Creating Returns with Clarity ALPHA & HIGH CONVICTION...Our investment capabilities span diverse asset classes, investment styles and geographic markets. They include: Luxembourg-domiciled

For investment professional use only. Not for inspection by, distribution or quotation to, the general public.

ALPHA & HIGH CONVICTION

Creating Returns with Clarity

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No matter where you look in the capital markets, it’s getting harder to find returns. That’s why beating the market matters more today.In recent years, abundant liquidity supplied by central banks created an unnatural environment. Most asset classes performed strongly, weak companies stayed profitable and investors were rewarded for following crowds. That period is coming to an end.

It’s easy to buy market beta today. Passive portfolios are everywhere, and they’re cheap. “Smart-beta” portfolios provide exposure to an endless array of quantitative factors, like value or low beta. But if market returns are lower across asset classes, investors may be left short. Investors now need to be more discriminating with their exposures and to search beyond the benchmark for opportunities that may be off the beaten path.

In traditional active portfolios, investors often didn’t really know how or where their returns were coming from—or what they were paying for. High-conviction portfolios offer investors alpha with clarity, through strategies with clear windows on how returns are sourced.

Forecast performance is for illustrative purposes only and is not a guarantee of future returns. Normal long-term return and 10-year projection are calculated as of 30 June 2018

Hedged returns in US dollars.

Returns above the line represent projections based on normal conditions. Normal conditions reflect AB’s estimates of equilibrium capital-market conditions, which are typically close to a very long-term historical average.

We project 10,000 plausible paths for major asset classes, and use them to quantify the median of returns.

Equity markets referenced represent broad universes similar to the corresponding MSCI indices: for example, global large-cap stocks represents a universe similar to the MSCI World. The bond markets referenced are for seven-year constant-maturity bonds of the type named: inflation-linked sovereign, nominal sovereign, high-yield and investment-grade corporate. Hedge funds represent a diversified fund of funds. Commodity futures represent the Dow Jones Commodity Index. Real assets are modelled as one-third REITs, one-third commodity futures and one-third commodity stocks.

Source: AllianceBernstein (AB)

Alpha, often considered the active return on an investment, gauges the performance of an investment against the market and is used as a measure of manager skill.

Beta is a measure of an investment’s sensitivity to the market as a whole. A beta below 1 indicates lower sensitivity to the market; a higher beta indicates higher sensitivity.

SKILL AND DISCIPLINERETURNS THAT MATTER

2.4 2.2 2.83.7

6.8 6.8 7.46.0 5.4

4.26.2

US Cash Global Sov Bonds

Global IGBonds

Global HYBonds

GlobalREITs

GlobalEquity

GlobalSmall Cap

EmergingEquities

HedgeFunds

CommodityFutures

RealAssets

4.5

5.86.3

8.2

7.1

9.0 8.8

7.5 7.2

5.4

7.1

Normal Projection as of 30 June 2018

RETURN OUTLOOK IS BELOW AVERAGE FOR ALL MAJOR ASSET CLASSESForecast 10-Year Median Growth Rates (Annualized, Percent)

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In a world of rising volatility, macroeconomic challenges and heightened geopolitical risk, it’s easy to be seduced by low-cost passive investing approaches. But we believe high-conviction investing approaches are best suited to navigate a rapidly changing global market environment.

Market volatility actually creates opportunities for active managers who can cut through the noise with conviction. In equities, this can be done by adopting an unconstrained approach and by increasing active share to move away from the benchmark. Conviction can also be expressed by identifying idiosyncratic return streams that can’t be easily replicated in passive strategies or building highly

concentrated portfolios with a small number of select securities. In fixed income, acute awareness of market signals and macro insights are especially important to develop conviction in areas of the market that offer outsized opportunities, such as US mortgage securities or financial companies.

To be successful, any high-conviction portfolio must be shaped by a clear investing philosophy backed by solid research, especially when delving into niche pockets of the market that require specialized knowledge. And a disciplined investing process differentiates effective high conviction from overconfidence.

CONVICTION TAKESMANY FORMS What does conviction really mean in investing? It’s more than just being confident or differing from the benchmark. Many ingredients are needed to invest effectively with conviction and to create active portfolios that can truly rise above the pack.

HIGH ACTIVESHARE

UNCONSTRAINEDPORTFOLIOS

IDIOSYNCRATICRETURN STREAMS

CONCENTRATEDHOLDINGS

CLEAR INVESTINGPHILOSOPHY

•STRONG RESEARCH

CAPABILITIES•

DISCIPLINED INVESTINGPROCESS

•DIFFERING MEANINGFULLY

FROM THE BENCHMARK

HOW TO INVEST WITH CONVICTION

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AB HIGH CONVICTION INVESTING Building high-conviction portfolios in complex markets requires a broad set of capabilities. AllianceBernstein (AB) has more than 50 years of experience, backed by a worldwide presence and a research-driven culture, to steer portfolios through changing market conditions.

GLOBAL PERSPECTIVESA global cross-asset perspective on markets, industries and companies is essential for developing conviction. Our firm has built an extensive and collaborative global research and investing footprint over five decades, giving us the broadest possible perspective.

EXPERIENCED INVESTORSOur portfolio managers and analysts have years of experience investing through changing market conditions, which underpins the confidence to stay the course when new challenges arise. Many AB analysts have worked in the industries that they cover, providing an insider’s view that is essential for forecasting a company’s future path.

DIFFERENTIATED INSIGHTSIn an increasingly passive world, it’s becoming harder for investment managers to distinguish themselves. Our portfolio teams are constantly looking for new ways to develop differentiated insights on securities and systematic, dynamic perspectives on portfolio risk that lead to better client outcomes. Technology and innovation are also key ingredients for our differentiated capabilities.

22COUNTRIES

48CITIES

81EQUITY

RESEARCHANALYSTS

138PORTFOLIOMANAGERS

59FIXED-INCOME

RESEARCHANALYSTS

22YEARS’ AVERAGE

EXPERIENCE

38MULTI-ASSET

& ALTS RESEARCHANALYSTS

12YEARS’ AVERAGE

AT AB

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PORTFOLIOS WITH A DIFFERENCE Each AB portfolio is rooted in a clear investment philosophy, which underpins a distinctive high-conviction approach designed to deliver a solid track record over time.

ISINs are provided for funds in their base currency. The base currency for all funds listed is USD, except for European and Eurozone Equities, which are in euros. Fund size based on assets under management as of 30 September 2018.

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AMERICAN GROWTH | EQUITY+ Seeks exceptional businesses that can reinvest profitably for

long-term, noncyclical growth.

+ High quality US large-cap companies are carefully selected for their compelling growth potential, driven by superior profitability, competitive advantages and robust cash flows.

Inception: 1992 | Fund size: $3,333m | ISIN: LU0079475348

EMERGING MARKETS GROWTH | EQUITY+ High quality companies with sustainable growth prospects,

strong competitive advantages and high returns on invested capital can deliver powerful long-term results.

+ Invests in secular growth companies that are well positioned to grow independent of the economic environment.


EUROPEAN AND EUROZONE EQUITY | EQUITY+ We approach investing as business owners, developing a dif-

ferentiated perspective on companies’ future cash flows and buying them at prices that offer relatively attractive returns.

+ Private equity techniques are applied to stock selection, using internal rate of return calculations.

EUROPEAN EQUITYInception: 2001 | Fund size: €693m | ISIN: LU0128316840EUROZONE EQUITYInception: 1999 | Fund size: €1,135m | ISIN: LU0528103707

SUSTAINABLE THEMATIC RESEARCH | EQUITY+ Investments that benefit society and the environment can

generate superior financial returns.

+ The UN’s Sustainable Development Goals provide a framework for theme selection, and a bottom-up stock selection process balances reward and risk while integrating environmental, social and governance (ESG) factors.

SUSTAINABLE GLOBAL THEMATICInception: 1991 | Fund size: $840m | ISIN: LU0069063542SUSTAINABLE US THEMATICInception: 2001 | Fund size: $125m | ISIN: LU0128316170

CONCENTRATED GLOBAL EQUITY | EQUITY+ Long-term consistent earnings growth drives long-term

investment returns.

+ Focuses on companies with strong management teams, volume drivers and dominant franchises with high barriers to entry, that are capable of growing earnings by at least 10% per annum over the next five years.

Inception: 2013 | Fund size: $187m | ISIN: LU1011997464

FINANCIAL CREDIT PORTFOLIO | FIXED INCOME+ Many US and European banks have strong fundamentals that

support attractive investment opportunities across the capital structure.

+ Focuses on issues that combine good quality with good value—especially within the subordinated financials space—offers attractive return potential with better protection.


CHINA OPPORTUNITY | EQUITY+ Seeks capital appreciation by investing in companies located in

or impacted by economic developments in China.

+ Provides exposure to Chinese economic growth and market development primarily through offshore H-shares and ADRs.


MORTGAGE INCOME PORTFOLIO | FIXED INCOME+ US mortgage-related securities are benefiting from tighter

underwriting standards, low levels of housing supply and continuing US economic growth.

+ Accesses a wide range of attractive income opportunities across both fixed and floating rate bonds.


ABOUT ALLIANCEBERNSTEIN AllianceBernstein is a leading global investment-management firm, offering a wide range of investment solutions to institutions and individual investors. Our commitment to rigorous research and differentiated insights helps keep our clients at the forefront of change. Our investment capabilities span diverse asset classes, investment styles and geographic markets. They include: Luxembourg-domiciled global, regional and sector-specific equity funds; multi-asset and alternative UCITS funds; and fixed-income strategies that encompass the entire risk/reward spectrum.

SNAPSHOT AS OF 30 JUNE 2018

US$540 billion of assets under management

Over 3,450 employees based around the globe working together to share knowledge and insights

48 offices based in 22 countries across the Americas, Asia, Europe, the Middle East and Australia

Over 50 years of experience in investment

For more information: AllianceBernstein.com

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For investment professional use only. Not for inspection by, distribution or quotation to, the general public.

IMPORTANT INFORMATION

The value of an investment can go up or down and investors may not get back the full amount they invested. Past performance is neither indicative of, nor a guarantee of, future results. Investment in the Fund entails certain risks. Risks are described in the respective Fund’s Prospectus. Prospective investors should read the Prospectus carefully and discuss risk and the fund’s fees and charges with their financial advisor to determine if the investment is appropriate for them.Each of the funds in this brochure is a portfolio of AB SICAV I, an open-ended investment company with variable capital (société d’investissement à capital variable), or a portfolio of AB FCP I, a mutual investment fund (fonds commun de placement), both of which are organized under the laws of Luxembourg.

Dividends are not paid for all share classes and are not guaranteed. The Fund is meant as a vehicle for diversification and does not represent a complete investment program. The sale of AB funds may be restricted or subject to adverse tax consequences in certain jurisdictions. This financial promotion is directed solely at persons in jurisdictions where the funds and relevant share class are registered or who may otherwise lawfully receive it. Before investing, investors should review the Fund’s full Prospectus, together with the Fund’s KIID and the most recent financial statements. Copies of these documents, including the latest annual report and, if issued thereafter, the latest semi-annual report, may be obtained free of charge from AllianceBernstein (Luxembourg) S.à r.l. by visiting www.alliancebernstein.com, or in printed form by contacting the local distributor in the jurisdictions in which the funds are authorised for distribution.

Note to Readers in Europe: This information is issued by AllianceBernstein Limited, 50 Berkeley Street, London W1J 8HA, it is for marketing purposes. Registered in England, No. 2551144. AllianceBernstein Limited is authorised and regulated in the UK by the Financial Conduct Authority (FCA). Additional Note to Readers in Austria and Germany: Local paying and information agents: Austria—UniCredit Bank, Austria AG, Schottengasse 6-8, 1010 Vienna; Germany—ODDO BHF Aktiengesellschaft, Bockenheimer Landstrasse 10, 60323 Frankfurt am Main. Note to Readers in Liechtenstein: The Funds are not registered for public distribution in Liechtenstein and, accordingly, shares may only be offered to a limited group of Professional Investors, in all cases and under all circumstances designed to preclude a public solicitation in Liechtenstein. This document may not be reproduced or used for any other purpose, nor be furnished to any other person other than those to whom copies have personally been sent by AB. Neither the Funds nor the shares described therein have been subject to the review and supervision of the Liechtenstein Financial Market Authority. Note to Readers in Switzerland: This document is issued by AllianceBernstein Schweiz AG, Zürich, a company registered in Switzerland under company number CHE-306.220.501. AllianceBernstein Schweiz AG is authorised and regulated in Switzerland by the Swiss Financial Market Supervisory Authority (FINMA) as a distributor of collective investment schemes. Swiss Representative & Swiss Paying Agent: BNP Paribas Securities Services, Paris, Succursale de Zürich. Registered office: Selnaustrasse 16, 8002 Zürich, Switzerland, which is also the place of performance and the place of jurisdiction for any litigation in relation to the distribution of shares in Switzerland. The Prospectus, the KIIDs, the Articles or management regulations, and the annual and semi-annual reports of the concerned fund may be requested without cost at the offices of the Swiss representative.

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 or any securities or financial products. This report is not approved, reviewed or produced by MSCI.

The [A/B] logo is a registered service mark of AB and AllianceBernstein® is a registered service mark used by permission of the owner, AllianceBernstein L.P.

© 2018 AllianceBernstein L.P.

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Creating Returns with Clarity ALPHA & HIGH CONVICTION...Our investment capabilities span diverse asset classes, investment styles and geographic markets. They include: Luxembourg-domiciled