The information herein reflects prevailing market conditions and our judgments as of the date of this document, which are subject to change. In preparing this document, we have relied upon and assumed, without independent verification, the accuracy and completeness of all information available from public sources. Opinions and estimates may be changed without notice and involve a number of assumptions which may not prove valid. There is no guarantee that any forecasts or opinions in this material will be realized. Information should not be construed as investment advice.
Investment Products Offered
• Are Not FDIC Insured • May Lose Value • Are Not Bank Guaranteed
3Q:2018 CAPITAL MARKETS OUTLOOK
1|CMO 3Q18
As of June 30, 2018Past performance does not guarantee future results.Global corporates, and Japan and euro-area government bonds in hedged USD terms. All other non-US returns in unhedged USD terms. An investor cannot invest directly in an index, and its performance does not reflect the performance of any AllianceBernstein (AB) portfolio. The unmanaged index does not reflect the fees and expenses associated with the active management of a portfolio.*Europe, Australasia and the Far East†Returns reflect Morningstar US open-end fund category averages.Source: Bloomberg Barclays, Morningstar Direct and AB
–1.2–0.2–0.2
1.91.8
–1.1–0.3
–1.9–5.2
0.2
–6.7–2.8
7.72.7
Returns in US Dollars
–0.1–0.5
0.2
–0.10.9
0.10.9
–0.5–3.5
1.0
–8.0–1.2
7.83.4
2Q 2018 Returns Recap: Rising Policy Risk Drives Return Dispersion
Equities
Government Bonds
Credit
Alternatives†
Jan–Jun 2018 Returns (Percent)
2Q:2018 Returns(Percent)
Japan
US High Yield
US
Euro Area
Emerging-Market (EM) Debt
Long/Short Equity
MultialternativeNontraditional Bond
Global Corporate
EAFE*
US Large-Cap
Emerging Markets
US Small-Cap
Municipals
2|CMO 3Q18
As of June 30, 2018Current analysis and forecasts do not guarantee future results.*G3 is the US, the euro area and Japan.Source: AB
The Key Takeaways
Macro Investors are right to be worried about rates They drove the majority of the beta trade through valuations, net margins and share count
Fundamentally, the developed macro story is one of solid but moderating growth, rising core inflation and rate increases/balance sheet reduction in the G3* By the end of 2019, developed growth will be lower (but solid), core inflation at threshold and rates higher across the curve
The wild card and key source of tail risk is the impact of policy/politics on the speed/level of inflation and rates
Markets From beta to alpha: the great rising tide is receding... Rising volatility, moderate returns, P/E contraction and rising dispersion drive the importance of security selection
...so focus on the better equity “boats” For the rest of the cycle, equity returns will largely be about persistency and quality of growth, and strength of balance sheets
Don’t fight the wrong bond battles The last thing you should worry about as rates rise is high-grade bonds. They can’t kill you; the math doesn’t allow it
Even so, core fixed-income exposure can be more efficient Globalize rates to diversify economic-cycle risk; hedge the currency risk to remove the volatility from core
When spreads are tight relative to rates, don’t run from duration and overweight credit—balance them Credit barbells are efficient structures and effective late-cycle navigators
Our base expectation is for moderate market returns over the next five years, but with substantial tail risk Portfolio construction needs to account for both—critical for those near, or early into, retirement/decumulation
3|CMO 3Q18
Left display from October 1, 2011, through June 15, 2016; right display as of December 31, 2017Past performance and historical analysis do not guarantee future results. For illustrative purposes only*Shadow fed funds rate as of year-end. †T.I.N.A.: there is no alternativeSource: Bloomberg, Federal Reserve Bank of Atlanta, Federal Reserve Bank of St. Louis, Morningstar Direct, S&P and AB
...and the Asset Purchases Used to Create ThemThe Great Beta Trade Was Dominated by Rates…
1,000
1,200
1,400
1,600
1,800
2,000
2,200
2.0
2.5
3.0
3.5
4.0
4.5
5.0
11 12 13 14 15 16
Price Level
USD
Tril
lions
S&P 500 Index
Fed Balance-Sheet Assets (Left Scale)
–1.47 –1.43 –2.13 –2.42 0.20 0.38
Shadow FedFunds Rate*
Historical Monetary Policy + Fiscal Expectations = Supercharged Net Margin and Valuation GainsAverage Annualized Growth Rate (March 2009–December 2017)
2.2%
3.1%
9.1%
17.3%
GDP SalesGrowth
EPSGrowth
S&P TotalReturn
3.8%Nominal
Real
EPS:Net Margin GainsShare Buybacks
Valuations:Lower Uncertainty Present ValuesT.I.N.A.†
4|CMO 3Q18
Left displays through March 31, 2018; right display as of June 30, 2018. Historical analysis and current forecasts do not guarantee future results. Long rates are 10-year yields unless otherwise indicated. *G7 is the US, Canada, France, Germany, Italy, Japan and UKSource: Bloomberg, Haver Analytics, IHS Markit and AB
The Global Macro Pillars: Growth, Inflation and Policy
AB Global Economic Forecast: June 2018
Real Growth (%) Inflation (%)
Official Rates (%)
Long Rates (%)
18F 19F 18F 19F 18F 19F 18F 19F
Global 3.2 3.1 2.8 2.7 2.9 3.3 3.3 3.6
Industrial Countries 2.3 2.0 1.9 2.0 1.2 1.8 2.0 2.6
Emerging Countries 4.8 4.8 4.3 3.9 6.2 6.1 5.9 5.6
US 2.5 2.0 2.3 2.3 2.4 3.4 3.3 3.8
Euro Area 2.3 2.1 1.7 1.8 0.0 0.3 0.8 1.5
UK 1.5 1.5 2.5 2.0 0.8 1.3 1.8 2.3
Japan 1.3 1.4 0.9 1.6 –0.1 0.0 0.1 0.3
China 6.5 6.3 2.3 2.3 4.4 4.4 3.5 3.3
Global Growth Solid, but Has Likely Peaked
2.0
2.5
3.0
3.5
4.0
4.5
5.0
10 11 12 13 14 15 16 17 18
G7 CPI Inflation Advances Toward 2%*
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
10 11 12 13 14 15 16 17 18
YoY
Per
cent
Cha
nge
YoY
Per
cent
Cha
nge
Real GDP
PMI Proxy
Core
Headline
5|CMO 3Q18
Left display through March 31, 2018; middle and right displays as of June 1, 2018Historical analysis and current forecasts do not guarantee future results. Source: Citigroup, Haver Analytics, IHS Markit, Thomson Reuters and AB
Jobs/Wages Fuel Consumption…and (Creeping) Inflation
Macroeconomic CycleTransitioning from the Sweet Spot in 2018?
Inflation Expectations Reflect Consumption
The Ongoing US Growth Story
16
17
18
19?
15
Growth Rising/Inflation
Low
Growth Low/
Inflation Falling
Growth Slowing/Inflation
High 19?
Workers Living Within Their MeansEarning vs. Spending
–6
–4
–2
0
2
4
6
8
10
00 02 04 06 08 10 12 14 16
YoY
Perc
ent C
hang
e
Personal Consumption Expenditures (PCE)
Paychecks0.9
1.1
1.3
1.5
1.7
1.9
2.1
2.3
11 12 13 14 15 16 17 18 19 20
Perc
ent
Realized Core PCE
High of Forecast Range
Low ofForecast Range
Growth High/
Inflation Rising
6|CMO 3Q18
Left and middle displays through January 31, 2018; right display through April 30, 2018Historical analysis and current forecasts do not guarantee future results. *Historical data exclude Ireland, where huge swings in gross fixed-capital formation have distorted the underlying trend in the components of overall euro-area demand.†Contribution to growthSource: Haver Analytics, IHS Markit and AB
Domestic Demand Remains Solid*… …as Wages Continue to Rise… …Leading to Increased Consumer Confidence and Activity
Euro-Area Growth: A Challenging, Likely Trade-Related, Start to 2018Strong Consumer Fundamentals Support Domestic Demand
–6
–4
–2
0
2
4
6
8
10
05 07 09 11 13 15 17
YoY
Per
cent
Cha
nge
–3.0
–2.0
–1.0
0.0
1.0
2.0
3.0
10 11 12 13 14 15 16 17 18
YoY
Per
cent
Cha
nge
–2
–1
0
1
2
3
4
5
6
05 07 09 11 13 15 17
YoY
Per
cent
Cha
nge
Real
Nominal
Domestic Demand
Net Exports†
ConsumerConfidence
Consumer CreditGrowth
7|CMO 3Q18
Left and middle displays as of June 30, 2018; right display as of December 31, 2017. Historical analysis and current forecasts do not guarantee future results. Projections of change in real GDP and both measures of inflation are percent changes from the fourth quarter of the previous year to the fourth quarter of the year indicated. Expectations for fed funds rate are for December 2018 and December 2019. The projections for the fed funds rate are the value of the midpoint of the projected appropriate target range for the fed funds rate or the projected appropriate target level for the fed funds rate at the end of the specific calendar year or over the longer run. *FOMC: Federal Open Market Committee; market expectations are the fed funds rate priced into the Fed futures market as of June 13, 2018 FOMC meeting date. †Net issuance is the budget deficit less central bank purchases.Source: Bloomberg, Haver Analytics, US Federal Reserve and AB
The Fed Is a Bit More Aggressive; the ECB Sets a Date
G3 Budget Deficit and Central Bank Bond Purchases†
Central Bank Watch
Fed Funds Rate ExpectationsFOMC and Market Expectations*
FOMC June 2018 Forecasts
18 19 20LongRun
Change in Real GDP 2.8 2.4 2.0 1.8
Unemployment Rate 3.6 3.5 3.5 4.5
PCE Inflation 2.1 2.1 2.1 2.0
2.4
3.1
2.22.7
2.9
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
14 15 16 17 18 19 20
Per
cent
Fed Funds RateFOMC ExpecationsMarket ExpectationsFOMC Long-Run Projection
–0.5
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
08 09 10 11 12 13 14 15 16 17 18F19F
US
D T
rillio
ns
Central BankPurchases
Budget Deficit
Net Issuance
The ECB Charts a Path
Asset purchases likely to end in December
No balance-sheet unwind for an “extended period of time after the end of our net asset purchases…” (Fed took 36 months)
Key policy rates expected “to remain at their present levels at least through the summer of 2019…” (Fed took 14 months)
8|CMO 3Q18
Left display through December 31, 2017; right display as of June 30, 2018Historical analysis and current forecasts do not guarantee future results. *GDP is in US dollars. Germany is adjusted for the impact of reunification.Source: Haver Analytics, World Bank and AB
2011 2018
Outright Monetary Transactions
Long-Term Refinancing Operations
QuantitativeEasing
Vulnerable Country(GDP)
Greece($0.2 Trillion)
Italy($1.9 Trillion)
Exposure of European Banks to Italy
Higher Lower
Real GDP per Capita*
This Time the ECB Has the Necessary Tools in Place to Intervene…Although Italy Is Not GreecePopulism, European-Style: Is a Full-Blown Crisis a la 2011 Coming Back?
60
70
80
90
100
110
120
130
80 85 90 95 00 05 10 15
1999
= 1
00
Germany
Spain
France
Italy
9|CMO 3Q18
As of June 30, 2018Historical analysis and current forecasts do not guarantee future results. Source: Haver Analytics, IHS Markit, Thomson Reuters Datastream and AB
Beyond Fundamentals: Structural and Policy-Based Inflation Tail Risk
Goods and Services Inflation
–5
–4
–3
–2
–1
0
1
2
3
4
5
93 95 97 99 01 03 05 07 09 11 13 15 17
Services
Durable Goods
Per
cent
Inflation Backdrop
RearviewMirror
Past 5–10 Years
StrategicHorizonNext 2–5
Years
Secular Horizon5+ Years
Demographics
Globalization/Populism
Debt Overhang
Technology
Monetary Regime
Net Impact
10|CMO 3Q18
Dow Jones Biggest Price Moves Were Trade (and Rates/Inflation) Driven
Wood & Metal Canaries: Inflationary Tariffs Ultimately a Tax
Tariff Dates and Summaries Jan 22: US slaps tariffs on imported solar panels and washing machinesMar 23: US implements tariffs on steel (25%) and aluminum (10%)Apr 2: China implements tariffs on 128 US productsMay 31: Canada announces retaliatory tariffs on US goods worth C$16.6 billionJun 15–16: US targets $34 billion of Chinese goods. China announces tariffs on $50 billion of US goodsJun 18: Trump threatens to impose tariffs on $200 billion of additional Chinese goodsJun 22: Trump threatens to impose 20% tariff on all vehicles imported from the EU
23,000
24,000
25,000
26,000
27,000
Jan 18 Feb 18 Mar 18 Apr 18 May 18 Jun 18
1
1
2
2
3
3
4
4
5
567
67
Left display through May 30, 2018; right display through June 30, 2018Historical analysis and current forecasts do not guarantee future results. *Import Price Index for lumber & wood in the rough; Producer Price Index three-month percent change: aluminum sheet & strip, steel mill productsSource: Bloomberg, Federal Reserve Bank of St. Louis, US Global Investors and AB
Price Impact of Tariffs*
–2
0
2
4
6
8
10
12
180
185
190
195
200
205
210
215
220
225
Nov17
Jan18
Mar18
May18
3-Month Percent C
hange
Inde
x Lumber & Wood (Left Scale)
Steel
Aluminum
11|CMO 3Q18
Valuations Compress on Rising Uncertainty and Rates
As of June 30, 2018Historical analysis and current forecasts do not guarantee future results.Source: Bloomberg, Chicago Board Options Exchange, Cornerstone Macro, FactSet, Federal Reserve Bank of St. Louis and AB
Volatility Rising and Rates RisingVIX vs. 10-Year Yields
Corporate-Profit Growth Is Robust but Projected to SlowRecent Earnings Growth (Percent)
10.9
24.3
28.9
22.0
10.79.59.9
7.4
11.6
US DevelopedMarkets ex US
EmergingMarkets
2017 2018E 2019E
The Mystery of Strong Earnings and Modest Market Returns, Part I:
~10% boost since tax
cuts
Modest YTD ReturnsLower P/Es Have Offset Higher EPS
1.7%
14.0%
–12.4%
PriceReturn
ForwardEPS Change
Forward P/EChange
Glass Half Full
Glass Half Empty
Slowing Growth Prospects & Higher Risks Have Contributed to
P/E Contraction This Year
Declining P/EsHave Offset
Most of the Rise in Earnings
2.0
2.2
2.4
2.6
2.8
3.0
3.2
0
5
10
15
20
25
30
35
40
Jan17
May17
Sep17
Jan18
May18
Percent
Inde
x Le
vel
VIX(Left Scale)
10-Year Yields
12|CMO 3Q18
We Were Already Paid for It. But That Doesn’t Mean the Future Is Bleak
Left and right displays as of December 31, 2017; middle display as of June 1, 2018Historical analysis does not guarantee future results.Source Bloomberg, Federal Reserve Bank of St. Louis, Morningstar Direct, S&P, Thomson Reuters I/B/E/S and AB
Stock Returns Have Been Resilient in Lower-Earnings EnvironmentsS&P 500 Average Total Return (1990–2017)
Average Annualized Growth RateJanuary 1, 2017–December 31, 2017
S&P 500 YoY Growth RatesPercent
The Mystery of Strong Earnings and Modest Market Returns, Part II:
2.8%
5.8%
13.1%
21.8%
GDP SalesGrowth
EPSGrowth
S&P TotalReturn
Nominal
Real
4.7%
15.4%
9.4%
EPS Growth >10% EPS Growth <10%
–10
–5
0
5
10
15
20
25
30
1Q:1
62Q
:16
3Q:1
64Q
:16
1Q:1
72Q
:17
3Q:1
74Q
:17
1Q:1
82Q
:18
3Q:1
8E4Q
:18E
1Q:1
9E2Q
:19E
3Q:1
9E4Q
:19E
Earnings
Revenue
13|CMO 3Q18
As of June 30, 2018Historical analysis does not guarantee future results.Source Bloomberg, Cornerstone Macro, Federal Reserve Bank of St. Louis, Institute for Supply Management, Morningstar Direct, S&P, Thomson Reuters I/B/E/S and AB
Rising Earnings and Inflation, Plus Fed Tightening, Equals Lower P/Es
Strong Earnings Growth Historically Linked to Rising Inflationary Pressures
0
10
20
30
40
50
60
70
80
90
100
–50
–30
–10
10
30
50
70
91 93 95 97 99 01 03 05 07 09 11 13 15 17
Index Level
Perc
ent
S&P 500—EPS Growth (Left Scale)
ISM Manufacturing Prices Paid Index
Fed Tightening
Rising Inflationary Pressures Have Led to Fed Tightening and P/E Contraction
Period1/31/94–2/28/95
5/31/99–5/31/00
5/31/00–7/31/06
12/16/15–06/30/18
Begin 14.9× 23.5× 16.5× 17.6×
End 12.6× 22.2× 14.0× 17.1×
Change –2.3 –1.3 –2.5 –0.5
Average change in P/E over the past four Fed tightening cycles: 1.7 P/E Points
P/Es have actually declined in 8 of the past 8 Fed tightening cycles
14|CMO 3Q18
As of December 31, 2017. Past performance is not necessarily indicative of future results. There is no guarantee that any estimates or forecasts will be realized. Based on AB’s estimates of the range of returns for the applicable capital markets. The forecasted figures in the left display utilize book-value growth and price-to-book valuations as representations of earnings growth and valuation. Data do not represent past performance and are not a promise of actual future results or a range of future results. Based on proprietary AB forecasting system. *Represents projected median compound annual growth rates over the next 10 years. †Global stocks are modeled as 18% US diversified, 18% US value, 18% US growth, 6% US small-/mid-cap, 30% developed international, and 10% emerging markets. ‡Probability of a 20% peak-to-trough decline in pretax, pre-cash-flow cumulative returns within the next 10 years. Because the AB system uses annual capital-market returns, the probability of peak-to-trough losses measured on a more frequent basis (such as daily or monthly) may be understated. The probabilities depicted above include an upward adjustment intended to account for the incidence of peak-to-trough losses that do not last an exact number of years. §Represents projected median compound annual growth rates over the next 10 years. || 100% return-seeking allocation is all stocks; 80%/20% allocation is 80% stocks/20% bonds; 60%/40% allocation is 60% stocks/40% bonds; 30%/70% allocation is 30% stocks/70% bonds; and 100% risk-mitigating allocation is all bonds. #Normal conditions reflect AB’s estimates of equilibrium capital-market conditions, which are typically close to a very long-term historical average. Source: AB
The Risk/Return Trade-Off Is More Important than EverProjected Median
10-Year Annualized Return§
Asset Allocation||
Probability of 20% Peak-to-Trough Loss Within Next 10 Years‡
Median Index Return Decomposition: Next 10 Years*
Valuation
EarningsGrowth
Dividends
Global Stocks US Stocks
2.4%
5.2%
–0.7%
6.8%
2.2%
5.9%
–2.0%
6.1%
†
100% Risk-Mitigating
30%/70%
60%/40%
80%/20%
100% Return-Seeking61.0%
40.0%
17.0%
<2.0%
<2.0%
6.8%
6.1%
5.3%
3.9%
2.3%
Normal# Normal#
15|CMO 3Q18
As of June 30, 2018Historical analysis does not guarantee future results.Treasury (TSY) is represented by Bloomberg Barclays Global Treasury and high yield (HY) by Bloomberg Barclays Global High-Yield hedged to USD.Source: Bloomberg Barclays and AB
Near-Term Volatility Is Likely in Rates and Credit Markets
Government and Credit Bonds Rarely Underperform at the Same Time
Today’s Environment Calls for a Balanced Approach
Cloudy Outlook Warrants Balance Between Rates and Credit Risks
–20
–15
–10
–5
0
5
10
15
20
–8 –4 0 4 8
Qua
rterly
Hig
h-Yi
eld
Ret
urns
(Per
cent
)
“Normal”TSY = NegativeHY = Positive19% of the TimeBalance Works
“Normal”TSY = PositiveHY = Negative
24% of the TimeBalance Works
“Good Times”TSY = PositiveHY = Positive
51% of the TimeBalance Works
“Bad Times”TSY = NegativeHY = Negative5% of the Time Balance Doesn’t Work
Sources of Volatility:
Monetary policy normalization and tighter liquidity in DM (rates)
Possible inflation pressures (rates and credit)
Corporate credit continues to move later in the credit cycle (credit)
Increased geopolitical risk, e.g., Italy and EM (select rates, credit)
Headlines around trade war (credit)
GlobalRates
GlobalCredit
Quarterly Treasury Returns (Percent)
16|CMO 3Q18
As of June 30, 2018. Past performance does not guarantee future results. *Bloomberg consensus forecast is for year-end 2018. It is an average of 60 forecasts from sell-side analysts and academics. †The scenario analysis assesses the potential impact of instantaneous changes in US high-yield spreads and a parallel shift in the US Treasury yield curve on the Bloomberg Barclays US Aggregate and US High-Yield indices. Expected returns incorporate the impact of roll and carry over the subsequent 12 months. An investor cannot invest directly in an index, and its performance does not reflect the performance of any AB portfolio. The unmanaged index does not reflect fees and expenses associated with the active management of a portfolio.Source: Bloomberg Barclays and AB
Putting Rising Rates in the Right Context
Big Spikes in Rates Are SparseFrequency of Monthly Changes in the 10-Year US Treasury Yield
Rates Have Already Risen Meaningfully
Rising Rates Don’t Have to Derail Bonds†
Expected Total Returns (Percent)
34%
15%
21%
11%8%
5% 5%
Dec
line
> 10
b.p
.
Dec
line
0–10
b.p
.
Incr
ease
0–1
0 b.
p.
Incr
ease
10–
20 b
.p.
Incr
ease
20–
30 b
.p.
Incr
ease
30–
40 b
.p.
Incr
ease
> 4
0 b.
p.
Historically, yield increases of more than 30 b.p. occurred only 10% of the time
USAggregate
Change in US High-Yield Spreads (b.p.)
–50 0 50 100
Cha
nge
in
US
Trea
sury
Yi
elds
(b.p
.) 100 –1.0 –1.4 –1.7 –2.1
50 1.3 1.0 0.6 0.3
0 3.7 3.4 3.0 2.7
USHigh Yield
Change in US High-Yield Spreads (b.p.)
–50 0 50 100
Cha
nge
in
US
Trea
sury
Yi
elds
(b.p
.) 100 5.7 4.1 2.5 0.9
50 6.9 5.3 3.8 2.1
0 8.2 6.6 5.0 3.41.8
2.0
2.2
2.4
2.6
2.8
3.0
3.2
3.4
Jun 17 Sep 17 Dec 17 Mar 18 Jun 18
Perc
ent
AB Year-End 2018 Forecast: 3.25%(Range 3.0%–3.5%)
Bloomberg Consensus Forecast: 3.16%*
17|CMO 3Q18
As of June 30, 2018Past performance does not guarantee future results.*Bar height may differ due to rounding. Global bonds hedged is represented by Bloomberg Barclays Global Aggregate hedged to USD and US bonds by Bloomberg Barclays US Aggregate. An investor cannot invest directly in an index, and its performance does not reflect the performance of any AB portfolio. The unmanaged index does not reflect fees and expenses associated with the active management of a portfolio. †B/E: break-even.Source: Bloomberg Barclays and AB
Take a World View on Interest-Rate Exposure
Global Outperforms when US FallsUp vs. Down CaptureMarch 1990–June 2018 (Percent)*
2.2
–1.0
2.1
–0.7
Average QuarterlyReturn when
US Aggregate IndexWas Positive
Average Quarterly Return when
US Aggregate IndexWas Negative
US Aggregate Index Global Aggregate Index
Up Capture: 96%Down Capture: 66%
Select Opportunities Exist in Global Inflation-Linked BondsB/E Inflation for 10-Year Rates (Percent)†
0.0
0.5
1.0
1.5
2.0
2.5
Dec 13 Jun 15 Dec 16 Jun 18
US
Japan
Japan Inflation2018 Forecast
US Inflation2018 Forecast
Actively Managing Your Exposure to Avoid Troubled Areas Is Key10-Year Bond Yields (Percent)
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
Mar 18 Apr 18 May 18 Jun 18
Italy
Spain
Germany
18|CMO 3Q18
As of June 30, 2018Historical analysis does not guarantee future results.Emerging Market (EM) hard currency is represented by J.P. Morgan EMBI Global; EM corporate by J.P. Morgan CEMBI Broad Diversified; and EM local currency by J.P. Morgan GBI–EM Global Diversified. Yields are sourced from the index’s subcomponents. An investor cannot invest directly in an index, and its performance does not reflect the performance of any AB portfolio. The unmanaged index does not reflect fees and expenses associated with the active management of a portfolio.Source: Bloomberg, J.P. Morgan and AB
Some EM Opportunities Still Exist, but Selectivity Is Increasingly Important
Technicals Remain Constructive with Much of Issuance Front-LoadedEM Net Issuance (USD Billions)
However, Near-Term EM Outlook Warrants Caution
Given Recent Volatility, Valuations Have Improved Somewhat
Rising rates in developed markets
Recent US-dollar strengthening
Increased idiosyncratic and political risk in select countries
Trump’s trade war
Some Countries in Recent Headlines:100
152
225
77
201
42
100
130
92110
2015 2016 2017 YTD2018
2018Forecast
EM Corporate EM Sovereign
4.0
4.5
5.0
5.5
6.0
6.5
7.0
EM HardCurrency
EMCorp.
EM LocalCurrency
Yiel
d to
Wor
st
Jan 2016 Dec 2017 Jun 2018
Turkey
Argentina
Brazil
Mexico
China
19|CMO 3Q18
Left and right displays as of June 30, 2018; middle display through December 31, 2017 (except for yield pickup, which is as of June 30, 2018) Historical analysis does not guarantee future results. Core Tier 1 ratios provided by Morgan Stanley European credit strategy research on western European banks. *AB bear- and base-case December 31, 2018 forecasts for energy issuers’ net leverage ratios. †Annualized hedging benefit uses one-month currency forwards. Source: Bloomberg Barclays, Morgan Stanley and AB
Selectivity Within Corporate Credit Remains Critical
European Financials Benefit from Improving Fundamentals Backdrop
Outlook Remains Constructive for Higher-Beta Energy NamesAB Net Leverage Forecast for 2018*
BBBs Offer Relative Value and Diversification vs. BBsUS Credit Bonds
2
3
4
5
6
7
8
Yiel
d to
Wor
st (P
erce
nt)
3.156Issues
820Issues
BBBBB
BBB Features: Select yields similar
to BBs Lower credit risk Lower extension risk Higher duration risk
30
32
34
36
38
40
42
0
2
4
6
8
10
12
14
16
06 07 08 09 10 11 12 13 14 15 16 17
PercentRat
io (×
)
Hedging EUR bonds back to USD results in a ~2.7% yield
pickup†
Core Tier 1 Ratio(Left Scale)
Risk-Weighted Assets to
Total Assets
6.2×
3.1×
11.0×
4.9×
2.1× 1.8×
3.8×3.1×
B(Bear)
B(Base)
CCC(Bear)
CCC(Base)
2Q:2017 2Q:2018
Energy OAS: 407 b.p.HY OAS: 363 b.p.
20|CMO 3Q18
As of June 30, 2018. Historical analysis does not guarantee future results. *Bank loans are represented by the Credit Suisse Leveraged Loan Index. Loan 1 is represented by Asurion and Loan 2 by American Airlines. †Change is calculated since July 2016. ‡Rising-rate periods defined as time periods when the 10-Year US Treasury rate increased by 20 b.p. or more. §CRT returns are represented by Mark Fontanilla & Co., LLC’s CRTx Index (Lower Mezzanine). ||CMBX yields are loss-adjusted. Correlation is the average correlation for BBB-rated CMBX and US corporates and BB-rated CMBX and US corporates. BB corporates are represented by Bloomberg Barclays US Corporate High-Yield BB and BBB Corporates by Bloomberg Barclays US Aggregate Corporate BBB. Source: Bloomberg, Bloomberg Barclays, Credit Suisse, Fannie Mae, Freddie Mac, IHS Markit, Mark Fontanilla, Trepp and AB
CMBS Offer Relative Value and Diversification Benefits||
Bank Loans Can Be Refinanced at Lower Rates Even as LIBOR Rises*Examples of Large Loan Issuers’ Yields (Percent)
CRTs Beat Loans in Rising Rates‡
Returns in Rising-Rate Periods (Percent)§
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
5.0
5.5
6.0
Jul 16 Jan 17 Jul 17 Jan 18 Jul 18
Yield
Cou
pon
Mortgages Offer Floating Rate Exposure and Relative Value Opportunities
Loan 1(Left Scale)
Loan 2 (Left Scale)
3-Mo. LIBOR
4.6
1.0
7.1
5.5
2.6
–2.0
4.53.7
Feb 15–Jun 15
Oct 15–Dec 15
Aug 16–Jan 17
Sep 17–Apr 18
CRTs Bank Loans
Coupon/Yield Change†:
3-Mo. LIBOR: 1.67%Loan 1: 0.09%Loan 2: 0.84%
0
2
4
6
8
10
12
BBB BB
Yiel
ds (P
erce
nt)
US Credit CMBX
Correlation (Between CMBX and US Credit)
0.29
21|CMO 3Q18
As of June 30, 2018Past performance does not guarantee future results.Treasuries are represented by Bloomberg Barclays US Treasury Intermediate and Bloomberg Barclays US Treasury Long; corporates by Bloomberg Barclays US Corporate High-Yield; municipals by Bloomberg Barclays Municipal Intermediate (5–10-year), Bloomberg Barclays Municipal Long Bond (22+ year), and Bloomberg Barclays Municipal High Yield. *The Federal Reserve Bank of Philadelphia’s US Index summarizes current economic conditions using state-level indicators across the 50 states. †Tax rate assumed: 40.8%.Source: Bloomberg Barclays, Federal Reserve Bank of Philadelphia, Municipal Market Data and AB
Negative Net Supply Has Followed a Spike in Issuance
Municipals Benefit from Strong Technicals and Fundamentals Along with Attractive Relative Valuations
Municipals Are Attractive Relative to Taxable PeersTax-Equivalent Yields (Percent)†
2.6 3.0
4.1
5.6
8.1
6.4
Intermediate Long HY
Treasury Municipal Corporate
–80
–60
–40
–20
0
20
40
60
80
100
Jun
17
Sep
17
Dec
17
Mar
18
Jun
18
Sep
18
Dec
18
Mar
19
USD
Billi
ons
Visible Supply Announced CallsMatured/Maturing IssuedNet Issuance
Market Dynamics Indicate Strength for Municipals
Supply-Demand Dynamics
Positive net fund flows and lack of supply continue to support prices
Negative supply has followed a flood of issuance in 4Q:17 Supply is 20% below last year’s pace
Credit Fundamentals
Tax collections increased 5.8% in 1Q:18 from 1Q:17
The Philadelphia Fed’s US Index increased 0.8% over the past three months, supporting the stronger US growth narrative*
Estimates
22|CMO 3Q18
As of June 30, 2018Historical analysis does not guarantee future results.Nominal yields. A credit rating is a measure of the quality and safety of a bond or portfolio, based on the issuer’s financial condition. AAA is highest (best) and D is lowest (worst). Ratings are subject to change. Bloomberg Barclays long indices are used for each respective rating category. *Roll is the natural price gain that a bond experiences as it ages, assuming interest rates are unchanged. Yield advantage shown is for 10-year municipal securities. Short taxable bonds are represented by Bloomberg Barclays US Aggregate 1–3 Year ex Government.Source: Bloomberg Barclays, Investment Company Institute, J.P. Morgan, Municipal Market Data, US Federal Reserve and AB
Municipals: Balance Intermediate Quality with Longer-Maturity Credit
Roll Plus Yield (Percent)
Shorter Bonds: Consider short-maturity municipals vs. comparable-maturity taxable bonds given the increase in short-term yields
Intermediate Bonds: Focus on rolland carry, but manage yield-curve structure due to flattening
Longer Bonds: Dip down in credit for an extra yield pickup—avoid longer-maturity high grades, which may be volatile due to stronger economic growth or potentially higher inflation
1.67 2.07 2.35 2.48 2.58 2.64 2.87 3.02 3.140.24 0.47
0.84 0.89 0.76 0.500.59 0.29
0.19
3.75
2 5 7 8 9 10 15 20 30Maturity (Years)
Yield Roll* BBB Muni
23|CMO 3Q18
As of June 30, 2018Past performance and historical analysis do not guarantee future results.*Based on peak-to-trough rate cycles for the corresponding periods of S&P 500. Rising-rate environments are defined as periods during which the 10-year US Treasury yield rose by more than 70 basis points. †Taper tantrum is from May 1, 2013, to December 31, 2013; tightening tantrum is from July 5, 2016, to March 13, 2017; tax-cut tantrum is from September 7, 2017, to June 30, 2018.Source: Bloomberg, Bloomberg Barclays, Ned Davis Research, S&P and AB
Rising Rates Often Do Not Derail Equities, but Sectors Can Matter
Equities Have Fared Well in Rate-Hike Cycles
Change in10-Year
Treasury Yields (%)
2.47.83.12.71.11.22.51.40.92.21.21.51.61.01.60.71.4
Rising-Rate
Cycles
Annualized S&P 500 Returns in Rising-Rate
Periods (Percent)*2.1
8.711.9
2.315.7
8.31.1
12.921.0
32.123.2
10.925.4
34.825.3
2.516.1
Jan 71–Sep 75Dec 76–Oct 81Oct 82–Jun 84
Aug 86–Sep 87Feb 88–Feb 89
Jul 89–Apr 90Sep 93–Nov 94Dec 95–Aug 96Nov 96–Mar 97Sep 98–Jan 00Oct 01–Mar 02Sep 02–Jun 06Dec 08–Dec 09Aug 10–Mar 11Jul 12–Dec 13Jan 15–Jun 15Jul 16–Jun 18
Average 15% Annualized Returns During Rising-Rate
Periods
Sector Relative Performance During Past Three Rising-Rate Tantrums (Percent)†
SectorTaper
TantrumTightening
TantrumTax-Cut Tantrum
Financials 6.2 23.5 –0.8
Cons. Disc. 5.5 –2.1 10.8
Technology 3.7 11.6 10.6
Industrials 9.3 2.2 –6.0
Telecom –19.7 –18.4 –11.4
Consumer Staples –10.1 –12.4 –16.4
Real Estate –24.7 –20.2 –9.3
Utilities –20.6 –15.6 –13.7
10-Year UST NoteYield Change +138 b.p. +125 b.p. +82 b.p.
24|CMO 3Q18
Left display as of December 31, 2017; middle display as of June 30, 2018; right display as of December 31, 2017. Average monthly returns of the net debt to equity factor (low leverage to high leverage) index between 1990 and 2017 when bond yields fall or rise by greater than 10 basis points or are unchanged. The US GDP cycle is based on that defined by the National Bureau of Economic Research. The table shows average quarterly returns of the low leverage to high leverage index in five cycles (early, mid, late expansion and early, late recession). The GDP cycle back test is carried out between 1990 and 2012.Historical analysis does not guarantee future results.Source: Bernstein Research, FactSet, MSCI, National Bureau of Economic Research, Thomson Reuters I/B/E/S, Thomson Reuters DataStream and AB
Financial Strength: Vital, Attractively Valued and Resilient as Rates Rise
Performance of Low-Leverage to High-Leverage Companies10-Year Bond Movements: 1990–2017
Average FallUn-
changed Rise
Global 0.25 –0.09 0.08 0.88
Europe 0.13 0.08 0.03 0.29
US 0.16 –0.43 –0.10 1.19
Relative P/B of Low- vs. High-Levered Stocks: Financial Strength on Sale
0
1
2
3
4
5
6
90 93 96 99 02 05 08 11 14 17
Rat
io (×
)
Valuation DiscountsGlobal: 42%
US: 64%
Median Debt/Equity Has ClimbedS&P 500 Companies
40
45
50
55
60
65
70
75
80
85
90
02 04 06 08 10 12 14 16
Perc
ent
US
Global
25|CMO 3Q18
Growth Style Remains Relevant, and Not as Risky as You Might Think
Left display through June 30, 2018; right display as of June 5, 2018Historical analysis does not guarantee future results.Source: Cornerstone Macro and AB
When PMIs Peak, the Stability of Growth Becomes More Important
30
35
40
45
50
55
60
65
70
75
–50
–40
–30
–20
–10
0
10
20
30
40
85 89 93 97 01 05 09 13 17
Index Level
TechBubble
ISMManufacturing
Index
Role Reversal: Betas Then and Now
1.20
0.980.96
1.23
Highest P/E Stocks Lowest P/E Stocks2000 2018
Year
-ove
r-Yea
r Per
cent
S&P 500 Pure Value vs. Pure Growth
(Left Scale)
26|CMO 3Q18
Left display as of June 30, 2018; right display through December 31, 2017Past performance, historical analysis and current forecasts do not guarantee future results. Not all sectors perform the same.An investor cannot invest directly in an index, and its performance does not reflect the performance of any AB portfolio. The unmanaged index does not reflect the fees and expenses associated with the active management of a portfolio. *Three-month trailing average historical monthly return dispersion; S&P 500 Stock Universe (1990–2017)Source: Bernstein Research, S&P and AB
That Could Support Active Management OutperformancePercent of Active US Large-Cap Funds Outperforming Benchmarks vs. US Market Dispersion (1990–2017)
0
10
20
30
40
50
60
70
80
90
0
2
4
6
8
10
12
14
16
90 92 94 96 98 00 02 04 06 08 10 12 14 16
Return Dispersion (Left Scale)Share of US Active Funds Outperforming
Dispersions Are Rising, Especially Above Post-2010 AverageUS Market Return Dispersion (Percent)*
0
2
4
6
8
10
12
14
16
18
20
90 92 94 96 98 00 02 04 06 08 10 12 14 16 18
Dispersions Are Rising, Which Bodes Well for Active Managers
Average Since 1990
Average Since 2010
Correlation: 0.49
27|CMO 3Q18
As of June 30, 2018Historical analysis does not guarantee future results.*Valuation composite is one-third price/forward earnings, one-third price/book and one-third price/sales.†Real estate sector adjusted for mortgage REITs post–GICS sector reconstitution to make it comparable with historical data.Source: Bloomberg, FactSet, Russell Investments and AB
Small-Caps: Opportunities Remain and Be Active
Historical Percentiles P/FE Multiple Relative to Russell 2000
13
27
54
42
76 79
Industrials
Consumer Discretionary
Technology
Utilities
Healthcare
Real Estate†
Smaller-Cap Stocks Are Less Expensive than Larger CapsRelative Valuations (Russell 2000 vs. Russell 1000)*
0.88
0.93
0.98
1.03
1.08
1.13
08 09 10 11 12 13 14 15 16 17 18
Rat
io (×
)
Large-Caps Are Cheap
Small-Caps Are Cheap
Average
28|CMO 3Q18
As of December 31, 2017Historical analysis does not guarantee future results. Numbers may not sum due to rounding. US GDP estimate from AB economists. Organic food estimate from AB analysts, through 2023. Automotive active safety revenues estimate from Roland Berger, through 2025. Health savings account AUM from Devenir and AB, through 2022. Private pension AUM estimate from Citigroup, OECD and AB, through 2025. Mobile data traffic estimates from Cisco Systems, through 2021.Calendar-year-end earnings per share growth and calendar-year total return indexed to 1.Source: Cisco Systems, Citigroup, Devenir, OECD, Roland Berger, S&P and AB
Key Opportunities for Growth: Secular Themes and High Profitability
Growth Isn’t Always About the Economy...Growth Rates (Percent)
…yet the Returns of Highly Profitable US Stocks Have Lagged EarningsEarnings per Share (EPS) Growth and Total Return Differential
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
5.0
5.5
6.0
11 12 13 14 15 16 17
Perc
ent
High-Profitability Companies—EPS GrowthS&P 500—EPS GrowthHigh-Profitability Companies—ReturnS&P 500—Return
High-Profitability Companies: stock
returns have lagged earnings
S&P 500:stock returns
have outpaced earnings2.3
8.0
16.0 17.0
29.0
46.0
US GDP(2018E)
OrganicFood
AutomotiveActiveSafety
Revenues
HealthSavingsAccount
AUM
PrivatePension
AUM
GlobalMobileData
Traffic
Compound Annual Growth Estimates
29|CMO 3Q18
Key to Successful Growth Investing: Beating the FadeCompanies Persisting with ≥10% Year-over-Year Earnings Growth Rates: Top 1,000 Global Companies (1979–2017)*
376
64
14
1.2
2.4
2.8
0
100
200
300
400
0.0
0.5
1.0
1.5
2.0
2.5
3.0
OneYear
ThreeYears
FiveYears
Num
ber of Com
panies
Exc
ess
Ret
urn
(Per
cent
)
Global Equities: A Broader Opportunity Set; Sustained Earnings Key
Number of Stocks with Earnings Yield Higher than 7%, and Percentage of Index
Left display as of March 31, 2018; right display as of December 31, 2017. Past performance and historical analysis do not guarantee future results. Historical data for information only. Earnings yield calculated using reciprocal of P/FE (2018). US represented by S&P 500, non-US developed by MSCI EAFE and EM by MSCI Emerging Markets. Individual stocks for which price/forward earnings (2018E) data were not available are excluded from these figures. *Universe consists of the top 1000 companies by market cap each year through 2016 with annual rebalancing. Source: Center for Research in Security Prices, FactSet, MSCI, S&P Compustat and AB
Annualized Excess Returns vs. MSCI World
US156
(32%)
Non-USDeveloped
371(50%)
EM424
(50%)
30|CMO 3Q18
A Word About Risk
The information contained here reflects the views of AllianceBernstein L.P. or its affiliates and sources it believes are reliable as of the date of this publication. AllianceBernstein L.P. makes no representations or warranties concerning the accuracy of any data. There is no guarantee that any projection, forecast or opinion in this material will be realized. Past performance does not guarantee future results. The views expressed here may change at any time after the date of this publication. This document is for informational purposes only and does not constitute investment advice. AllianceBernstein L.P. does not provide tax, legal or accounting advice. It does not take an investor’s personal investment objectives or financial situation into account; investors should discuss their individual circumstances with appropriate professionals before making any decisions. This information should not be construed as sales or marketing material or an offer or solicitation for the purchase or sale of any financial instrument, product or service sponsored by AllianceBernstein L.P. or its affiliates.
Important Risk Information Related to Investing in Equity and Short Strategies
All investments involve risk. Equity securities may rise and decline in value due to both real and perceived market and economic factors as well as general industry conditions.
A short strategy may not always be able to close out a short position on favorable terms. Short sales involve the risk of loss by subsequently buying a security at a higher price than the price at which it sold the security short. The amount of such loss is theoretically unlimited (since it is limited only by the increase in value of the security sold short). In contrast, the risk of loss from a long position is limited to the investment in the long position, since its value cannot fall below zero. Short selling is a form of leverage. To mitigate leverage risk, a strategy will always hold liquid assets (including its long positions) at least equal to its short position exposure, marked to market daily.
Important Risk Information Related to Investing in Emerging Markets and Foreign Currencies
Investing in emerging-market debt poses risks, including those generally associated with fixed-income investments. Fixed-income securities may lose value due to market fluctuations or changes in interest rates. Longer-maturity bonds are more vulnerable to rising interest rates. A bond issuer’s credit rating may be lowered due to deteriorating financial condition; this may result in losses and potentially default, or failure to meet payment obligations. The default probability is higher in bonds with lower, noninvestment-grade ratings (commonly known as “junk bonds”).
There are other potential risks when investing in emerging-market debt. Non-US securities may be more volatile because of the associated political, regulatory, market and economic uncertainties; these risks can be magnified in emerging-market securities. Emerging-market bonds may also be exposed to fluctuating currency values. If a bond’s currency weakens against the US dollar, this can negatively affect its value when translated back into US-dollar terms.
Bond Ratings Definition
A measure of the quality and safety of a bond or portfolio, based on the issuer’s financial condition, and not based on the financial condition of the fund itself. AAA is highest (best) and D is lowest (worst). Ratings are subject to change. Investment-grade securities are those rated BBB and above. If applicable, the Pre-Refunded category includes bonds which are secured by US government securities and therefore are deemed high-quality investment grade by the advisor.
31|CMO 3Q18
Index Definitions
Following are definitions of the indices referred to in this presentation. It is important to recognize that all indices are unmanaged and do not reflect fees and expenses associated with the active management of a mutual fund portfolio. Investors cannot invest directly in an index, and its performance does not reflect the performance of any AB mutual fund. Bloomberg Barclays Global Aggregate Bond Index: Measure of global investment-grade debt from 24 local-currency markets; includes treasury, government-related, corporate
and securitized fixed-rate bonds from both developed- and emerging-market issuers.
Bloomberg Barclays Global Aggregate Corporate Bond Index: Tracks the performance of investment-grade corporate bonds publicly issued in the global market and found in the Global Aggregate. (Represents global corporate on slide 1.)
Bloomberg Barclays Global High-Yield Bond Index: Provides a broad-based measure of the global high-yield fixed-income markets. It represents the union of the US High-Yield, Pan-European High Yield, US Emerging Markets High-Yield, CMBS High Yield and Pan-European Emerging Markets High-Yield indices.
Bloomberg Barclays Global High-Yield Corporate Index: A multi-currency measure of the global high-yield corporate debt market. The index represents the union of the US High-Yield, the Pan-European High-Yield, and the corporate sector of the Emerging Markets (EM) Hard-Currency High-Yield Indices. The high-yield and emerging-market sub-components are mutually exclusive. The Global High-Yield Corporate Index is a component of the Global High-Yield Index and subsequently a component of the Multiverse Index, along with the Global Aggregate, Euro Treasury High-Yield and EM Local Currency Government Indices.
Bloomberg Barclays Global Treasury: Euro Bond Index: Includes fixed-rate, local-currency sovereign debt that makes up the Euro Area Treasury sector of the Global Aggregate Index. (Represents euro-area government bonds on slide 1.)
Bloomberg Barclays Global Treasury: Japan Bond Index: Includes fixed-rate, local-currency sovereign debt that makes up the Japanese Treasury sector of the Global Aggregate Index. (Represents Japan government bonds on slide 1.)
Bloomberg Barclays Municipal Bond Index: A rules-based, market value–weighted index engineered for the long-term tax-exempt bond market. (Represents municipals on slide 1.)
Bloomberg Barclays US Aggregate Bond Index: A broad-based benchmark that measures the investment-grade, US dollar–denominated, fixed-rate, taxable bond market, including US Treasuries, government-related and corporate securities, mortgage-backed securities (MBS [agency fixed-rate and hybrid ARM pass-throughs]), asset-backed securities (ABS), and commercial mortgage-backed securities (CMBS).
Bloomberg Barclays US Corporate High-Yield Bond Index: Represents the corporate component of the Bloomberg Barclays US High-Yield Index. (Represents US high yield on slide 1.)
Bloomberg Barclays US Corporate Bond Index: Measures the investment-grade, fixed-rate, taxable corporate bond market and includes USD-denominated securities publicly issued by US and non-US industrial, utility and financial issuers.
32|CMO 3Q18
Index Definitions (continued)
Bloomberg Barclays US Treasury Index: Includes fixed-rate, local-currency sovereign debt that makes up the US Treasury sector of the Global Aggregate Index. (Represents US government bonds on slide 1.)
Bloomberg Barclays US Treasury Inflation-Linked Bond Index: Measures the performance of the US Treasury Inflation-Protected Securities market.
J.P. Morgan Corporate Emerging Markets Bond Index: A global, corporate emerging-market benchmark that tracks USD-denominated corporate bonds issued by emerging-market entities.
J.P. Morgan Emerging Market Bond Index Global: A benchmark index for measuring the total return performance of government bonds issued by emerging-market countries that are considered sovereign (issued in something other than local currency) and that meet specific liquidity and structural requirements. In order to qualify for index membership, the debt must be more than one year to maturity, have more than $500 million outstanding, and meet stringent trading guidelines to ensure that pricing inefficiencies don’t affect the index. (Represents emerging-market debt on slide 1.)
J.P. Morgan Government Bond-Emerging Markets Global Diversified Index: A comprehensive global emerging-market index of local government bond debt. To qualify, a country’s gross national income (GNI) per capita must be below the GNI per capita level that is adjusted yearly by the growth rate of the world GNI per capita, provided by the World Bank, for three consecutive years.
MSCI EAFE Index: A free float–adjusted, market capitalization–weighted index designed to measure developed-market equity performance, excluding the US and Canada. It consists of 22 developed-market country indices. (Represents EAFE on slide 1.)
MSCI Emerging Markets Index: A free float–adjusted, market capitalization–weighted index designed to measure equity market performance in the global emerging markets. It consists of 21 emerging-market country indices. (Represents emerging markets on slide 1.)
MSCI World Index: A market capitalization–weighted index that measures the performance of stock markets in 24 countries.
Russell 1000 Index: A stock market index that represents the highest-ranking 1,000 stocks in the Russell 3000 Index, representing about 90% of the total market capitalization of that index.
Russell 2000 Index: Measures the performance of the small-cap segment of the US equity universe. It is a subset of the Russell 3000 Index, representing approximately 8% of the total market capitalization of that index. It includes approximately 2,000 of the smallest securities based on a combination of their market cap and current index membership. (Represents US small-cap on slide 1.)
S&P 500 Index: Includes a representative sample of 500 leading companies in leading industries of the US economy. (Represents US large-cap on slide 1.)
MSCI makes no express or implied warranties or representations, and shall have no liability whatsoever with respect to any MSCI data contained herein. The MSCI data may not be further redistributed or used as a basis for other indices, any securities or financial products. This report is not approved, reviewed or produced by MSCI.
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