Bill Siemers: Yes. Thanks, Matt. The only a couple of things I would add, one, obviously, a recap for Bill. As you know, insurance is a large portion of our assets, roughly quarter of our assets, AUM is managed on behalf of insurance clients. So it’s core to our business. And second, as Matt briefly mentioned, we have the ability and the expertise to marry these specialized origination engines with insurance-friendly wrappers. So that structuring is very important, whether it’s specialty finance, mortgages, NAV lending, rated feeders or middle market lending. We have deep expertise in terms of packaging those solutions in a capital and regulatory efficient way for the insurance companies, both in the United States as well as globally. And that, I think, creates a solid foundation for our continued growth in the insurance space.
Bill Katz: Great. Thank you. And just as my follow-up, Seth, for you, I was just wondering, what was your and the Board’s decision to bring this marks in given where I think maybe the evolution of the Alliance Bernstein model might sit? And then within that, given that your margin today is bucking up against your 30% margin you laid out at the Investor Day more recently, how should we be thinking about that in light of just obviously a higher level of assets and just your incremental cost guidance, is 30 now, a bit of a stale outlook ex-markets? Or is there more opportunity here to get to a higher run rate margin? Thank you.
Seth Bernstein: Bill, thanks very much for the question. Good morning, everybody. I’m going to actually defer to Bill to talk about the margin impact, but let me touch on Jackie and her role. We have been blessed for a number of years by having an incredibly capable and well-regarded controller who has been CFO a couple of times now on an interim basis. And it’s precisely to reinforce the skills and disciplines that Bill has embedded into our team that I found Jackie so compelling. She has a very deep skill set and experience in the controller function generally, but also in global treasury and tax, as well as her skill set and strategy. So I think she brought a package of skills or brings a package of skills together that are quite complementary to what we have in the firm.
And I think she has the leadership skills to move forward without skipping a beat as Bill moves on to the call [ph] of course. So I would simply say that we’re very pleased that she’s arrived and Bill will transition after this quarter. And so I think she’s well-positioned to take the role forward. I think with respect to the relationship with Equitable, I think the skill set is quite complementary to what the Equitable team would be looking for. I think she will be an added voice with respect to advocacy for AB and its strategic goals and needs. And I think we’re off to a pretty good start. So let me pass it over to Bill to give you a little more color on our expectations on margin.
Bill Siemers: Thanks, Seth. Yeah, Bill, I mean, we don’t give, as you know, specific margin targets, particularly for the next year, but we did give the top side, 2027 targets at the Equitable Investor Day. But that said, yes, I mean, we are starting at a better AUM level this year, than last year. AUM starting point being almost $80 billion higher, but with that, I mean, we’re going to continue to invest in our business for growth. And then we have to continue to remain competitive and pay our people for performance and then, manage all our non-GAAP expenses. So with that said, from the Investor Day, we mentioned with the VRS JV, we were going to — on a run rate going forward, annual basis, get 250 basis points of improvement.
That’s definitely going to come into fruition this year. To what extent, we don’t know. It’s according to when the transaction takes place. So we might only get a piece of that. And then as we’ve mentioned, the completion of the relocation is going to add another 100 to 150bps. That will actually trigger first thing next year. Right now, we’re in the Hudson Yards and also 1345. So I mean, once we get at 1345, this year that will trigger. And then, of course, the other remaining stuff is just Growth Investments and Private Alts rounding out that number. But the big thing to note also is all these improvements that I’m talking about, I mean that’s potential benefit without market improvements in there right now. I mean, so we put some market improvements in there, we would be able to beat those numbers.
Bill Katz: Thank you. And best of luck again. Bye-Bye.
Bill Siemers: Thank you very much.
Operator: And we will take our next question from Craig Siegenthaler with Bank of America. Your line is open.
Craig Siegenthaler: Good morning, Seth. Thank you for taking my questions.
Seth Bernstein: It’s too good to hear you.
Craig Siegenthaler: Will give your perspective on how you think your fixed income lineup is positioned for money-in-motion duration extension with future Fed rate cuts and the yield curve steepening? And what I’m getting at is do you think you’re missing or light on any capabilities like core total return that could limit your ability to win some money motion.
Seth Bernstein: Craig, thanks for the question. Look, I think it’s clear that we’re at the end and the issue of the right of the raises and rates. And the issue now is when that starts easing. We have thought it’s later in the year all along. And the recent strength we’ve seen in payrolls and ISM, we don’t change our expectations in that regard. And while we do see the economy slowing, we do think that we’re in a soft land bank for the first time that I can remember. And so I’m going to rejoice in that. And what we’re seeing quite clearly is that, investors are now increasingly comfortable with extending duration and moving into credit. We’re seeing that most definitively offshore and the very strong growth that we’ve had in Asia.
And we think that continues. And in fact, that strength, I think, reflects both increased comfort with extending duration and having higher yields switch between AIP and American Income and Global High Yield range between 5% and 7% today. But I think what’s most interesting is that the alternatives available to our local investors are less attractive to the mainly onshore Chinese equities. I think that’s, I think, a pretty compelling case for us, and we hope to ride that. I think retail in the US, I think we’re quite well positioned with high net worth individuals, who are focused on the municipal marketplace, the tactics that marketplace we’ve been building share, as you know, for years, and we think we have a differentiated product proposition in how we build these separately managed accounts, which is where we see all the growth there in ETFs that I think will really drive pretty strong demand over the course of this year and hopefully into next.
We also feel that we benefit from an institutional capability and with insurance companies that will continue to pay us dividends as they seek better ways of managing public market investment grade credit. Our systematic strategies have proven to have very strong risk return characteristics and we can do so at a quite a competitive cost, and we’re seeing increasing interest there, not just in the US but really outside the US as well. But it’s certainly true, Bill, that we don’t have an installed base of traditional DBDC ag-based core strategies, although we think we have a pretty compelling product proposition that may be better at addressing our client teams, particularly to becoming increasingly cost competitive. So I’m going to actually ask Onur, if has anything to add to that answer
Onur Erzan: Great summary. Two-thirds of our institutional sales in the fourth quarter was fixed income. So, we are definitely showing strength in institutional and fixed income as well. That’s perfect to summarize the strength in retail across US and international markets. I would also highlight the growing ETF product range we have, where we participate in core and other taxable and tax-exempt fixed income categories. We are very pleased with the build-out and the asset capture of our ETF franchise and that should help us increase our penetration in taxable fixed income including core and core plus categories as well. Again, early days, but the signs are very encouraging, combined with our distribution power in US retail.
Craig Siegenthaler: Thanks, Onur and Seth. And I actually have a credit one, so I might take advantage that Matthew Bass is on the line too. But I know you launched a NAV lending strategy last year. And we know the LTVs are quite low in this product from a lender standpoint. But, you know, I wanted to see, if you think it’s a good idea for buyout funds to cross-colorize their portfolio companies in order to get early cash flow events to their LTVs?
