AllianceBernstein (AB) recorded $6.6 billion of firmwide net inflows in the third quarter of 2026, its strongest organic-growth quarter since the first quarter of 2022, as a large institutional mandate and continued demand for alternatives and multi-asset solutions outweighed retail redemptions. The asset manager also increased its full-year performance-fee outlook, although a lower effective fee rate and higher expenses constrained operating profit.
Firmwide net inflows represented a 3% annualized organic growth rate, reversing $2.3 billion of outflows a year earlier and improving from $0.8 billion of inflows in the second quarter. Active strategies generated $4.1 billion of net inflows, compared with $3.4 billion of outflows in the prior-year quarter.
Assets under management ended September at $900.4 billion, up 5% from $860.1 billion a year earlier but down 1% from $905.5 billion at the end of June. The sequential decline reflected $11.7 billion of negative investment performance, which more than offset net inflows. Average AUM rose 8% year over year to $908.3 billion.
Adjusted earnings edge higher as fee rate declines
Adjusted net revenue increased 2% from a year earlier to $904 million, supported by a 3% rise in adjusted base fees to $845 million and a 25% increase in adjusted performance fees to $26 million. Adjusted operating income was unchanged at $303 million as adjusted operating expenses rose 3% to $601 million. The adjusted operating margin narrowed to 33.5% from 34.2%.
AB Holding adjusted diluted net income per unit increased 2% to $0.88, while the quarterly distribution was also $0.88 per unit. The compensation ratio remained at 48.5%.
The annualized effective base-fee rate fell to 37.1 basis points from 38.9 basis points a year earlier and 37.7 basis points in the second quarter, reflecting changes in the mix of assets. That pressure was particularly visible in retail, where average AUM rose 3% year over year but adjusted base management fees declined 3%.
On a GAAP basis, net revenue increased 8% to $1.23 billion, while operating expenses rose 14% to $976 million. Operating income declined 12% to $250 million, and the GAAP operating margin contracted to 21.9% from 24.3%. GAAP diluted net income per unit was unchanged at $0.79. The quarter included $95.6 million of performance-based fees from certain acquired AB CarVal funds and $105.4 million of related compensation expense, which AB excluded from adjusted results because it does not participate in the funds’ performance.
Institutional inflows offset retail weakness
The institutional channel produced a record $15.7 billion of net inflows, led by an approximately $12 billion commercial mortgage loan mandate. Alternatives and multi-asset solutions attracted $13.3 billion in institutional inflows, their seventh consecutive positive quarter, while taxable fixed income and passive equities added $3.8 billion and $3.2 billion, respectively. Those gains more than offset $4.6 billion of active-equity outflows.
AB said fees on the commercial mortgage loan assets began in the fourth quarter at a high-single-digit basis-point rate, with potential additional fee revenue from new originations. Its institutional pipeline stood at $13.1 billion at quarter-end after more than $4 billion of additions across emerging-market debt, mortgage income and private credit. The company cautioned that unfunded mandates are not legally binding and may not be funded at the expected amounts or times.
Retail posted $8.4 billion of net outflows as gross sales weakened amid volatile markets. Tax-exempt fixed income generated $2 billion of inflows, and alternatives and multi-asset solutions added $600 million. Those gains were outweighed by $6.1 billion of active-equity outflows and $3.5 billion of taxable fixed-income outflows. AB said mutual-fund redemptions more than offset inflows into exchange-traded funds, separately managed accounts and thematic products.
Private Wealth recorded $700 million of net outflows but $600 million of net new assets after reinvested dividends and interest. Adjusted base fees in the channel rose 9% year over year to $312 million, and the business contributed more than one-third of firmwide adjusted net revenue while representing about 18% of average AUM. Private Wealth AUM ended the quarter at $165.1 billion.
Across investment services, alternatives and multi-asset solutions generated $15 billion of firmwide net inflows, offsetting $10 billion of equity outflows. Private Markets AUM reached $105.5 billion, up 33% year over year and above AB’s 2027 strategic target. The total included $91.6 billion of fee-paying assets and $13.9 billion of fee-eligible committed capital. AB also reported $21 billion across 34 ETFs in the U.S., EMEA and Asia-Pacific, as well as $68 billion in retail separately managed accounts.
Performance-fee outlook increases
For full-year 2026, management now expects total performance fees of $135 million to $150 million, compared with the prior range of $115 million to $135 million. The forecast includes $60 million to $65 million from private markets and $75 million to $85 million from public markets.
AB narrowed its expected non-compensation expense range to $620 million to $635 million from $620 million to $640 million. The company maintained its compensation accrual at 48.5% of net revenue and its projected tax rate for AllianceBernstein L.P. at 5% to 6%.
The outlook remains dependent on financial-market conditions and the investment performance of AB’s products and separately managed accounts. Other risks identified by the company include economic and industry conditions, competition, regulation, acquisitions and integration, the funding of institutional mandates, and uncertainty over whether public- and private-market performance fees will ultimately be realized.
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