Alliance Capital was hit by fund outflows among retail investors in the second quarter. The New York-based firm said retail outflows reached $4.7 billion in the second quarter. Retail accounts for $147 billion of the $159 billion in fund assets at the firm. The outflows combined with market deprection to push assets under management down 16.7 percent from the first quarter.

Despite the fall in assets Alliance was able to match analyst expectations of $0.59 per share. The firm had fallen short of expectations in the first quarter.

The firm said that the net outflows during the quarter included "the loss of a large European portfolio and certain institutional cash management assets. It added that sales of its Luxembourg-based funds were a bright spot in the quarter as were its variable annuity sales.

Bruce Calvert, chief executive officer, told analysts that net redemptions picked up so far in July. "If you are just looking at the U.S. long-term flows, the net flows are a little bit worse in July than they were in the second quarter, but I wouldn't make a huge thing of it," Calvert said. Most of those outflows are from retail growth funds.

"In the U.S., net outflows from growth products and net inflows to value funds mirrored an industry-wide phenomenon. Given the preponderance of growth funds in our asset mix at the start of the period, however, these trends resulted in net outflows for Alliance, compared to net inflows for the industry. Net sales of our Luxembourg-based non-U.S. mutual funds evidenced particular strength in Japan and Taiwan," said John D. Carifa, president & chief operating officer.

Calvert remains optimistic, though. He foresees pension clients needing to make new cash contributions as plans become underfunded due to the falling stock market. Companies making up funding shortfalls would presumably award Alliance new mandates. 

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