Your Clients’ Portfolio May Be Built for a Market That No Longer Exists
Markets have changed. The path investors take matters as much as the outcome they pursue. Build a Better Path is AB’s framework for constructing durable portfolios for an unpredictable journey.
The Landscape Has Shifted
For decades, falling rates, positive demographics, and globalization made the 60/40 portfolio look invincible. That era is over.
In an environment of compressed return expectations, a large drawdown early in retirement can be especially difficult to overcome. It's not just the level of return that matters, but the sequence of returns. Two portfolios with the same average return can produce very different outcomes if one experiences a significant loss early on. That's why the path matters.
Historical analysis and current forecasts do not guarantee future results.All investments involve risk, including loss of principal.
Hypothetical 60/40: 60% S&P 500 Total Return Index, 40% Bloomberg US Aggregate Bond Index; 4% annual withdrawals adjusted for 2.25% inflation
Through July 31, 2025.
The S&P 500 Index tracks 500 large US companies (total return includes reinvested dividends.) The Bloomberg US Aggregate Bond Index tracks the US investment-grade, fixed-rate taxable bond market. Indices are unmanaged; an investor cannot invest directly in an index.
Past performance does not guarantee future results.
Through July 31, 2025.
Source: Bloomberg and AB
What Matters Most To Your Clients Right Now?
Efficient Growth | Volatility Management | Reliable Income |
Purchasing Power | After-Tax Outcomes
A System for Building Better Portfolios
Sequence risk means averages aren’t enough. Portfolios should be built for stress, seeking a more durable return pattern and better up/down capture.
Build a Better Path achieves this with three connected levers: better building blocks, intentional design, and skillful finishing touches.
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BETTER BETA
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EFFICIENT STRUCTURE
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TARGETED ALPHA
- BETTER BETA
- EFFICIENT STRUCTURE
- TARGETED ALPHA
Improve the Basics
Identify market exposures that may offer a more favorable up/down profile.
A portfolio capturing 90% of the upside and only 80% of the downside grew a hypothetical $100 to $4,895 over roughly 35 years, versus $3,848 for the S&P 500.
Why It Matters
Losing less in downturns leaves more capital to compound. A less volatile ride can mean less emotional decisions and higher returns.
Past performance does not guarantee future results. An investor cannot invest in an index
October 1, 1989, through December 31, 2025. Up/down capture illustrations: “90/80” captures 90% of the S&P 500’s monthly gains and 80% of its losses; “50/20” captures 50% of gains and 20% of losses. Hypothetical, for illustrative purposes only.
Source: S&P and AB
Make Every Component Work Harder
Combining better betas intentionally can also help smooth the overall path.
A mix of better beta building blocks has historically delivered higher returns, less volatility, better up/down capture, and a lower maximum drawdown than a traditional 60/40.
Why It Matters
Combining the better betas intentionally can help lower overall volatility and smooth the return path.
Past performance does not guarantee future results. Hypothetical example for illustrative purposes only. Investors cannot invest directly in an index.
Returns are from January 1990 through December 31, 2020, exchanging 1990 and 2008 returns to illustrate the impact of a sharp decline early in retirement.
The 60/40 strategy is 60% S&P 500 and 40% Bloomberg US Aggregate Bond Index. The 88/74 up/down capture strategy captures 88% of the 60/40 return and 74% of its downside.
The 88/74 up/down capture was calculated from a strategy of 17% S&P 500 Dividend Aristocrat, 17% S&P 500 Consumer Staples, 17% S&P 500 Low Volatility, 17% J.P. Morgan Emerging Markets Bond Index Global Diversified, 17% Bloomberg US Corporate
High Yield Index and 15% Bloomberg US Treasury Index. Morningstar data: © 2026 Morningstar, Inc. All rights reserved. The information contained herein: (1) is proprietary to Morningstar and/or its content providers; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete, or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information.
Source: Morningstar Direct and AllianceBernstein (AB)
Target Portfolio Enhancements That Improve Outcomes
Add targeted sources of value—from active investment decisions to structural tools such as tax management—that may enhance outcomes beyond market exposure alone.
Active skill tends to matter most in less efficient markets, such as high-yield bonds and small-cap stocks. Non-investment alpha comes from managing when gains are realized, harvesting tax losses, and being deliberate about asset location.
Why It Matters
Because these enhancements tend to be structural, they may be more persistent. Alpha doesn't have to be heroic. Even modest, consistent contributions can add up over the long run.
Strategies Designed for the Journey Ahead
A resilient portfolio isn’t built from any single component, rather it’s the combined effect that adds durability. Our strategies incorporate these principles to help create portfolios designed to improve the path of returns and support long-term client outcomes.
Related Insights
In the first of a two-part episode, market history yields insights on how to navigate uncertainty.
How mastering the pivot point can take capital markets commentary from informative to motivating
To pursue a better return path, think better betas, efficient structure and targeted alpha.
Frequently Asked Questions
About AllianceBernstein
A leading global investment firm offering research-driven solutions across equities, fixed income, and alternatives.
Risks to Consider
Investing in ETFs involves risk and there is no guarantee of principal.
Investors should consider the investment objectives, risks, charges and expenses of the Fund/Portfolio carefully before investing. For copies of our prospectus or summary prospectus, which contain this and other information, visit our Literature Center or contact your AB representative.
Please read the prospectus and/or summary prospectus carefully before investing.
Shares of the ETF may be bought or sold throughout the day at their market price on the exchange on which they are listed. The market price of an ETF’s shares may be at, above or below the ETF’s net asset value (“NAV”) and will fluctuate with changes in the NAV as well as supply and demand in the market for the shares. Shares of the ETF may only be redeemed directly with the ETF at NAV by Authorized Participants, in very large creation units. There can be no guarantee that an active trading market for the Fund’s shares will develop or be maintained, or that their listing will continue or remain unchanged. Buying or selling the Fund’s shares on an exchange may require the payment of brokerage commissions and frequent trading may incur brokerage costs that detract significantly from investment returns.
The information contained herein reflects the views of AllianceBernstein L.P. or its affiliates and sources it believes are reliable as of the date of this publication. AllianceBernstein L.P. makes no representations or warranties concerning the accuracy of any data. There is no guarantee that any projection, forecast or opinion in this material will be realized. Past performance does not guarantee future results. The views expressed herein may change at any time after the date of this publication. This document is for informational purposes only and does not constitute investment advice. AllianceBernstein L.P. does not provide tax, legal or accounting advice. It does not take an investor’s personal investment objectives or financial situation into account; investors should discuss their individual circumstances with appropriate professionals before making any decisions. This information should not be construed as sales or marketing material or an offer or solicitation for the purchase or sale of any financial instrument, product or service sponsored by AllianceBernstein or its affiliates
There is no assurance that a separately managed account will achieve its investment objective. Separately managed accounts are subject to market risk, the market values of securities owned will fluctuate so that your investment, when redeemed, may be worth more or less than its original cost.
Alpha measures risk-adjusted excess return” over a benchmark.
Beta measures volatility relative to a benchmark.
Up/down capture measures the percentage of market gains or losses captured/endured when markets are up or down, respectively.
Maximum drawdown is the largest peak-to-trough decline in an investment’s value over a given period, expressed as a percentage of the peak.
AllianceBernstein L.P. (AB) is the investment Advisor for the Fund.
Distributed by Foreside Fund Services, LLC. Foreside is not affiliated with AllianceBernstein.