31: 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 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022 As of December 30
Slide 32: ~25% of Any Recovery Occurs in Month One, ~40% by Month Three
~25% of Any Recovery Occurs in Month One, ~40% by Month Three % of % of Weeks Recovery in Recovery in After Bear-Market Troughs Peak-to- Peak-to- from Start 1st Month 1st 3 Months % Recovery Occurring in… Peak Trough Peak-to- Recovery to Down Following Following Month Months Trough Fall Months 20% T
Slide 33: Market Sell-offs: Last 60 Years
Market Sell-offs: Last 60 Years Cumulative Returns Peak-to- 12-Month Return 3-Year Return 5-Year Return 10-Year Return Peak Trough Peak-to- Trough Following Following Following Following Month Month Trough Fall Trough Trough† Trough† Trough† Months 12/12/1961 6/26/1962 6 –27% 37% 75% 106% 186% 2/9/1
Slide 34: 10-Year Capital-Markets Projections: Asset Classes
10-Year Capital-Markets Projections: Asset Classes Median 10-Year One-Year 10-Year Annual Mean Annual Return Mean Annual Income Growth Rate Volatility Equivalent Volatility Cash Equivalents 3.7% 3.9% 3.9% 0.5% 5.0% Short-Term Treasuries 4.4% 4.5% 4.2% 1.2% 4.4% Short-Term Taxables 4.7% 4.8% 4.7% 1.5
Slide 35: Estimated Spending Rate and Core Capital Amounts: Based on Age
Estimated Spending Rate and Core Capital Amounts: Based on Age Sustainable Spending Rate* Allocation 0/100 20/80 40/60 60/40 80/20 100/0 Age 55 1.4% 1.8% 2.1% 2.2% 2.2% 2.0% Age 65 2.0 2.4 2.6 2.8 2.8 2.6 Age 75 3.0 3.4 3.6 3.8 3.7 3.7 Estimated Core Capital—Spending $100,000 USD Millions Allocation
Slide 36: Notes on the Bernstein Wealth Forecasting System
Notes on the Bernstein 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
Slide 37: Notes on the Bernstein Wealth Forecasting System (cont.)
Notes on the Bernstein Wealth Forecasting System (cont.) 2. Modeled Asset Classes The following assets or indices 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 Treasur
Slide 38: Notes on the Bernstein Wealth Forecasting System (cont.)
Notes on the Bernstein Wealth Forecasting System (cont.) 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 volatili
Slide 39: Notes on the Bernstein Wealth Forecasting System (cont.)
Notes on the Bernstein Wealth Forecasting System (cont.) 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 Capita- Taxpayer Scenario Start Year End Year Tax Method Type Tax Rate Gains Tax Ra
Slide 40: Supplemental Performance Information
Supplemental Performance Information Annualized as of 12/31/2023 Product Inception Date Fee 1 YR (%) 3YR (%) 5YR (%) Inception (%) ABFIS-Government Money Market Portfolio-Advisor 11/10/2017 Net of Fees 5.01 2.13 1.77 1.70 AB Short Duration Income Portfolio- Advisor 12/12/2018 Net of Fees 6.96 (0.01)
Slide 41: 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 Bloomb
Slide 42: 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 43: 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 44: 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 45: The [A/B] logo is a registered service mark of AllianceBernstein, and AllianceBernstein ® is
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. © 2024 AllianceBernstein L.P. BPWM-475930-2024-01-05
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