Seth Bernstein
New dynamics are coming to the fore in the way that global and Australian fund managers think about their businesses and deliver value for clients, the global head of investment firm AllianceBernstein (AB) said in Sydney yesterday.
Seth Bernstein, AB’s President and Chief Executive Officer, said that the industry was entering a new phase of change which added to improvements introduced since the 2008 global financial crisis.
“After the crisis, AB and many other firms understood that serving our clients well in the new market environment required a radical shift away from the old ways of thinking about investment.
“We realized, too, that clients wanted to know more about our corporate culture and values, and what we were doing to leverage the benefits of technology in our business.
“What’s significant now is how important these conversations about culture and technology have become―even more important than they were before.”
After the crisis, AB and other active managers introduced investment strategies which were benchmark-agnostic, and asset-allocation concepts which went beyond the old equity/bonds paradigm and looked instead for risk and return opportunities across the asset spectrum.
AB, for example, responded to client demand by broadening its investment platform to include multi-asset and alternative investment strategies, and a more closely integrated global research platform in which analysts from all asset categories talk to each other and share insights daily.
“These changes have worked well, but competition continues to be relentless across the industry and market conditions remain challenging, as evidenced by recent volatility,” said Bernstein.
“While we continue to innovate in our differentiated investment offerings we are also looking at corporate culture and technology as areas where we can compete and add value for clients.”
AB’s culture has always been collegiate and client-centric, said Bernstein, and a key attribute in attracting and keeping good employees and helping to ensure client satisfaction. Increasingly, AB is finding that its diversity and inclusion policies are making important contributions in these respects.
“If you want to attract and keep the best people, you need a culture that promotes diversity and inclusion across all demographics,” said Bernstein.
“We’re proud, for example, that, for three years in a row, from 2016 to 2018, AB achieved a perfect score of 100 on the Corporate Equality Index, a US national benchmarking tool on corporate policies and practices for LGBTQ employees.
“Our efforts in technology have also been focused on improving our value proposition for clients. For example, Abbie, our virtual bond-trading assistant, provides a range of automated services, all delivered through natural language processing.
“Her tasks include responding to requests for holding information and on-the-run treasury bond characteristics, telling you the credit bucket breakpoints for any benchmark and―particularly important in today’s market conditions―identifying liquid bonds.
“The efficiencies she has introduced have been of direct benefit to clients and have led to AB becoming an acknowledged leader in this field of technology.”
Bernstein noted that these developments, while not directly investment-related, were in fact aspects of AB’s core focus on investment risks and opportunities.
“The risk environment we face today is very different from the one that preceded the 2008 crisis. It includes many new factors, such as Brexit, populism, the US’s diminishing dependence on global oil supplies, China joining global indices and experiencing slower growth, and growth in global debt.
“There are a lot of imbalances out there and they’re likely to cause a few tremors.
“I don’t know how big those tremors might be, but the fact that so many new risks exist is, to me, a powerful argument for maintaining a suitable exposure to active investment strategies.
“They might be a good, alternative way to negotiate uncertainty compared to, for example, passive exchange-traded funds which, while cheap, aren’t necessarily risk-free.”