Institutional capital might be flowing steadily into passively managed strategies, but active managers are refusing to throw in the towel.
AllianceBernstein LP is perhaps the most recent success story among active managers, experiencing steady institutional inflows after reorganizing their business and making acquisitions.
“We've been focusing on high-conviction strategies and differentiating ourselves from the competition over the last several years,” said Dianne F. Lob, AllianceBernstein's senior managing director for equities and head of global business development in New York.
She added AllianceBernstein has been working to diversify its lineup of equity offerings, having launched a suite of global, international and U.S. strategic core equity strategies and acquiring boutique specialty managers beginning in 2011.
“It's a combination of services we've developed internally with existing employees and some services we've acquired,” Ms. Lob said.
BlackRock, for example, has been boosting its factor-based investing capabilities since June 2015. Eaton Vance is offering non-transparent exchange-traded managed funds through its NextShares Solutions LLC subsidiary.
And a number of money managers, including Fidelity Investments, Goldman Sachs Asset Management and Vanguard Group Inc., are beginning to market actively managed ETFs (Pensions & Investments, Sept. 5).
AllianceBernstein developed a defensive core investment platform in 2011 for clients concerned with managing downside risk called Strategic Core Equities. The platform currently has $2 billion in assets.
In 2013, it launched European Opportunities and Emerging Consumer equity portfolios, which have $1.5 billion in assets.
On the acquisition side, the firm in 2011 completed the acquisition of Caxton Alternative Management's long-only and long-short equity growth strategies and relaunched it as Select Equities. Caxton's platform had $1 billion in AUM when it was acquired; it now has $13.5 billion.
In 2013, the firm acquired concentrated U.S. and global growth firm WP Stewart & Co. Ltd. And just in August, AllianceBernstein agreed to acquire Ramius Alternative Solutions LLC, a manager with more than $3 billion in assets under management that specializes in factor-based and multiasset and alternative risk premium strategies.
A recent report from Moody's Investors Service shows that while many active managers failed to respond to what it called “the passive threat,” AllianceBernstein “has taken a number of steps over the last few years to respond to the threat from passive investing and to make the firm more broadly adaptive to shifting industry terrain.”
“The results so far are modest but encouraging,” the report added.
Dean Ungar, a vice president and senior analyst at Moody's and author of the report, said in a phone interview that the New York-based manager is “trying to respond to the challenge of passive investing” by “creating an investment platform that is customer-centric and goes places where passive doesn't go.”