Captial Markets Outlook: 1Q:2017

3Q:2017

Capital Markets Outlook

Learn More

Historical analysis and current forecasts do not guarantee future results. Past performance does not guarantee future results. As of June 30, 2017, unless specified otherwise.

Displays: Returns
Global high yield, global corporates, and Japan and euro-area government bonds in hedged USD terms. All other non-US returns in unhedged USD terms. Emerging-market debt returns are for dollar-denominated bonds as represented by the J.P. Morgan Emerging Markets Bond Index Global. 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 the fees and expenses associated with the active management of a portfolio.
Source: Bloomberg Barclays, FactSet, FTSE, J.P. Morgan, Morningstar, MSCI, Standard & Poor’s (S&P) Dow Jones and AB

Display: US Aggregate Yield to Worst and Level of S&P 500 Index
Source: Bloomberg, S&P and AB

Displays (3): Volatility, Inflation, Global Growth
Second display through May 31, 2017
Beta Trade is from October 1, 2010, through February 2015. After Beta Trade is from March 1, 2015, through October 30, 2016. Post-election is from November 9, 2016, through June 30, 2017. 1H:2017 is from January 1, 2017, through June 30, 2017.
Source: Bloomberg, CBOE, Haver Analytics, IHS Markit and AB

Displays (2): The Large Gap Between Stock and Bond Yields Persists & Earnings
Second display as of December 31, 2016
The forecasted figures utilize book value and price-to-book valuations instead of earnings and price to earnings. Historical data are for the S&P 500. Next five years is the median AB proprietary forecast for a similar group of stocks.
Source: Bloomberg Barclays, FactSet, MSCI, S&P and AB

Display: S&P 500 Bottom-Up EPS Actual and Estimated
Not all sectors perform the same. EPS: earnings per share.
Source: FactSet, S&P and AB

Displays (2): You’re Paying Too Much for Bond Proxies & Profitability (ROE) Is Cheap Today
Highest 20% of dividend payers among 1,500 US-listed stocks in the AB equity universe, excluding 33 companies that do not currently have a P/E ratio because they are not profitable. Highest 20% of earnings growth and ROE among 1,500 US-listed stocks in the AB equity universe, excluding 33 companies that do not currently have a P/E ratio because they are not profitable.
Source: FactSet, Russell Investments and AB

Display: Active Managers Tend to Do Best in Challenging Markets
As of December 31, 2016. Measured by the average annual outperformance of active managers in the Large Blend Morningstar category vs. each fund’s primary prospectus benchmark over the past 20 years.
Source: Morningstar and AB

Display: Balancing Credit and Interest-Rate Exposure Is Critical in Today’s Environment
For illustrative purposes only.
Source: AB

Display: BBBs Offer Relative Value and Diversification to BBs
As of June 27, 2017. BBB by Bloomberg Barclays US Aggregate BBB; BB by Bloomberg Barclays US High Yield BB. 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 the fees and expenses associated with the active management of a portfolio.
Source: Bloomberg Barclays and AB

Display: Local-Currency Debt Offers Higher Yields than US High Yield
EM local is represented by J.P. Morgan Government Bond–Emerging Markets Global Diversified. 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: Bloomberg, J.P. Morgan and AB

Display: Time Erases Pain of Rising Rates
Global bonds hedged is represented by Bloomberg Barclays Global Aggregate Hedged to USD; US bonds by Bloomberg Barclays US Aggregate. 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: Bloomberg Barclays and AB

Display: Investing Through Uncertainty
Source: AB

Show Full Disclosure

GO ACTIVE IN EQUITIES TO FIND WINNERS AND AVOID LOSERS

AN ACTIVE APPROACH IS CRITICAL IN UNCERTAIN MARKETS

To boost returns in today’s market, you’ve got to avoid the crowds and move beyond stocks that act like bonds. That requires extensive research and expert security selection.

Rated against 1,277 funds in the Large-Cap Growth category as of June 30, 2017*

Rated against 1,277 funds in the Large-Cap Growth category as of June 30, 2017*

Rated against 356 funds in the Mid-Cap Value category as of June 30, 2017*

CONSIDER CREDIT SELECTIVELY. DON’T ABANDON GLOBAL BONDS.

WITH BONDS, IT’S ALL ABOUT INCOME AND STABILITY

Consider a multi-sector approach that targets opportunities across fixed-income sectors and hedge the currency exposure in your global bond strategy to avoid low global yields.

Rated against 590 funds in the High-Yield Bond category as of June 30, 2017*

Rated against 856 funds in the Intermediate-Term Bond category as of June 30, 2017*

Rated against 298 funds in the World Bond category as of June 30, 2017*

MUNICIPALS SNAP BACK AND STILL HOLD POSSIBILITIES

ACTIVE MANAGEMENT MAKES A DIFFERENCE IN TODAY'S MARKET

Despite talk of potential tax reform and concerns with rising US interest rates, opportunities abound for active managers.

Rated against 176 funds in the Muni National Short category as of June 30, 2017*

Rated against 263 funds in the Muni National Intermediate category as of June 30, 2017*

Rated against 145 funds in the High Yield Muni category as of June 30, 2017*


AB