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AB announces distribution partners for FlexFee funds

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AllianceBernstein (AB) has lined up several distribution partners to offer the AB FlexFee Funds, a suite of actively managed mutual funds providing a flexible management fee structure in which fees begin at low, ETF-like levels and increase only as the funds outperform their benchmark – up to a maximum fee level.

Pioneered by AB in early 2017, the FlexFee Funds are a new and compelling solution for investors who are increasingly preferring cheaper passive strategies over active funds. Although passive investors have generally paid lower fees, they have eliminated the opportunity to outperform the benchmark. AB’s FlexFee Funds offer a competitive alternative by combining the fee benefits of passive, with the excess return potential of active management that traditional passive ETFs do not provide.
 
When the Funds perform in line with or below their respective benchmark, the fees are similar to or lower than passive fees. Investors only pay more than passive fees when their investments outperform the respective benchmark. The performance-based fee approach aims to create better outcomes for investors by aligning their interests with the asset manager.
 
“The potentially game-changing flexible fee model aligns fees with investor outcomes, and could set a new industry standard for active funds that dramatically improves our competitiveness,” says Chris Thompson (pictured), Head of the Americas Client Group at AB. “We intentionally did not patent FlexFee as we want to encourage industry-wide adoption and unsurprisingly, since announcing the launch last year, we’ve seen other asset managers file to offer similar products.”
 
AB currently offers four FlexFee Funds across diverse equity and fixed income strategies that have proven track records of strong investment performance: AB FlexFee Large Cap Growth Portfolio (FFLYX), AB FlexFee US Thematic Portfolio (FFTYX), AB FlexFee International Bond Portfolio (FFIYX), and AB FlexFee US High Yield Portfolio (HIYYX). The funds are available on the platforms of AB’s largest distribution partners, including Merrill Lynch, Morgan Stanley, Charles Schwab, TD Ameritrade, Pershing and LPL Financial.
 
“AB’s FlexFee Funds appeal to investors who want access to active management, but only want to pay higher fees if the fund outperforms the benchmark – and we’re confident this will give investors the best of both worlds in one solution,” says Thompson. 

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