Money manager AllianceBernstein Holding LP is coming under scrutiny from UK pension funds over its performance in global equities, managers say, with one scheme deciding to end its mandate last month. Bedfordshire County Council Pension Fund told Reuters it had sacked AllianceBernstein, one of the world's largest fund managers, from a global equities mandate which was valued at 85 million pounds ($121.6 million) in March 2008.
Another pension fund - the Kent County Council Pension Fund, for which AllianceBernstein manages 200 million pounds in a global equities mandate - said the fund manager's performance was being "scrutinised very closely". "It has been a particularly difficult 2008 and the spotlight has been on AllianceBernstein. Their [performance] is something that we are concerned about ... they have a lot of questions to answer," said Nick Vickers, head of financial services at Kent County Council said.
But "there was no issue about terminating" its mandate, Vickers added. The global fund management industry has been severely hit by the global financial crisis, denting investment performance and resulting in huge fund outflows. AllianceBernstein is not alone in posting negative returns, but its high exposure to financial stocks had made it more vulnerable than many of its peers, fund managers said.
"The major losses that AllianceBernstein has made in these stocks is one of its main problems," said Martin Spriggs at the London Borough of Brent Pension Fund. Investors pulled out a net $44 billion from the New York-based company during 2008, contributing to the firm's fourth-quarter revenue falling by 50 percent.
An AllianceBerstein spokesman admitted the recent performance of its global equities services had been disappointing but added: "We are confident that our portfolios are well positioned to capture today's exceptionally large opportunities to deliver the long-term premium that our clients expect while guarding against near-term risks." The spokesman declined to comment on the potential loss of business from any UK pension schemes.
The AllianceBernstein Global Growth Fund returned a negative 53.63 percent in 2008, according to data from Thomson Reuters fund research firm Lipper, underperforming its peers as defined by Lipper Global by 10.81 percent. The fund ranked 3,839 out of 4,408 funds in the benchmark.
"Clearly, they have underperformed very significantly for a lot of their clients including us. We will be keeping a very close eye on them," said Richard McIndoe, head of pensions at Glasgow-based Strathclyde Pension Fund, which has around 9 billion pounds in assets under management. AllianceBernstein runs a 300 million pound global equities mandate for the pension fund.