The Last Risk Premium Standing

By most measures, the world is a less risky place for investors,

and almost all financial assets have been re-priced accordingly.
Yet the risk premium in equities remains at historical levels.
Why this divergence and what are its implications?

Lewis A. Sanders
Chairman and Chief Executive Officer

MAY 2007
About the Author

Lewis A. Sanders
Chairman of the Board of Directors and
Chief Executive Officer

Mr. Sanders became AllianceBernstein’s Chairman in

January 2005; he became CEO in July 2003. He had been
Vice Chairman and CIO since October 2000. Before the
combination of Alliance Capital and Sanford C. Bernstein &
Co., Inc. in October 2000, Mr. Sanders served for seven years
as CEO of Bernstein. In his 32 years at Bernstein, he also
served as president and chief operating officer, with senior
responsibility for all research and investment-management
operations (1981–1993); executive vice president (1979–
1981); and research director (1972–1981). Mr. Sanders
joined Bernstein in 1968 as a research analyst, establishing
credentials that would lead to his being named to the
Institutional Investor All-America Research team four times.
Before joining Bernstein, Mr. Sanders worked at Oppenheimer
& Co. for two years as a research assistant. He holds a BS in
operations research from Columbia University. CFA.
The Last Risk Premium Standing
Lewis A. Sanders, Chairman and Chief Executive Officer
Most investment assets are being priced for a more stable investment environment.
Equities stand as the major exception.
Is the financial world losing its grip again? Consider
what’s under way in the capital markets.
In 2006, the aggregate value of mergers and acquisitions
completed reached $3.3 trillion, triple the level just three
years ago. An incredible $2.3 trillion of that total was
financed with cash. In the first quarter of 2007, the value
of M&A deals announced rose another 50% to more than
$5 trillion at an annual rate.
Taking companies private is now all the rage. By some
accounts, equity capital raised but not yet invested by
private equity firms now exceeds $300 billion, implying
potential buying power with leverage of well more than
$1 trillion. And the money keeps pouring in.
The price of commercial real estate has soared. In just the
last few years, AAA commercial property is up more than
50% in many markets and 100% in prized areas such as
New York City. Cash-on-cash yields1 of as low as 3% to
4% are no longer unusual for exceptional properties—
yields that would have been unthinkable for most of
modern business history.
Lubricating these phenomena is a depth of liquidity in
the fixed-income capital markets that has no histori-
cal precedent, and at credit spreads that have collapsed,
especially for speculative grades—so much so that the
term high-yield bond is, in some sense, losing its mean-
ing. And it’s more than just credit spreads that are low,
so is the real long-term rate, the term premium and the
inf lation premium.
1 Cash income (rents less operating expenses less debt payments) divided by market value
Corporate buyers, private-equity investors and fixed-
income lenders appear to be operating as if the world
has changed. They are making a wager that risk is much
lower, that more leverage can be safely employed, and
that stocks, even at the higher prices achieved over the
past few years, are still extremely attractive.
Traditional equity investors don’t appear to see things
the same way. Stocks are priced as if little has changed.
The equity risk premium is at its long-term average—
price-to-earnings ratios are near the mean of the last 50
years. In the US, households are net sellers of stock at
a rate larger than at any time in history. Some pension
funds, in an attempt to “de-risk” their assets relative to
their liabilities, are cutting equity allocations and raising
exposure to fixed income.
So who’s right? What explains this dichotomy? Will it all
come to a bad end?
The weight of evidence would appear to be on the side
of the optimists. There is much evidence to suggest
that the world has actually become a less risky place in
economic terms and for reasons that should prove last-
ing. This would mean that the higher level of risk that
continues to be priced into equities provides an exploit-
able opportunity.
May 2007 1
Signs of Lower Risk Are Plentiful
To examine why the world has become less risky and
is likely to stay that way (at least for a while), let’s focus
first on the US. We broke up the last 60 years into three
segments—the post-World War II boom, the era of high
inf lation that followed and, finally, the current era of
stability. We then looked at the change in a number of
metrics over these periods, specifically real growth, inf la-
tion and corporate profits. In every case, the decline in
volatility has been striking (Display 1), typically on the
order of 50% or more. So for example, real GDP growth
averaged 3.4% p.a. over the 1946–2006 period. It used to
have a volatility of ±3% around the average, but that has
declined to ±1.2% over the last 20 years.
Display 1
Economic Volatility Has Fallen Sharply
Volatility
GDP Growth Inflation
What accounts for the decline? Most of it came from just
a few areas (Display 2):
• Federal spending on defense,
• Swings in inventories,
• Consumer investment in housing and
other durable goods, and
• Trade with the rest of the world.
The reduction in volatility from these sources collectively
accounts for 80% of the total decline. And it is a decline
that in each case looks durable.
Take defense spending. Certainly, it’s still volatile. But
it just doesn’t matter much anymore. During the 1950s,
defense spending averaged nearly 16% of GDP (Display 3),
a figure that still seems startling for a period that was,
after all, mostly a period of peace. Defense spending was
still 12% of GDP during the 1960s. As such, when con-
Corporate Profit Growth f licts like the Korean and Vietnam Wars came along, they
22.6% imparted huge volatility to economic output.
16.7%
12.8% Display 3
Defense Spending Has Lost Its Significance in Relation to GDP

3.0% 2.7% 3.2% 2.0%

1.2% 0.6% Defense Spending as % of Real GDP
20%
■ 1946–68 Post-War Boom ■ 1969–84 High Inflation ■ 1985–06 Stability
15 Average 16%
Source: Bureau of Economic Analysis (BEA) and AllianceBernstein
10 Average 12%

Display 2 5
Five Sectors Have Driven Volatility Decline Average 4%
0

Contribution to GDP Growth 50 54 58 62 66 70 74 78 82 86 90 94 98 02 06

(Volatility) Through December 31, 2006
1.9% Source: BEA
Defense
0.5% 0.3% 0.2%
By the start of the current decade, however, defense
1.4%
Inventories 0.9% spending had fallen to little more than 4% of GDP. Thus,
0.5% 0.4%
the surge in spending associated with the Iraqi conf lict
Residential has been hardly noticeable in economic performance.
Investment 0.7% 0.8%
0.3% 0.2% What was a source of nearly 200 basis points in the
volatility of economic growth in the 1950s and 1960s has
Goods 0.7% 0.5% 0.3% 0.2% fallen to little more than 20 basis points today.

Trade 0.7% 0.9% The story in inventories is similar. Manufacturing has

0.5% 0.4%
played a progressively diminished role in the economy.
Post-War Boom High Inflation Stability At the same time, businesses have gotten much better at
1946–1968 1969–1984 1985–1995 1996–2006 inventory management. The amount of stock needed per
unit of output has gone down, and swings in stock levels
Source: BEA and AllianceBernstein due to errors in planning are of lesser magnitude.

2 The Last Risk Premium Standing

Inventories, in response, have fallen from 26% of GDP The third source of reduced volatility stems from smaller
coming out of the 1950s to 14% today (Display 4, top). swings in consumer spending on housing and durable
This, coupled with better management, has reduced the goods. In part, the increased stability is a function of posi-
contribution to economic volatility from this source by a tive feedback from other sectors, like inventory, which
resounding 65%, from 140 basis points in the 1950s and used to produce big changes in employment and personal
1960s to a mere 40 basis points in the last 10 years. income, inducing like swings in discretionary spending
on deferrable items such as cars and appliances.
Moreover, even these remaining effects have been
dampened by the globalization of supply chains. We now Financial Deregulation Has Made a Big Difference
import more than 50% of the goods we consume, up But the largest effect has come from the deregulation of
from an average of about 30% 20 years ago (Display 4, the US financial system, which transformed monetary
bottom). Accordingly, if there’s too much inventory, policy into a mechanism to control the price of credit as
fully half of the resulting production and employment opposed to its availability. Credit crunches, of course, are
downturn is absorbed by our trading partners, which, still possible, but they are no longer the rule. In the days
of course, are a diversified bunch, with no single source when the primary source of credit came from banks, and
accounting for more than 15% of the total. Inventory interest rates on bank deposits were set by government
adjustments, which used to be a country-specific affair, regulation under Regulation Q, which dates back to the
are now diffused across the globe. Glass-Steagall Act of 1933, bouts of disintermediation
often shut down the supply of credit quite abruptly. You
Display 4 wanted a mortgage and were fully qualified to service
The Economy’s Inventory “Intensity” Has Fallen Sharply… the debt, but you just couldn’t get one—the money
wasn’t there to lend.
Inventory as % of GDP
With the phasing out of Regulation Q in the early 1980s,
30%
monetary policy rationed credit through changes in price
25 rather than availability. Banks could pay any rate they
Average 24% wanted for deposits, stemming disintermediation, and then
20 attempt to pass the higher cost of deposits on in lending
14% rates. The process of applying credit constraints became
15
gradual as borrowers were progressively discouraged or
10 disqualified by rising rates. This smoothing process has
been reinforced, in recent years, by the development of
60 65 70 75 80 85 90 95 00 05
securitized debt instruments, which have brought into the
market many new lenders apart from banks.
…Helped by Globalization of the “Goods” Supply Chain
Housing, in particular, has benefited greatly from these
Imports as % of Manufactured Goods Consumed changes. It’s still volatile, but much less so. For the period
60% from 1965 to 1985, for example, the standard deviation
52% for housing starts was plus or minus 400,000, or a poten-
50
tial swing of 800,000 units. Between 1986 and 2006,
40 however, that standard deviation dropped to plus or
Average 35% minus 275,000, or a swing of 550,000 units.
30

20
47 52 57 62 67 72 77 82 87 92 97 02 06

Through December 31, 2006

Source: BEA

May 2007 3
Display 5 This has many positive feedbacks, most notably less need
The Volatility of Inflation Has Declined Meaningfully… for very wide swings in monetary policy, and thus less
attendant economic volatility. To be sure, effective coun-
3.2% tercyclical monetary policy will still be a crucial con-
tributor to sustained stability. Indeed, Greenspan’s Federal
2.0% Reserve was seen as so good at it that some came to call
it “the Greenspan put.” But, the drop in volatility during
0.7%
the last 20-plus years has a lot more behind it than just
0.6%
insightful leadership at the US Fed.

Post-War Boom High Inflation Stability Lower Risk a Global Phenomenon

1946–68 1969–84 1985–95 1996–06 And many of these same good things appear to be under
way elsewhere as well. For example, the UK, Germany
…as Highly Variable Components Dropped in Significance and Japan have all seen a sharp fall in economic volatil-
ity over the past 20 years (Display 6, top). Risks are lower,
Food Share of Energy Share of too, among emerging countries, especially the largest, as a
Consumer Spending Consumer Spending function of the miraculous improvement in their finan-
26.3% 4.6% 4.6% cial positions (Display 6, bottom). From time immemorial,
Prior to
Price emerging countries have depended on foreign financial
20.3% Spike
2.9%
investment to drive local development and to finance
15.0% 13.8% 2.4%
Display 6
Developed Markets’ Economic Volatility Has Fallen Sharply…

46–68 69–84 85–95 06 46–68 69–84 85–95 06 Real GDP Growth

Year Year Rolling Three-Year Volatility (%)*

Source: BEA, Federal Reserve Board, UK Germany Japan

Haver Analytics and AllianceBernstein 3% 3% 3%

Yet another source of increased stability comes from 2 2 2

a more predictable inf lation rate (Display 5, top). The
decline in volatility in this key variable can be traced 1 Average 1 1
to two primary factors. The first is the aforementioned
increase in imported goods as a share of consumption, 0 0 0
which has had the effect of disciplining prices through 63 73 83 93 03
05 63 73 83 93 03
05 63 73 83 93 03
05
a vast expansion in the quantity and diversity of supply.
The second is a change in the composition of the con- …While Emerging Countries’ Financial Conditions Have Improved
sumer market basket, wherein items vulnerable to sudden
and dramatic price shocks, like energy and food, have lost Current Account Debt to GDP
a lot of share. ($ Billion)
639 50%
587
The significance of each of these two components has
fallen by about 50% over the last 50 years (Display 5, bot- 425
40
tom). It’s no wonder that the most recent oil-price shock
212
was absorbed so easily—prior to the rise in price, energy 148
had fallen to about 2.5% of the consumer market basket. 80 79 30
40
None of this to say that we are now immune to inf lation
problems, but rather that any such problems are likely to (24)
(113) 20
develop more gradually than in the past, with fewer good
and bad surprises, and each of lesser magnitude. 99 01 03 05 07E 99 01 03 05 07E

*Through December 31, 2006

Source: Global Financial Data and International Monetary Fund, World
Economic Outlook, September 2006

4 The Last Risk Premium Standing

trade—investment f lows that have been notoriously unre-
liable. It would appear, however, that those days are gone.
In the last 10 years, the current account of the emerging
countries has moved from a deficit of $113 billion to a
surplus projected at more than $600 billion this year.
Debt in relationship to GDP has dropped from 40% to
25%. These improvements have been widespread, cover-
ing all regions of the world save Eastern Europe, which
remains a glaring but statistically unimportant exception.
It’s not that a favorable external position ensures economic
stability—it clearly doesn’t. What it does do, however,
is remove a key—for many countries the key—source of
instability during the last many years. In this context, it’s
no wonder that the risk premium of emerging-country
debt has declined so sharply.
All of this comes at a time of extraordinary business pros-
perity pretty much around the world. Return on equity in
virtually every part of the world is at or near modern day
highs (Display 7). Moreover, the quality of earnings is excel-
lent, as returns are far above required capital investment,
leaving lots of free cash flow and thereby amplifying the
sense of solidity that investors take from these conditions.
Display 7
Corporate Profitability Has Been Well Above Average Globally
Return on Equity
Trailing 12 Months: 1976–1Q:2007
25%
20
15
10
5 Average
0
(5)
US Emerging Markets* Europe Japan
*September 1996–1Q:2007
Source: FactSet, MSCI and AllianceBernstein
Consider the picture in the US:
• Debt to EBITDA ratios have been falling and are now at
the lowest levels in 30 years.
• Interest coverage ratios have been soaring and are now
more than double the average of the 1980s.
• The frequency of bond defaults is very low (Display 8).
Display 8
The Frequency of Default Has Fallen Significantly
Single “B” Default Frequency
25%
20
15
10 Average 10%
5 Average 4%
0
83 85 87 89 91 93 95 97 99 01 03 05
Includes bond and loan issuers rated as of January 1 of each year
Moody’s introduced alphanumerically modifi ed Caa ratings in 1997. Caa letter
ratings are mapped to Caa2 prior to 1997.
Source: Merrill Lynch and Moody’s
Credit and Real-Estate Markets Reflect
Greater Stability…
The response in credit markets to these conditions has
been extraordinary. Consider, for example, how single-B
credits have been re-priced. Their yield over treasuries has
fallen from a long-term average of 475 basis points (and a
peak of 1,000 basis points in 2002) to 260 basis points as
of early April.
This is a sensible response if you are willing to believe
that the frequency of defaults during the last 10 years
(which fell by half as compared to the prior 10 years) is a
sustainable condition. And on this score, let me remind
you that the last 10 years have hardly been a cakewalk, as
they included the Asian financial crisis, a historic bubble
Highest
Current in the stock markets of the world and a subsequent crash,
9/11, a recession, some of the largest corporate frauds of
all time and, most recently, a major oil shock. Despite all
of this, economic volatility made a new low. So perhaps
Lowest
extrapolation of lower risk is not such a stretch.
Moreover, the advent of asset-backed securities, collat-
eralized debt obligations (CDOs) and collateralized loan
obligations (CLOs), as well as credit derivatives, have, at
least so far, reinforced this favorable environment by pro-
viding investors with the ability to diversify risk to a far
greater degree and with far greater liquidity than the cash
markets ever provided. This has had the effect of reduc-
ing market risk premiums still further, which is a logical
development as these vehicles convert idiosyncratic risk to
systematic risk at a time when the latter appears to be at
an historical low.
May 2007 5
Display 9 Display 10
Highly Leveraged Financing Has Shifted Real-Estate Cap Rates Are at a Modern-Day Low…
from Banks to Institutions
Cash Yields Before Cap Ex
Collateralized Loan Obligations New Issues by Lender 15%
Outstanding
300
12
25% Banks
Average
200 9
US$ Billion

% of Total
87%
100 75% Institutions 6
66 70 74 78 82 86 90 94 98 02 06

0 13%
97 99 01 03 05 07 97 07* …and the Real-Estate Equity Risk Premium
Has Become Compressed
*1Q:2007 annualized
Source: Standard & Poor’s
Commercial Mortgage Real-Estate Expected Return
Spreads over Treasuries Premium over 10-Year Treasuries
By way of example, look at what’s going on in leveraged
200 380
loans (Display 9). Issuance of CLOs has exploded and now 172 167
accounts for two-thirds of the leveraged-loan market. 290
(Basis Points)

(Basis Points)
This has vastly expanded the pool of investors willing to 110
take on this kind of exposure. Indeed, institutions now
finance an estimated 75% of new issuance—a profound
shift from the old days when the bulk of such loans would
have stayed on the books of only a handful of banks.
1970s 1980s 1990s 4Q: 1965–2006 4Q:
These same forces have also reshaped the market for com- 2006 Average 2006

mercial real estate. Capitalization, or cap, rates—the cash As of December 31, 2006
f low generated by an asset relative to its purchase price— Source: American Council of Life Insurers, Barron’s, Global Financial Data,
have been driven down (Display 10, top) by the combina- Lehman Brothers, Real Capital Analytics and AllianceBernstein

tion of sharp decline in the cost of real-estate related debt

and a concurrent decline in the real-estate equity risk pre-
mium (Display 10, bottom). Real-estate debt has benefited Display 11
greatly from the large increase in liquidity generated by The US Equity Risk Premium Is at Its Long-Term Average
securitization through commercial mortgage-backed secu-
rities and similar instruments, which has made these loans 8%
attractive to a vast array of global investors. The decline
6
in the real-estate equity risk premium appears to be tied
to improved economic stability that, all other factors held 4
equal, implies more reliable rental income. Average
2
…but Not Equity Markets
Curiously, however, the new risk paradigm hasn’t really 0
affected the valuation of common stocks, as noted earlier. 60 66 72 78 84 90 96 02 07
The risk premium for equities is the only significant one
for which we have not seen a secular decline. The current Through March 31, 2007. Difference between expected return on equities, as
reading for the equity risk premium is actually slightly represented by the S&P 500 and 10-Year US Treasuries
above its long-term average (Display 11). Source: Federal Reserve Board, First Call, Mortgage Bankers Association, S&P
and AllianceBernstein

6 The Last Risk Premium Standing

What separates stocks from bonds and real estate?
Primarily, the way in which risk is framed and mea-
sured. For equity investors, risk is experienced as mark-
to-market volatility, which is measured regularly and,
in some cases, in real time. Behavioral research makes it
clear that investors find the uncertainty thereby gener-
ated highly distasteful. They have to be induced to live
with it through higher expected returns. This is what
the equity risk premium is about. And while there is
some evidence recently that daily stock volatility has
been falling in response to more stable economic condi-
tions (Display 12), investors properly see it as far too
early to draw such conclusions.
Bond and real-estate investors, however, respond to dif-
ferent signals. In the case of bonds, many investors see the
risk of default as far more important than mark-to-market
volatility, especially for short- and intermediate-term
paper. In the case of real estate, there is no reliable short-
run pricing information, so measurement horizons are
much longer than stocks.
Thus, the fact that the volatility of investment returns
for either asset class has not fallen below historical levels
has been largely irrelevant. Instead, investors are looking
through to the underlying cash f lows of the assets that
they are buying and liking the increased stability they see.
All of which has put in place an arbitrage of sorts—
between buyers of assets not affected by mark-to-market
considerations and those who are. In large measure, it is
this distinction that is driving one of the most provocative
features of today’s capital-markets setting—the private-
equity boom.
Display 12
The Volatility of US Equities Has Shown Signs of Decline
Only Lately
S&P 500
Rolling Three-Year Annual Volatility
Post-War Boom High Inflation
25%
20
15
10
5 new financial products that have become so popular will
0
49 57 65 73 81 89
Through January 31, 2007
Source: Ibbotson
Display 13
Privatization Driven by a Disconnect
Between Stock and Bond Pricing
Purchase Price 8 × EBITDA
Leverage Ratio 6 × Debt/EBITDA
EBITDA/Purchase Price 12.5%
Required Cap Ex – 3.0%
Cash-on-Cash Yield 9.5%
Cost of Debt 7.4%
Gross Spread 2.1%
Source: AllianceBernstein
It’s a boom fueled by the availability of low-cost debt
against equity-market prices that, as noted, do not
acknowledge the improved quality and stability of the
cash f lows that define their value. In this environment,
well-crafted privatization deals can be structured at a
premium to public market prices. These transactions can
employ significant amounts of leverage and still provide
a hefty return to the new private equity owner. For
example, a purchase price of 8x EBITDA, or cash f low,
implies a cash f low of 12.5% of the purchase price. This
cash f low would be reduced by capital spending, leaving
about 9.5% of the purchase price available to both service
debt and provide a return to the new private equity
holder. With debt costs low at 7.4%, the “gross spread”
on the transaction is about 200 basis points (Display 13).
Leverage that at 70% debt to capital and the return on
equity gets interesting (15%), and subject to material
enhancement by actions to improve profit margins and/
or optimize capital deployment. And maybe, in our new
and more-stable world, all that leverage won’t turn out
to be as dangerous as it used to be.
Threats to the Current Environment
So what would threaten this highly attractive setting?
One possibility would be the emergence of new system-
atic risk factors that no one is counting on. Aside from
Stability
ever-present geopolitical risks, potential disruptive devel-
opments might include a swing in the pendulum back
in favor of labor over business, more regulation rather
Average
than less, or increased as opposed to decreased impedi-
ments to trade, all of which would damage profitability
and threaten higher inf lation. It’s also not clear how the
behave in a period of sustained turbulence. Most of these
structures, and the hedging strategies they have spawned,
97 05 have never been tested in a major bear market.
May 2007 7
But, of all the potential threats, the one most likely to Display 15
upset the apple cart is leverage. As we lose volatility in the Corporation Credit Metrics Remain Strong
real economy and credit costs are re-priced accordingly,
we set up incentives for people and companies to rebuild Net Debt/EBITDA Interest Coverage
risk through increasing leverage. 3.5x 8x
7
And, they are doing just that. Among households, it is 3.0
6
manifest in expanding mortgage debt. While the sub- Average
2.5 5
prime mortgage cycle in the US got distorted in the last
4
year or two with inappropriate lending practices, the fact 2.0
is that greater economic and employment stability does 3
enlarge the pool of qualified borrowers and does permit 1.5 2
debt service burdens to be “safely” increased. Household 70 76 82 88 94 00 06 70 76 82 88 94 00 06
financial obligations are at a new high in relation to Through December 31, 2006
income (Display 14). But once again, aside from the sub- Source: BEA and Federal Reserve Board
prime distortion, there is little evidence as yet of credit
deterioration. So the bottom line is this: Publicly traded equities repre-
sent the last risk premium standing. As long as the current
Display 14
era of stability persists, it is a tempting target to exploit.
Households Have Increased Leverage Materially
Not only is it inducing public-to-private recapitaliza-
tions, it is driving managements of public companies to
Debt Monthly Payment Obligations
use the free cash f low they generate to buy back shares.
as % of DPI* as % of DPI†
Most recently, some prominent companies have even
150% 20%
announced plans to increase their debt to do so. Indeed,
19
last year the combination of these factors led to retirement
120
18 (net of new issuance) of nearly 4% of the equity-market
17 capitalizations of both the US and the UK. In sum, the
90
16 forces at work are producing a strong tailwind to public-
equity valuation.
60 15
86 90 94 98 02 06 86 90 94 98 02 06 While the forces are in place to drive loftier stock market
Through December 31, 2006 returns, the scenario is not without risks. An altogether
*Household credit-market debt as a percent of household disposable income different picture could emerge if free trade is restricted, if
†The Federal Reserve Board’s Obligations Ratio, which refl ects the aggregate
amount of mortgage payments, installment-loan payments, rental payments, insur- the current proliferation of financial derivative products
ance payments and real-estate taxes as a percent of disposable personal income creates unanticipated weaknesses, if geopolitical issues
Source: Federal Reserve Board alter the pattern of economic stability, or if increased
corporate leverage reaches extremes. The current mar-
In the corporate sector, the leveraging process is just ket environment, with the potential for both continued
getting started (Display 15). Indeed, 2006 was the first positive equity returns and the resurgence of a variety of
year in five in which debt in relationship to cash f low risks, supports a full exposure to stocks—in line with the
rose. However, it still remains meaningfully below prior investor’s long-term asset allocation strategy—together
peaks—and far below what I’ll dub the “private-equity with an appropriate dose of stabilizing bonds. ■
capital structure” archetype.

8 The Last Risk Premium Standing

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We recognize that client needs are varied. Our client-service
and investment professionals seek to provide clients with the
investment service that is best for them, sometimes modify-
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To give clients peace of mind, our client-service professionals
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the research basis for our portfolio decisions, our analysis of
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other research findings.
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As of March 31, 2007, our firm had US$742 billion in
assets under management. We believe that our range of
services, global research coverage and ability to serve clients
in virtually all parts of the world make AllianceBernstein a
preeminent resource for investors worldwide. ■
© 2007 AllianceBernstein L.P.
Note to All Readers:
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Note to UK Readers:
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