thematic portfolio ab sustainable global · esg: environmental, social and governance *the ab...
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First Name Last Name Position Department/Product AreaFirst Name Last Name Position Department/Product Area
CURRENT STRATEGY & REVIEW
AB SUSTAINABLE GLOBALTHEMATIC PORTFOLIO
31 December 2019
LUXFLAGLabel
This document is issued by AllianceBernstein Limited, 50 Berkeley Street, London W1J 8HA. AllianceBernstein Limited is authorised and regulated in the UK by the Financial Conduct Authority (FCA-Reference Number 147956). This information is directed solely at persons in jurisdictions where the Fund and relevant share class are registered, or who may otherwise lawfully receive it. The sale of the Fund may be restricted or subject to adverse tax consequences in certain jurisdictions. In particular, no shares may be offered or sold, directly or indirectly, in the US or to US persons, as described in the Fund’s prospectus. It is provided for marketing purposes but does not constitute investment advice or an invitation to purchase any security or other investment. The views and opinions expressed in this document are based on our internal forecasts and should not be relied upon as an indication of future market performance. Past performance does not guarantee future results. For Investment Professional use only. Not for inspection by, distribution or quotation to, the general public.
The Sustainable Global Thematic Portfolio is a portfolio of AB SICAV I, an open-ended investment company with variable capital (société d’investissement à capital variable) incorporated under the laws of the Grand Duchy of Luxembourg.
1|AB Sustainable Global Thematic Portfolio 4Q19For Investment Professional use only. Not for inspection by, distribution or quotation to, the general public.
Past performance does not guarantee future results. Logos, brands and other trademarks in this presentation are the property of their respective trademark holders. They are used for illustrative purposes only, and are not intended to convey any endorsement or sponsorship by, or association or affiliation with, the trademark holders. Investors must not rely on LuxFLAG or the LuxFLAG Label with regard to investor protection issues, and LuxFLAG shall not incur any liability related to the financial performance or default of the AB Sustainable Global Thematic Portfolio. The LuxFLAG Label has been granted through 31 March 2020. ESG: environmental, social and governance*The AB Sustainable Global Thematic Portfolio was awarded the LuxFLAG ESG Label concurrently with one other US-based manager. As of 31 December 2019Source: Label ISR and LuxFLAG
Awarded Both the Label ISR and LuxFLAG ESG LabelExternally Recognized for Excellence in Sustainable Investing
Label ISR: Saving Toward a More Sustainable WorldAwarded February 2019
LuxFLAG ESG Label: Raising Awareness of ESG Investing Awarded March 2019
The Label ISR (or SRI—Socially Responsible Investing) helps investors choose sustainable and responsible investments
Created and supported by the Finance Ministry in France, the purpose of the label is to increase the visibility of socially responsible investment products
The Label ISR aims to reconcile economic performance with social and environmental impact by facilitating investments in companies that contribute to sustainable development
LuxFLAG (the Luxembourg Finance Labelling Agency) is an independent body that raises awareness of and promotes the responsible investment industry
The ESG Label is awarded to funds that screen 100% of the portfolio using ESG criteria
AllianceBernstein is the first US-based asset manager to be awarded the ESG Label for an equity strategy*
2|AB Sustainable Global Thematic Portfolio 4Q19For Investment Professional use only. Not for inspection by, distribution or quotation to, the general public.
Past performance does not guarantee future results. Holdings are subject to change.*Active share I Class vs. MSCI ACWI†Up/down capture is vs. MSCI ACWI since June 2013 (when Daniel Roarty took over the strategy)‡Beta is a measure of an investment’s sensitivity to the market as a whole. A beta below 1 indicates lower sensitivity to the market; a higher beta indicates higher sensitivity. As of 31 December 2019Source: MSCI and AB
AB Sustainable Global Thematic Portfolio: Overview
Characteristics
Index MSCI ACWI
Number of Holdings 30–60
Active Share* 85%–90%
Up/Down Capture (%)† 108/100
Beta‡ 0.95–1.10
Turnover 30%–70%
Capitalization Mid/Large
Encompassing Sustainability, ESG Integration and Management EngagementSeeking Positive Financial and Social Outcomes
Sustainable Themes
ActiveOwnership
ESGIntegration
The UN Sustainable Development Goals
(UNSDGs) are the foundation for our investment themes
We engage company management teams on material ESG issues
We consider ESG factors at each step of our
fundamental investment process
3|AB Sustainable Global Thematic Portfolio 4Q19For Investment Professional use only. Not for inspection by, distribution or quotation to, the general public.
Philosophy
We seek to generate superior financial returns through investments that
contribute to positive social and environmental
outcomes.
4|AB Sustainable Global Thematic Portfolio 4Q19For Investment Professional use only. Not for inspection by, distribution or quotation to, the general public.
AB Sustainable Global Thematic Portfolio: Investment Team
Investment team is subject to change.As of 31 December 2019Source: AB
Average: 20 Years of Industry Experience12 Years of Experience with AB
Ben Ruegsegger, CFATechnology19 Years of Industry Experience19 Years of Experience with ABUS
Joseph Sun, CFAConsumer Discretionary & Staples10 Years of Industry Experience9 Years of Experience with ABUS
Dave Wheeler, CFAEnergy & Industrials28 Years of Industry Experience12 Years of Experience with ABUS
William JohnstonFinancials 34 Years of Industry Experience 22 Years of Experience with ABUK
Ed Bryan, CFA Healthcare13 Years of Industry Experience13 Years of Experience with ABUK
Amy YangQuantitative Analysis7 Years of Industry Experience7 Years of Experience with ABUS
Lei QiuTechnology & Communication Services21 Years of Industry Experience8 Years of Experience with ABUS
Daniel Roarty, CFACIO27 Years of Industry Experience9 Years of Experience with ABUS
5|AB Sustainable Global Thematic Portfolio 4Q19For Investment Professional use only. Not for inspection by, distribution or quotation to, the general public.
For illustrative purposes only. There can be no assurance that any investment objectives will be achieved.
Investment Process
Investment Universe~1,400 companies
Companies offering products that contribute to achieving the UNSDGs
Proprietary product identification methodology
Organized thematically Climate Health Empowerment
$1 billion+ market cap with sufficient liquidity
Attractive Candidates~400 companies
Fundamental research by sector experts emphasizes companies with superior: UNSDG Alignment Revenue Growth Profitability Management Quality
Financial modeling reflects structured evaluation of material ESG factors
Team collectively vets candidates
Portfolio ~30–60 companies
Reflect team’s highest-conviction ideas
Size positions for optimal risk/reward spread and balanced theme exposure
Disciplined risk-management and sell process
Ongoing management engagement on material ESG issues
AB Sustainable Thematic Equities
6|AB Sustainable Global Thematic Portfolio 4Q19For Investment Professional use only. Not for inspection by, distribution or quotation to, the general public.
For informational purposes only Source: United Nations and AB
UN Sustainable Development Goals Serve as the Foundation for the StrategyGoals Link Social and Financial Progress
UN Sustainable Development Goals A Powerful Framework of 17 Goals and 169 Sub-Targets The UNSDGs represent an aspirational view of what
the world could look like by 2030
The 17 goals address challenges relating to: Economic prosperity Environmental sustainability Social inclusion
193 nations collectively created, and committed to achieving, the goals, signaling broad political consensus
The estimated costs to achieving the UNSDGs are massive—roughly US$90 trillion
Business alignment with the UNSDGs can enhance long-term growth potential and reduce risk
We invest exclusively in well-managed companies providing solutions to key UNSDG challenges
7|AB Sustainable Global Thematic Portfolio 4Q19For Investment Professional use only. Not for inspection by, distribution or quotation to, the general public.
For informational purposes onlySource: United Nations and AB
Product Analysis Drives Universe and Theme CreationWe Have Identified Approximately 80 Sustainable Products
Proprietary Analysis Informs Investment Universe and ThemesDetailed Analysis of 169 UNSDG Sub-Targets Sharpens Investment Focus
Sustainable Products
Identify companies generating
revenues from sustainable product
sales
Group together to facilitate ongoing research and client communication
Investment Universe
Investment Themes
Most Sub-Targets Require Private-Sector SolutionsOthers Depend Primarily on Policy Support
PolicyUNSDG 5c:
“Adopt and strengthen sound policies and
enforceable legislation for the promotion of gender
equality…”
PrivateSector
UNSDG 7.2:“By 2030, increase
substantially the share of renewable energy in the
global energy mix”
63
106
Sustainable ProductsBatteries, Solar Panels, Wind Turbines, Smart-Grid Equipment and
Software
Not directlyinvestable
UNSDG Sub-targets
8|AB Sustainable Global Thematic Portfolio 4Q19For Investment Professional use only. Not for inspection by, distribution or quotation to, the general public.
Sustainable Products Fit Three Primary ThemesMisaligned Products Are Excluded
For informational purposes only*We exclude direct manufacturers of these products. We exclude distributors of these products and suppliers to manufacturers of these products if their business exposure exceeds 20% of their revenues. We also monitor companies for conduct-based violations, as generally defined by the United Nations Global Compact.Source: FEW Resources, United Nations and AB
Themes Guide Capital-Allocation DecisionsThemes Reflect Most Compelling Opportunities for the Private Sector
Climate Cleaner Energy Resource Efficiency Sanitation and Recycling Sustainable Transportation
Health Access to Quality Care Food Security and
Clean Water Medical Innovation Well Being
Empowerment Educational Services Financial Security and
Inclusion Information and
Communication Technologies
Sustainable Infrastructure
Misalignments/Exclusions* Alcohol Coal Gambling Pornography Prisons Tobacco Weapons
9|AB Sustainable Global Thematic Portfolio 4Q19For Investment Professional use only. Not for inspection by, distribution or quotation to, the general public.
For informational purposes only As of 31 December 2019Source: AB
Grassroots ResearchUnique Research Approach Helps Clarify Sustainable Investment Opportunities
20142013 2018GhanaNigeriaSouth AfricaThailandPhilippinesIndonesia
VietnamChinaSouth KoreaIndia
2015 2017BrazilChilePeruColombiaMexicoChina
JapanIndonesiaPhilippines
ChinaIndia
ChinaSouth Africa
2016
China (2017)
South Africa (2018)
2012 India
Indonesia (2016)
Affordable Medical Care, Enabling Technologies, Financial Inclusion, Women’s Empowerment
Enabling Technologies, Sustainable Production, Water
India (2015)
Economic Infrastructure, Enabling Technologies, Financial Inclusion, Low Carbon, Water, Women’s Empowerment
Affordable Medical Care, Financial Inclusion, Healthy Lifestyles, Women’s Empowerment
2011 InnerMongolia
2019 Tennessee
10|AB Sustainable Global Thematic Portfolio 4Q19For Investment Professional use only. Not for inspection by, distribution or quotation to, the general public.
For informational purposes only*IRR: internal rate of return. This analysis targets a portfolio IRR of 12%–15% based on the weighted average of analyst estimates for individual securities in the portfolio.Source: AB
Disciplined Fundamental Research Process
Think like long-term private-equity owners to capitalize on market’s short-term focus
Sector experts develop proprietary five-year financial forecasts
Apply a conservative exit multiple to determine expected returns (IRRs)
Forward-looking risk analysis incorporates ESG and traditional risk factors
Utilize propriety mapping process to evaluate and quantify most material risks
Proprietary scoring methodology determines cost of equity
Estimate Return Potential (IRR)* Estimate Risk (Cost of Equity)
Environmental
Governance
OperationalFinancial
Time
Price
Private Equity-Like Mentality Can Improve Stock Selection
Strategic Social
Invest Based on (Return-Risk) Spread
Use the (Return-Risk) spread to assess relative stock attractiveness
Stocks with high spreads generally have stronger appeal
Target portfolio IRR of 12%–15% and (Return-Risk) spread of +300 b.p.*
Investment Attractiveness
Return
Risk
Compound Annual Return
Hurdle Rate
11|AB Sustainable Global Thematic Portfolio 4Q19For Investment Professional use only. Not for inspection by, distribution or quotation to, the general public.
Historical and current analyses do not guarantee future results. This example is provided for the sole purpose of illustrating how research can be used to help identify investable ideas in the portfolio-management process, and is not to be considered a recommendation by AllianceBernstein L.P. For informational purposes only.As of 31 December 2019Source: Nav, Square and AB
SquareAffordable and Accessible Platform for Economic Growth
ThesisTheme: Empowerment Outcome
2015
2016
2017
2018
2019
2020E
2021E
2022E
2023E
050100150200250
01020304050
Percent
Gross Payment Volume EstimatesUSD (Thousands)
Return/RiskSpread of
10.8%
Hurdle Rate
Compound Annual Return
The global trend away from paper toward digital payments offers substantial long-term growth
Square’s total addressable global market is estimated to be as high as $13.5 trillion by 2026
20% of the small businesses in a recent study reportedly considered shutting down, primarily because of lack of growth or cash-flow issues
53% of small businesses applied for funding or credit lines over the past five years, and more than one in four sought loans multiple times
Square’s holistic platform model, including payment processing, has increased opportunities for small businesses by allowing them to accept card payments and access small-business loans
Micro-merchant gross payment volume in 2018 was $41,953 million—over 19% YoY growth
YoY Growth (Right Scale)
12|AB Sustainable Global Thematic Portfolio 4Q19For Investment Professional use only. Not for inspection by, distribution or quotation to, the general public.
For illustrative purposes only. There can be no assurance that any investment objectives will be achieved.
Alignment Between Fundamental Conviction and Risk Is Dynamically MonitoredRisk Management and Sell Discipline
No predefined formula or mechanical trading rules—all transactions require a qualified review
Fundamentals
Valuation
Portfolio Construction
Stock Risk Focus on fundamental conviction and thesis risk
Valuation (IRR–Cost of Equity Framework)
Portfolio Risk Individual stock contribution to active risk, risk boundaries and alignment with conviction
Thematic exposure
Style Risk Minimize unintended factor exposures
Emphasize idiosyncratic over style risk
ESG Risk Ensure UNSDG company alignment
Monitor for major ESG controversies
Risk Management Sell Discipline
Compound Annual Return
HurdleRate
13|AB Sustainable Global Thematic Portfolio 4Q19For Investment Professional use only. Not for inspection by, distribution or quotation to, the general public.
Firmwide commitment to responsible investing, leveraging the resources of nearly 200 experienced global research analysts
Proprietary technology (eSight) to document and share ESG analysis and engagement Long history of research and investment in social and environmental themes
Why AB?
Significant and underappreciated role for the private sector in achieving global sustainability Rising consumer, corporate and regulatory focus on ESG issues ESG increasingly influencing investor behavior
Why Now?
Thematic alignment with the UNSDGs links positive social and financial outcomes Deep ESG integration at all steps of investment process improves fundamental analysis Active ownership with emphasis on ESG issues positively influences management behavior
Why ABSustainable Global Thematic Portfolio?
Why AB Sustainable Global Thematic Portfolio?
14|AB Sustainable Global Thematic Portfolio 4Q19For Investment Professional use only. Not for inspection by, distribution or quotation to, the general public.
PORTFOLIO REVIEW
15|AB Sustainable Global Thematic Portfolio 4Q19For Investment Professional use only. Not for inspection by, distribution or quotation to, the general public.
AB Sustainable Global Thematic Portfolio
Past performance does not guarantee future results. Prior to 31 October 2018, the Portfolio was named AB Thematic Research Portfolio. All data prior to 31 October 2018 relates to the AB Thematic Research Portfolio. Returns are shown net of fees. Shares of the Portfolio are offered only pursuant to the Portfolio’s current Prospectus together with the most recent financial statements. The information on this page is for informational purposes only and should not be construed as an offer to sell, or solicitation of an offer to buy, or a recommendation for the securities of the Portfolio. Returns denominated in a currency other than that of the fund may increase or decrease as a result of foreign-exchange currency fluctuations. Source: MSCI and AB
Total Returns, Class I Shares (USD)
Periods Ended 31 December 2019
4Q 2019
OneYear
ThreeYears
FiveYears
10Years
AB Sustainable Global Thematic Portfolio 9.0% 29.3% 16.6% 9.8% 7.7%
MSCI ACWI 9.0 26.6 12.4 8.4 8.8
Relative Performance +0.0% +2.7% +4.2% +1.4% –1.1%
16|AB Sustainable Global Thematic Portfolio 4Q19For Investment Professional use only. Not for inspection by, distribution or quotation to, the general public.
AB Sustainable Global Thematic Portfolio
Past performance does not guarantee future results. Prior to 31 October 2018, the Portfolio was named AB Thematic Research Portfolio. All data prior to 31 October 2018 relates to the AB Thematic Research Portfolio. Returns are shown net of fees. Shares of the Portfolio are offered only pursuant to the Portfolio’s current Prospectus together with the most recent financial statements. The information on this page is for informational purposes only and should not be construed as an offer to sell, or solicitation of an offer to buy, or a recommendation for the securities of the Portfolio. Returns denominated in a currency other than that of the fund may increase or decrease as a result of foreign-exchange currency fluctuations.Source: MSCI and AB
Total Returns, Class A Shares (USD)
Periods Ended 31 December 2019
4Q 2019
OneYear
ThreeYears
FiveYears
10Years
AB Sustainable Global Thematic Portfolio 8.8% 28.2% 15.7% 9.0% 6.8%
MSCI ACWI 9.0 26.6 12.4 8.4 8.8
Relative Performance –0.2% +1.6% +3.3% +0.6% –2.0%
17|AB Sustainable Global Thematic Portfolio 4Q19For Investment Professional use only. Not for inspection by, distribution or quotation to, the general public.
4Q:2019 (Basis Points)Attribution
Attribution by Sector* Contributors
Detractors
Materials
Technologies
Utilities
Company Sector Theme Attribution
UnitedHealth Group Healthcare Health +40
Vestas Wind Systems Industrials Climate +37
Kingspan Industrials Climate +33
Infineon Technologies Technology Climate +29
NVIDIA Technology Empowerment +28
Company Sector Theme Attribution
PagSeguro Digital Technology Empowerment –70
Etsy Cons. Discretionary Empowerment –36
Hexcel Industrials Climate –30
Ecolab Materials Climate –26
Proofpoint Technology Empowerment –26
Past performance does not guarantee future results. Holdings are subject to change.*Sector attribution includes sector-allocation effect and stock-selection effect, showing top three and bottom three; numbers may not sum due to rounding.†Theme attribution is based on AB’s own theme assessment for the individual holdings in both the portfolio and benchmark. As of 31 December 2019Source: MSCI and AB
Attribution by Theme†
41
–28
48
Empowerment
Climate
Health
18|AB Sustainable Global Thematic Portfolio 4Q19For Investment Professional use only. Not for inspection by, distribution or quotation to, the general public.
Trailing 12 Months (Basis Points)Attribution
Attribution by Sector* Contributors
Detractors
Company Sector Theme Attribution
MSCI Financials Empowerment +113
DSM Materials Health +81
Bruker Healthcare Health +65
Bio-Rad Laboratories Healthcare Health +59
Kingspan Industrials Climate +53
Company Sector Theme Attribution
Swedbank Financials Empowerment –75
Unicharm Consumer Staples Health –48
China Everbright Intl. Industrials Climate –46Bharat Financial Inclusion Financials Empowerment –41
Etsy Cons. Discretionary Empowerment –37
Financials
Technology
Communication Services
Past performance does not guarantee future results. Holdings are subject to change.*Sector attribution includes sector-allocation effect and stock-selection effect, showing top three and bottom three; numbers may not sum due to rounding.†Theme attribution is based on AB’s own theme assessment for the individual holdings in both the portfolio and benchmark. As of 31 December 2019Source: MSCI and AB
Attribution by Theme†
150
–95
276
Empowerment
Climate
Health
19|AB Sustainable Global Thematic Portfolio 4Q19For Investment Professional use only. Not for inspection by, distribution or quotation to, the general public.
Geographic Exposure (Percent)
Sector weights and holdings are subject to change. For illustrative purposes only. Numbers may not sum due to rounding. Numbers are net of cash.*Estimates from MorningstarAs of 31 December 2019Source: Morningstar, MSCI and AB
4Q:2019Sector and Geographic Exposure
Sector Overview (Percent)
26.1
23.0
13.4
12.7
8.4
6.3
6.1
2.8
1.3
17.1
11.8
10.3
16.7
10.8
8.0
4.8
3.3
8.7
5.2
3.2
Technology
Healthcare
Industrials
Financials
Consumer Discretionary
Consumer Staples
Materials
Utilities
Communication Services
Energy
Real Estate
AB Sustainable Global Thematic Portfolio MSCI ACWI
US45.8
Region ofDomicile
Region of Revenue Exposure*
Developed Markets 89.5 67.4
Emerging Markets 10.5 32.6
Netherlands 8.5Japan 6.7Ireland 5.8India 4.7Denmark 4.6Switzerland 4.1China 4.1France 4.0Germany 4.0Austria 2.4Hong Kong 1.9Brazil 1.7UK 1.7
20|AB Sustainable Global Thematic Portfolio 4Q19For Investment Professional use only. Not for inspection by, distribution or quotation to, the general public.
Holdings by Theme
Investment theme weightings are subject to change. References to specific securities are presented to illustrate the application of our investment philosophy only and are not to be considered recommendations by AB. The specific securities identified and described herein do not represent all of the securities purchased, sold or recommended for the fund, and it should not be assumed that investments in the securities identified were or will be profitable. Holdings are subject to change.As of 31 December 2019Source: AB
Abcam Apollo Hospitals Bio-Rad Laboratories Bruker Chr. Hansen
Danaher Gerresheimer ICON Kerry Group DSM
Philips NXP Semiconductors Tecan Unicharm UnitedHealth Group
Adyen AIA Group Alibaba Group Bright Horizons Family Solutions Charles Schwab
Erste Group Bank Flex HDFC Bank Microsoft MSCI
NVIDIA PagSeguro Digital Partners Group Proofpoint Recruit Holdings
Square Tencent Visa Zendesk
American Water Works Apple Aptiv Beijing Enterprises
China Everbright International Dassault Systèmes Ecolab Hexcel
HORIBA Infineon Technologies Keyence Kingspan
Health: 36.5%
Sub-themes: medical innovation; affordable medical care; healthy lifestyles; food security; physical safety
Empowerment: 36.8%
Sub-themes: economic infrastructure; enabling technologies; financial inclusion; women’s empowerment
Climate: 26.7%
Sub-themes: low carbon generation; energy efficiency; clean transportation; water; sanitation and recycling; sustainable production
West Pharmaceutical Services Xylem
Nike Procter & Gamble Schneider Electric Vestas Wind Systems
21|AB Sustainable Global Thematic Portfolio 4Q19For Investment Professional use only. Not for inspection by, distribution or quotation to, the general public.
Past performance does not guarantee future results. *Weighted average of analyst estimated IRR and cost of equityAs of 31 December 2019Source: MSCI and AB
Strong Fundamental Characteristics
EPS GrowthPast Five Years (Percent)
16.112.7
AB Sustainable GlobalThematic Portfolio
MSCI ACWI
Portfolio Return-Risk SpreadWeighted Average (Percent)*
ROENext 12 Months (Percent)
19.014.8
AB Sustainable GlobalThematic Portfolio
MSCI ACWI
Revenue GrowthFive-Year History (Percent)
11.18.0
AB Sustainable GlobalThematic Portfolio
MSCI ACWI
10.78.4
Compound AnnualReturn (IRR)
Hurdle Rate(Cost of Equity)
Return-Risk Spread: 2.3%
22|AB Sustainable Global Thematic Portfolio 4Q19For Investment Professional use only. Not for inspection by, distribution or quotation to, the general public.
OUTCOME REVIEW
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Measuring Enterprise Impact
Product Im
pact*
Corporate Behavior†
MSCI ACWI
Social ValueDestruction
Social ValueCreation
Negative
Positive
Weaker Stronger
Past performance does not guarantee future results.*Product impact reflects our assessment of net revenue exposure (revenue from aligned products minus misaligned products) to the UNSDGs.†Corporate behavior score leverages MSCI ratings to assess corporate behavior relative to peers as well as changes in behavior over time.As of 31 December 2019Source: MSCI and AB
A Practical Framework for Assessing Enterprise ImpactSocial Value Creation
The Big Idea
Investors often confuse two types of impact:
Investment Impact: Did my specific investment create measurable social impact?
Enterprise Impact: Are the companies I invest in having a positive impact on society?
Only Enterprise Impact is relevant for investors, who must choose appropriate metrics to match their objectives
Firms can sell products that help (vaccines) or hurt (tobacco) society
Corporate behavior can be positive (fair gender pay) or negative (corruption and bribery)
All companies—and portfolios—can be evaluated on these two dimensions
We believe that social value creation and economic value creation are mutually-reinforcing
AB Sustainable Global Thematic
Portfolio
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Tilted Toward the Most Attractive Opportunities for Private Capital
Past performance does not guarantee future results. For informational purposes only. Each UNSDG includes a series of specific targets to help assess the progress toward achieving each of the 17 goals. The Portfolio is designed to maximize exposure to the most attractive opportunities (goal or target) for private capital. Numbers are net of cash. As of 31 December 2019Source: MSCI, United Nations and AB
Measuring Allocation to UNSDGs
Allocation to UNSDGs in FundPortfolio Weight (Percent)
Goal 3 (Good Health and Well Being) and Goal 8 (Decent Work and Economic Growth) and the most common UNSDG exposures
Over 70% of our Portfolio is invested in UNSDGs: 3, 8, 7, 12 and 6
Some relevant products apply equally to multiple UNSDGs, which makes precise portfolio mapping to the UNSDGs difficult. We map our holdings in this case to one UNSDG
21.0
16.7
13.8 13.6
9.1 8.5 7.8
4.72.3 1.8
0.7
25|AB Sustainable Global Thematic Portfolio 4Q19For Investment Professional use only. Not for inspection by, distribution or quotation to, the general public.
Current analysis does not guarantee future results and is for illustrative purposes only.References to specific securities are presented to illustrate the application of our investment philosophy only and are not to be considered recommendations by AB. The specific securities identified and described herein do not represent all of the securities purchased, sold or recommended for the portfolio, and it should not be assumed that investments in the securities identified were or will be profitable. Holdings are subject to change.As of 31 December 2019Source: Company reports and AB
Top Holdings: Product ImpactHow Our Companies Are Creating Social ValueSecurity UNSDG Social Contribution
NikeNike has a large opportunity to reduce its environmental footprint. Using recycled materials reduces natural resource consumption and CO2 emissions from the manufacture of newly acquired raw materials. In 2018, 65% of the materials used in Nike footwear and apparel products were recycled
Philips Philips measures how many lives it is improving by multiplying the number of people touched by its products over the lifetime of a product by the number of those products delivered in a year. This number was 1.54 billion in 2018
HDFC Bank HDFC Bank is the second largest private bank in India, providing broad financial services access to Indian consumers and small/medium-size enterprises. As of FY 2019, loans to micro, small and medium enterprises had amounted to INR 1,289.8 billion, up 44.8% YoY
Vestas Wind SystemsVestas manufactures and services wind turbines and wind farms, which help reduce carbon emissions and air pollution and increase renewable energy penetration. CO2 savings in million tonnes over the lifetime of the wind turbines it produces and ships annually grew 24% in 2018 and 213% since 2013
American Water Works AWK is the largest and most geographically diversified investor-owned water and wastewater utility company in the US. In 2018, the company reduced water use by 3.5 billion gallons year over year through conservation
Bio-Rad Laboratories Bio-Rad sells diagnostic instruments used to treat a wide array of diseases. The number of products offered in its life-science segment rose approximately 20% between 2016 and 2018, demonstrating Bio-Rad’s advancement of tools used to answer complex biological questions
West Pharmaceutical Services
WST enables more effective, consumer-friendly drug consumption via novel delivery systems and easier-to-use syringes. The company produced 41 billion components in 2017
Erste Group BankErste Group Bank actively contributes to positive social outcomes through its business operations, with a number of microfinancing and financial education programs as well as social housing initiatives. In 2018, Erste Group Bank realized €115.6 billion in household lending. This is indicative of the company’s progress toward promoting financial inclusion in Central and Eastern Europe
Kingspan Kingspan’s products improve energy efficiency, lower carbon emissions and reduce air pollution. Customer energy savings from Kingspan’s installed insulation products in 2018 was equivalent to taking 20 million cars off the road
MSCI MSCI is a direct play on ESG through its rating services. As of 2018, MSCI ESG Research had analyzed and offered ESG ratings for over 7,800 companies worldwide
26|AB Sustainable Global Thematic Portfolio 4Q19For Investment Professional use only. Not for inspection by, distribution or quotation to, the general public.
We Seek Strong Relative Performance and Continuous ImprovementMeasuring ESG: Select Portfolio Metrics
Current analysis does not guarantee future results and is for illustrative purposes only. Carbon emissions are defined as tons per million dollars invested. *Female representation in executive ranks: Percentage of women on the board of directors, as reported by the company. This is updated annually by the companies. In Europe, where the company has a supervisory board and a management board, this is the percentage of women on the supervisory board. †Companies with ESG-linked executive compensation: Companies report whether their executive compensation is linked to environmental, social and governance (ESG) goals. This is updated annually by the companies.As of 31 December 2019Source: Bloomberg, MSCI Barra, S&P, Sustainalytics and AB
Social: Companies with Female Representation in Executive Ranks*Percent
Environmental: Carbon FootprintTons CO2e/USD Millions Invested
Governance: Companies with ESG-Linked Executive Compensation†
Percent
128.7
55.9
MSCI ACWI AB Sustainable Global Thematic Portfolio
24.325.6
MSCI ACWI AB Sustainable Global Thematic Portfolio
12.011.5
MSCI ACWI AB Sustainable Global Thematic Portfolio
27|AB Sustainable Global Thematic Portfolio 4Q19For Investment Professional use only. Not for inspection by, distribution or quotation to, the general public.
Analysis provided for illustrative purposes only and is subject to revision. ESG: environmental, social and governanceAs of 31 December 2019Source: AB
Management Engagement Drives Change and Uncovers New Information ESG Engagement: 4Q 19
4Q:19 Engagement Examples Annual Engagement SummaryNumber of Engagements per Category
Environmental22
Social71
Governance70
StockESG Pillar ESG Factor
Impact on Thesis
Portfolio Action
Apollo Hospitals E, S, G Carbon Emissions, Labor
Management, Pay Neutral Maintained Position
Kerry Group S, G Opportunities in Nutrition
& Health, Pay Neutral Maintained Position
Amazon S Supply Chain Labor Standards Negative Exited
Position
Philips E, S, GCarbon Emissions,
Product Safety & Quality, Corruption & Instability
Neutral Maintained Position
28|AB Sustainable Global Thematic Portfolio 4Q19For Investment Professional use only. Not for inspection by, distribution or quotation to, the general public.
AB Sustainable Global Thematic PortfolioA Word About Risk
Investment in the Fund entails certain risks. Investment returns and principal value of the Fund will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. The Fund is meant as a vehicle for diversification and does not represent a complete investment program. Some of the principal risks of investing in the Fund include focused portfolio risk, turnover risk, derivatives risk, emerging markets risk, allocation risk, REITS, OTC derivatives counterparty risk and equity securities risk. These and other risks are described in the Fund’s prospectus. Prospective investors should read the prospectus carefully and discuss risk and the Fund’s fees and charges with their financial advisor to determine if the investment is appropriate for them.
This information is directed at Investment Professionals only and should not be relied upon by any other persons. It is provided for informational purposes only and is not intended to be an offer or solicitation, or the basis for any contract to purchase or sell any security, product or other instrument, or to enter into any type of transaction as a consequence of any information contained herein. The views and opinions expressed in this document are based on our internal forecasts and should not be relied upon as an indication of future market performance.
References to specific securities are presented to illustrate the application of our investment philosophy only and are not to be considered recommendations by AB. The specific securities identified and described in this presentation do not represent all of the securities purchased, sold or recommended for the portfolio, and it should not be assumed that investments in the securities identified were or will be profitable.
The value of an investment in the Fund can go down as well as up and investors may not get back the full amount they invested. Before investing in the Fund, investors should review the Fund’s full prospectus, together with the Fund’s Key Investor Information Document and the most recent financial statements. Copies of these documents, including the latest annual report and, if issued thereafter, the latest semiannual report, may be obtained free of charge by visiting www.alliancebernstein.com or by contacting the local distributor in the jurisdictions in which the Fund is authorized for distribution, or in the case of Swiss investors, from the registered office of the Swiss representative.
29|AB Sustainable Global Thematic Portfolio 4Q19For Investment Professional use only. Not for inspection by, distribution or quotation to, the general public.
Important Information
An investor cannot invest directly in an index or average, and these do not include the sales charges or operating expenses associated with an investment in a mutual fund, which would reduce total returns.
MSCI makes no express or implied warranties or representations and shall have no liability whatsoever with respect to any MSCI data contained herein. The MSCI data may not be further redistributed or used as a basis for other indices or any securities or financial products. This report is not approved, reviewed or produced by MSCI.
Note to Canadian Readers: AllianceBernstein provides its investment-management services in Canada through its affiliates Sanford C. Bernstein & Co., LLC and AllianceBernstein Canada, Inc.
Note to European Readers: This information is issued by AllianceBernstein Limited, 50 Berkeley Street, London W1J 8HA, it is for marketing purposes. Registered in England, No. 2551144. AllianceBernstein Limited is authorised and regulated in the UK by the Financial Conduct Authority (FCA).
Note to Austrian and German Readers: Local paying and information agents: Austria—UniCredit Bank, Rothschildplatz 1 1020 Vienna; Germany—BHF-Bank Aktiengesellschaft, Bockenheimer Landstrasse 10, 60323 Frankfurt am Main.
Note to Liechtenstein Readers: The Fund is not registered for public distribution in Liechtenstein and, accordingly, shares may only be offered to a limited group of Professional Investors, in all cases and under all circumstances designed to preclude a public solicitation in Liechtenstein. This document may not be reproduced or used for any other purpose, nor be furnished to any other person other than those to whom copies have personally been sent by AB. Neither the Fund nor the shares described therein have been subject to the review and supervision of the Liechtenstein Financial Market Authority.
Note to Swiss Readers: This document is issued by AllianceBernstein Schweiz AG, Zürich, a company registered in Switzerland under company number CHE-306.220.501. AllianceBernstein Schweiz AG is authorised and regulated in Switzerland by the Swiss Financial Market Supervisory Authority (FINMA) as a distributor of collective investment schemes. Swiss Representative & Swiss Paying Agent: BNP Paribas Securities Services, Paris, succursale de Zürich. Registered office: Selnaustrasse 16, 8002 Zürich, Switzerland, which is also the place of performance and the place of jurisdiction for any litigation in relation to the distribution of shares in Switzerland. The Prospectus, the key investor information documents, the Articles or management regulations, and the annual and semiannual reports of the concerned fund may be requested without cost at the offices of the Swiss representative.
Note to Hong Kong Readers: This document is issued in Hong Kong by AllianceBernstein Hong Kong Limited (聯博香港有限公司), a licensed entity regulated by the Hong Kong Securities and Futures Commission. This document has not been reviewed by the Hong Kong Securities and Futures Commission.
Note to Singapore Readers: This document has been issued by AllianceBernstein (Singapore) Ltd. (“ABSL”, Company Registration No. 199703364C). AllianceBernstein (Luxembourg) S.à r.l. is the management company of the portfolio and has appointed ABSL as its agent for service of process and as its Singapore representative. AllianceBernstein (Singapore) Ltd. is regulated by the Monetary Authority of Singapore. This advertisement has not been reviewed by the Monetary Authority of Singapore.
AB Sustainable Global Thematic Portfolio
30|AB Sustainable Global Thematic Portfolio 4Q19For Investment Professional use only. Not for inspection by, distribution or quotation to, the general public.
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LF-95781-2020-01-14IC2020027