Strange innumeracy at the Journal

The paper has a report today (via Ritholtz) on fund manager AllianceBernstein, which is used as an example of the shift in the industry from managing equity funds to managing bond funds. The only problem is that the numbers don’t really say what the Journal says they do.

About mid-way through the article, we get this:

While other asset managers also have moved more into bonds, the transformation has been the most striking at AllianceBernstein, analysts said.

At the end of 2007, the firm held $580 billion, or about 72% of its assets under management, in stocks, and $198 billion of its assets, or about 25%, in bonds.

Now AllianceBernstein holds about $240 billion, or about 57% in bonds and 27% in stocks.

That is certainly a significant shift in composition of stocks vs. bonds, but it is also evidence of a struggling business. The bond assets have grown by 20% over 5 years, or just under 4% annually. But all AllianceBernstein would have to do to achieve that is hold onto the bonds it had in 2007 – income and appreciation would have taken care of the rest. Given that, the only way to get to that shift in composition between equities and bonds as percentages of the whole would be for equity (and thus total) assets under management to have fallen sharply.

And sure enough, that data point appears earlier in the article:

AllianceBernstein’s total assets under management have dwindled from about $800 billion at the end of 2007 to $419 billion in the third quarter of 2012 as investors piled into bond mutual funds and ETFs.

Perhaps the point of the article was to fluff the CEO – I have no idea – but this is rather deceptive on the Journal’s part.

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