3Q15 Capital Markets Outlook: After the Beta Trade

• published: 23 Jul 2015
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For the past few years, we’ve talked about four themes: moderate global growth, low inflation and policy responses to low rates and quantitative easing. Rick Brink, Director of Multi-Assets and Alternatives at AB, discusses the potential impact for investors. Historical analysis and current forecasts do not guarantee future results. Past performance does not guarantee future results. As of June 30, 2015, unless specified otherwise. Displays: Volatility Fell Off Dramatically / Dispersion Within Markets Declined Dispersion: Rolling six-month average of monthly returns dispersion, based on the AB US Large Cap Equity universe. Source: Center for Research in Security Prices, Morningstar, MSCI, S&P; Dow Jones and AB Display: The Great Beta Trade is Likely Over Current yield represented by yield-to-worst. Annualized returns in US dollars. Markets are represented from left to right by the S&P; 500 Index, MSCI EAFE Index (unhedged), Barclays US Aggregate Index and Barclays US High Yield Index. Median forecast based on proprietary AB forecasts. Source: Barclays, FactSet, Lipper, MSCI, Standard & Poor’s (S&P;) and AB Display: Balance Interest Rates and Credit Source: AB Display: Global Index Protected Better When Bonds Fell March 1990 – December 2014 US is represented by the Barclays US Aggregate Index, Global is represented by the Barclays Global Aggregate Index. 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: Barclays and AB Displays: Earnings per Share (EPS) Growth Forecast is Muted /Top 1,000 Companies with Earnings-Growth Rates ≥10% First display as of May 31, 2015; second display as of December 31, 2014. Trailing 12-month EPS; next 12-months’ consensus EPS growth is the next four quarters’ consensus EPS vs. the current trailing 12-month EPS. Universe consists of the top 1,000 companies by market cap each year from 1979-2014, with annual rebalancing. Source: Bloomberg, CRSP, FactSet, MSCI, S&P; Compustat, S&P; Dow Jones and AB Display: S&P; 500 ex Financials Uses of Available Cash Through December 31, 2014. 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: S&P; Dow Jones and AB Display: Alternatives: Better Up/Down Capture Source: Barclays, Credit Suisse, CRSP, HFR, J. P. Morgan, Morningstar, MSCI, Russell Investments and AB The information herein reflects prevailing market conditions and our judgments, which are subject to change, as of the date of this document. 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 that 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.