What changed in this filing

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Item 1. Business

2021-03-01 compared with 2020-03-02 · 66 added, 124 removed, 220 unchanged (46% of the section changed)

We are a global, diversified asset management company with $156.7 billion of assets under management as of December 31, 2020.

We operate our business through our seven Affiliates, which we support through the provision of certain shared services with a focus on the organic growth of our Affiliates from the Center through growth initiatives, investment capital and global distribution capabilities.

Our business model combines the investment talent, entrepreneurialism, focus and creativity of leading asset management firms with the resources and capabilities of a larger firm.

We have a partnership structure with our Affiliates that preserves the unique culture that has made each of them successful and provides them with investment and day-to-day operational autonomy.

We operate our business through our five Affiliates.

We ensure that key management professionals at each Affiliate retain meaningful levels of equity in their own businesses to maintain strong alignment of interests between us, our Affiliates, their clients, and our shareholders.

Our approach to investing in Affiliates includes a profit-sharing arrangement to provide incentives for growth and prudent business management across multiple generations of Affiliate partners.

We have broad and deep experience in working with asset managers, and we leverage the expertise and resources within our organization to engage actively with our Affiliates and provide them with growth leverage generally unavailable to specialist asset management firms.

We work with our Affiliates to execute upon growth opportunities for their businesses in areas such as business line expansion and product development.

Our Global Distribution team complements and enhances the distribution capabilities of our Affiliates to enable them to access geographies and channels they may not be able to access on their own.

Furthermore, our collaboration with our Affiliates extends to the commitment of seed and co-investment capital to launch new products and investment capital to financially support new growth initiatives.

From time to time we may also leverage our prior experience executing M&A transactions for asset managers, to opportunistically source growth opportunities for both us and individual Affiliates through investments in new Affiliates as well as add-on acquisitions on behalf of existing Affiliates.

We have broad and deep experience in working with asset managers.

Our collaboration with our Affiliates extends to the commitment of seed and co-investment capital to launch new products and investment capital to financially support new growth initiatives.

Currently, our business comprises interests in the following Segments:

Data as of December 31, 2019.

(1) On July 24, 2020, we sold all of our equity interests in Copper Rock, a former Affiliate in the Liquid Alpha segment, to Spouting Rock Asset Management LLC.

On November 17, 2020, we completed the sale of all of our equity interests in Barrow Hanley, a former Affiliate in the Liquid Alpha segment, to Perpetual U.S.

Holdings Company Inc.

(“Perpetual”).

On February 6, 2021, we entered into a definitive agreement to sell all our interests in ICM, an Affiliate in the Liquid Alpha segment.

The transaction is expected to close during second quarter of 2021.

Our diversification, by Affiliate, asset class, geography and investment strategy, enhances relative earnings stability and provides multiple sources of growth for us.

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Our Affiliates currently manage assets for non-U.S.

clients in approximately 30 countries, including Australia, Canada, Denmark, Ireland, the Netherlands, South Korea and the United Kingdom.

Our Center-led Global Distribution platform, launched in 2012, has contributed to the increase of our non-U.S.

assets under management.

From January 1, 2012 through December 31, 2019, we have raised approximately $16 billion in client assets for our Affiliates.

clients in approximately 29 countries, including Australia, Canada, Ireland,, Denmark, the Netherlands, China and the United Kingdom.

Competitive Strengths

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Well-Established, Diverse Affiliates.

Through our seven current Affiliates, we are well-diversified by brand, strategy and asset class, providing multiple sources of revenue and growth opportunities for our business across global market cycles, while limiting downside risk.

Through our five current Affiliates, we are well-diversified by brand, strategy and asset class, providing multiple sources of revenue and growth opportunities for our business across global market cycles, while limiting downside risk.

Each Affiliate has its own brand and investment processes and generally operates in distinct asset classes.

Our assets under management across Affiliates are invested in both global/non-U.S.

equities ( 60.6% and 21.2% , respectively) and alternative assets including forestry and secondary strategies focused in real estate and private equity, as well as fixed income.

equities (75.9% and 7.4%, respectively) and alternative assets including forestry and secondary strategies focused in real estate, infrastructure, and private equity, as well as fixed income.

We are also well-diversified by investment strategy within each asset class, with 64 distinct investment strategy composites.

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Our business serves over 550 institutional and sub-advisory clients, with our top 25 client relationships representing approximately 25% of run rate gross management fee revenue, including our equity-accounted Affiliate, as of December 31, 2020.

Total run rate gross management fee revenue reflects the sum for each account at each of our seven Affiliates, of the product of (a) assets under management in each account at December 31, 2019 , multiplied by (b) the relevant management fee rate on that account.

Total run rate gross management fee revenue reflects the sum for each account at each of our five Affiliates, of the product of (a) assets under management in each account at December 31, 2020, multiplied by (b) the relevant management fee rate on that account.

This calculation includes all accounts at our equity-accounted Affiliate.

Differentiated Model Drives Growth.

Our business is differentiated among asset management firms by our focus on active engagement with our Affiliates to enhance their organic growth potential.

We have a two-pronged approach for successfully collaborating with our Affiliate firms.

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This structure gives our Affiliate partners meaningful wealth creation opportunities through equity ownership and encourages investments in long-term growth while maintaining an appropriate focus on profitability, efficient capital management and risk control.

Second, we offer our Affiliates strategic and financial support to grow and enhance their businesses.

Strategic guidance includes helping Affiliates to expand into new products, strategies, geographies or channels, and may also include lift-outs of new investment teams or the acquisition of add-on businesses.

Our financial support further extends to the investment of seed and co-investment capital to help launch new investment strategies.

In addition, our Center-led Global Distribution team complements and enhances the distribution capabilities of our Affiliates.

Utilizing our strategic capabilities enables our Affiliates to capitalize on growth opportunities while maintaining their focus on delivering superior investment performance, innovative offerings, and excellent service to their clients.

In 2019 , over $7 billion of our gross sales have resulted from new initiatives, seeding, and Global Distribution.

Second, we offer our Affiliates financial support to grow and enhance their businesses through the investment of seed and co-investment capital to help launch new investment strategies.

Track Record of Competitive Investment Performance Across Market Cycles.

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For the rolling 10-year period ending December 31, 2020, approximately 88% of benchmarked assets have outperformed their relevant benchmarks.

Our Affiliates’ five largest benchmarked investment strategies, Acadian Asset Management (AAM) Emerging Markets Equity , AAM Global Managed Volatility , AAM Global Equity , Thompson, Siegel & Walmsley LLC (TSW) International , and Barrow, Hanley, Mewhinney & Strauss (BHMS) Large Cap Value have each outperformed their relevant benchmarks since inception by 2.5% , 1.5% , 1.4% , 1.4% , and 1.3% , respectively, on an annualized basis.

Our Affiliates’ four largest benchmarked investment strategie s, Acadian Asset Management (AAM) Emerging Markets Equity , AAM Global Equity, Thompson, Siegel & Walmsley LLC (TSW) International, and AAM Global Managed Volatility, have each outperformed their relevant benchmarks since inception by 2.2%, 1.5%, 1.4%, and 0.2%, respectively, on an annualized basis.

Attractive Financial Model.

Our model generates strong, recurring free cash flow to our business that we can use for growth initiatives on behalf of our Affiliates, return to shareholders through dividends and stock repurchases, or in certain circumstances, use to make investments in new Affiliates.

Our ENI revenue has grown 5.1% compounded annually since 2015 .

Our model has generated strong, recurring free cash flow to our business that we can use for growth initiatives on behalf of our Affiliates, return to shareholders through dividends and stock repurchases, repay outstanding debt obligations or in certain circumstances, use to make investments in new Affiliates.

Our revenue consists largely of recurring management fees on assets under management and is not heavily dependent upon more volatile performance fees.

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Our comparable ENI operating margin (calculated before Affiliate key employee distributions) was 35% in 2016 and 35% in 2020 as we continued to invest in the business.

Experienced Management Team.

The members of our senior management team have significant, long-term experience in the asset management industry and bring a wide range of expertise that includes investment banking and corporate strategy, private equity, corporate development and portfolio management.

Each of our senior executives understands how to structure and maintain partnerships that provide Affiliate firms with the proper incentives and resources to continue to generate strong growth.

Growth Strategy

The cornerstone of our model is to combine the investment talent, entrepreneurialism, focus and creativity of leading asset management firms with the expertise and capital of a larger firm in areas where our resources can provide distinct advantages.

We provide strategic capabilities to our Affiliates, enabling them to focus on delivering superior investment performance, innovative offerings, and excellent service to their clients.

We strive to maintain and enhance the characteristics which have made our Affiliates market leaders in their areas of expertise.

Our focus is working with a select group of diverse Affiliates with whom we can build scalable business platforms leveraging their core investment and distribution capabilities.

Our growth strategy is based on the incentives inherent in our aligned partnership model.

As a partner dedicated to providing our Affiliates with operational autonomy, our structure is designed to align our economic interests with those of our Affiliates to promote long-term client-driven growth.

Through retained Affiliate equity ownership and a profit-sharing partnership model, we ensure appropriate focus on key issues critical to the long-term success of each Affiliate, particularly investment performance, client service, talent management and risk management.

Core Affiliate Growth.

Our growth strategy is rooted in core Affiliate growth.

Growth initiatives are primarily driven by our Affiliates, who by virtue of their day to day management of their operations are able to identify new products and business opportunities.

We seek to support their growth through capital deployment and strategic guidance.

Our Affiliates are strong investment management firms with highly-defined and rigorous investment strategies for which there is real demand in the institutional marketplace.

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See “—Overview of Current Affiliates.”

Collaborative Organic Growth.

Our collaboration with our Affiliates enables them to grow and enhance their businesses in ways that they could not do on their own.

We leverage the broad industry experience of our senior management to evaluate, structure, and support Affiliate growth opportunities, including expansion into new products and strategies, geographies and channels.

In addition, we provide seed and co-investment capital to help launch new products.

Global Distribution .

Our Affiliates are recognized for their long-term investment performance and high quality client service, and have strong client and consultant relationships in their core institutional marketplaces.

However, there are certain areas of distribution outside of their core markets that are more scale-oriented or specialized in nature.

To assist our Affiliates in penetrating these markets, we offer a range of distribution capabilities in a transparent, opt-in partnership-based model that is supported by an experienced sales team focused on cultivating broad and deep relationships within the U.S.

sub-advisory (mutual fund and variable annuity) and insurance general account channels as well as the non-U.S.

See “—Distribution Model and Client Base” for further discussion of our Center-led Global Distribution platform.

Investments in New Affiliates.

We may also from time to time opportunistically pursue partnerships with additional asset managers that can enhance our growth potential and diversify our earnings drivers.

In such instances, we would expect to target asset classes that complement our existing Affiliates’ capabilities or provide additional expertise in capacity-constrained investment strategies.

Our Operating Model and Holding Company Activities

We manage our business through seven Affiliates, each of which operates autonomously and employs its own distinct investment processes.

We work with our Affiliates to identify and execute upon growth opportunities in areas such as distribution, business line expansion and product development.

Our collaboration with our Affiliates extends to the commitment of seed and co-investment capital to launch new products and investment capital to financially support new growth initiatives.

We manage our business through five Affiliates, each of which operates autonomously and employs its own distinct investment processes.

Our collaboration with our Affiliates primarily extends to the commitment of seed and co-investment capital to launch new products and investment capital to financially support new growth initiatives.

We also encourage our Affiliates to pursue inorganic growth opportunities such as team lift outs and bolt-on acquisitions and are willing to provide strategic advice and capital support in these endeavors.

We align incentives with our Affiliates through our partnership structure, which provides employee partners of our Affiliates with equity in their respective firms through an equity recycling program, and participation in established profit-sharing arrangements.

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Partners in each of our Affiliates own meaningful equity positions in their respective businesses.

Among our consolidated Affiliates, their equity stakes range from approximately 20% to 40% , in some cases following a distribution preference to BSIG.

Among our consolidated Affiliates, their equity stakes generally range from approximately 20% to 40%, in some cases following a distribution preference to BSIG.

We may facilitate the recycling of Affiliate equity to the next generation of Affiliate partners.

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Collaborative Growth Initiatives

Our business is differentiated from other asset management companies by our focus on active engagement with our Affiliates to enhance their organic growth potential.

Our collaboration with Affiliates generally consists of the following:

Strategic Affiliate Growth Opportunities.

As part of our partnership approach with Affiliates, we support the Affiliates to identify and analyze potential growth strategies for their businesses.

Dedicated professionals at BSIG help to formulate a plan of execution and develop an economic structure to appropriately share risk and reward between us and Affiliate equity-holders.We have collaborated with our Affiliates on a number of growth initiatives to further diversify and strengthen our business.

Our Affiliates have been able to leverage our strategic capabilities in areas such as capital support (including seed capital and co-investments), corporate development, global distribution, and product expansion.

• Seed Capital.

As of December 31, 2019 , we have approximately $124 million committed to seed capital, which is currently invested in 21 products across seven different asset classes.

As of December 31, 2020, we have approximately $24 million committed to seed capital, which is currently invested in six products across four different asset classes.

Our Affiliates’ use of seed capital generally falls into two categories:

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In consideration for providing co-investment capital, which is typically illiquid for approximately seven to ten years, we receive returns on our underlying partnership investment, our proportionate share of profits on assets in the fund, and the potential for fund incentive fee allocations.

• Inorganic Growth Opportunities.

We provide strategic advice and capital support to our Affiliates in pursuing inorganic growth opportunities such as team lift outs and bolt-on acquisitions when such opportunities emerge.

Capital Management

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For the period January 1, 2016 to December 31, 2020, we have repurchased approximately 36% of our shares.

Holding Company Management Team

Our senior management team has defined a core set of operating principles and positioned our business around them.

Our business strategy is to enhance the long-term growth of our market leading, investment management firms.

The members of our senior management team leverage their experience in areas such as asset management sector investment banking, private equity and corporate strategy to focus on supporting our Affiliates in areas where we believe we can provide the greatest benefit.

Overview of Current Affiliates

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The firm has over 100 investment and research professionals and manages over 70 distinct investment products and strategies.

Barrow, Hanley, Mewhinney & Strauss LLC , or Barrow Hanley ( $51.7 billion in AUM as of December 31, 2019 ), founded in 1979, has a long-term track record of providing its clients with strong performance and client service in a wide range of value-oriented investment strategies.

The firm applies a strict definition of value that guides all of its investment decisions, as it employs disciplined, bottom-up analysis to construct value equity portfolios of U.S., non-U.S., global and emerging market securities that exhibit below-market price-to-earnings ratios, below-market price-to-book ratios, and above-market dividend yields, regardless of market conditions.

The firm’s value-oriented fixed income portfolios seek to achieve higher total returns with below-benchmark volatility by identifying temporarily mispriced securities with yield-to-maturity advantages over Treasury bonds of comparable maturity.

Barrow Hanley’s flagship large cap value equity product, which had over $17 billion in assets at December 31, 2019 , has over a 40 -year track record.

Barrow Hanley has a diverse and longstanding clientele;

more than 40 of its clients have maintained their relationships with Barrow Hanley for over 20 years.

In addition to direct relationships with institutional investors, the firm serves as a sub-advisor to more than 19 highly regarded mutual fund clients.

Cory Martin is the CEO and Executive Director of Barrow Hanley and James Barrow is the firm’s Founding Director.

In addition, Barrow Hanley has a team of 22 managing directors.

The firm has 45 investment professionals managing approximately 25 distinct investment strategies.

Overview of Current Affiliates (cont.)

Campbell Global LLC , or Campbell Global ($4.7 billion in AUM as of December 31, 2020), is a global investment manager focused on forestland.

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Campbell Global combines ingenuity, data-supported decision making and a passion for responsible investing to deliver the best possible performance to their clients.

As of December 31, 2019 , the firm managed nearly 1.8 million acres ( 0.7 million hectares) and employed 139 individuals across the U.S.

and New Zealand.

As of December 31, 2020, the firm employed 159 individuals and managed nearly 1.7 million acres (0.7 million hectares) in North America, Australasia, and Latin America.

Campbell Global’s management team is led by Chief Executive Officer and Chairman John Gilleland and Angie Davis, President and Managing Director.

The firm has 32 investment professionals managing its investment portfolios.

Copper Rock Capital Partners LLC , or Copper Rock ( $3.9 billion in AUM as of December 31, 2019 ), founded in 2005, offers specialized, growth equity investment management focused on small and small/mid-capitalization strategies in international, global and emerging markets growth equities.

Copper Rock’s investment strategy seeks to outperform in up-markets due to the firm’s pure fundamental growth approach and also to protect clients’ capital through portfolio construction and a strong sell discipline.

Copper Rock’s client base includes pension plans, institutional investors and mutual funds located in the U.S., Canada, the United Kingdom, Denmark and Australia.

Copper Rock’s management team is led by the firm’s Chairman and Chief Investment Officer Steve Dexter and Chief Executive Officer Mike Forrester.

The firm has eleven investment professionals managing four distinct investment strategies.

Overview of Current Affiliates (cont.)

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(1) Accounted for under the equity method of accounting.

On February 6, 2021, we entered into a definitive agreement to sell all our interests in ICM.

The transaction is expected to close during second quarter of 2021.

Landmark Partners, LLC , or Landmark ($18.4 billion in AUM as of December 31, 2020), founded in 1989 and acquired by us in August 2016, specializes in secondary market transactions of private equity, real estate and infrastructure investments.

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sovereign wealth funds, public pensions, corporate pensions, insurance companies, asset managers and foundations located globally.

Landmark is led by President and Managing Partner, Timothy Haviland and Chairman and Managing Partner, Francisco Borges, supported by a team of sixteen Partners.

As of December 31, 2019 , Landmark employed 136 individuals across five offices in Boston, MA;

Landmark is led by President and Managing Partner, Timothy Haviland and Chairman and Managing Partner, Francisco Borges, supported by a team of eighteen Partners.

As of December 31, 2020, Landmark employed 150 individuals across six offices in Simsbury, CT;

New York, NY;

Simsbury, CT and Dallas, TX in the United States and London in the United Kingdom.

and Dallas, TX in the United States, together with London in the United Kingdom and a newly opened office in Hong Kong China.

Overview of Current Affiliates (cont.)

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Distribution Model and Client Base

Our distribution is focused on the institutional and sub-advisory channels, reached through both Affiliate-led and complementary, Center-led sales efforts.

Our distribution is focused on the institutional and sub-advisory channels, reached through Affiliate-led sales efforts.

During the year ended December 31, 2020 we repositioned our distribution strategy and discontinued supplemental distribution efforts from the Center.

As a result all distribution activities are concentrated at the Affiliate level.

Our Affiliates have teams of established sales and client service professionals with broad and deep relationships across the major segments of the institutional investor community.

Consistent with our partnership philosophy, Affiliates develop and maintain client relationships independently of both us and each other, while maintaining the option to participate in Center-led complementary distribution initiatives in the domestic sub-advisory and selected global markets.

In aggregate, our Affiliates have approximately 131 sales and marketing professionals servicing over 750 institutional and sub-advisory clients.

We launched our Center-led Global Distribution platform in 2012, which consists of a team of experienced channel and regional marketing specialists focused on developing new business opportunities for our Affiliates.

In the U.S., complementing and enhancing the distribution capabilities of the Affiliates, we have sales and marketing professionals focused on cultivating relationships in the sub-advisory (mutual fund and variable annuity) and insurance general account channels.

We also maintain independent relationships with institutional investment consultants.

If requested, our team also provides strategic marketing support for the Affiliates.

Outside the U.S., where scale is a meaningful advantage to support geographic reach and servicing capabilities, we have a Global Distribution team consisting of dedicated and strategically deployed sales and marketing professionals focused on developing client relationships and gathering assets in Europe, Asia, and recently expanded to South America.

Within these channels and jurisdictions, our objective is to cultivate broad and deep relationships with key consultants and institutional investors and to generate new client opportunities for those Affiliates.

From January 1, 2012 through December 31, 2019 , we have raised approximately $16 billion in client assets for our Affiliates.

In aggregate, our Affiliates service over 550 institutional and sub-advisory clients.

The institutional channel accounts for 79% of our AUM.

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Within this channel, we manage assets for mutual funds, giving us exposure to a retail investor base and the defined contribution market.

We have approximately 60 sub-advisory mandates on approximately 45 leading platforms, including American Beacon, SEI, Principal and Transamerica.

We have approximately 55 sub-advisory mandates on approximately 30 leading platforms, including Transamerica, SEI, and Strategic Advisors Inc (SAI).

Our top ten sub-advisory relationships account for approximately 14% of AUM and 8% of run rate gross management fee revenue, including our equity-accounted Affiliate, and have an average tenure of over ten years.

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We continually monitor and review our segment reporting structure in accordance with authoritative guidance to determine whether any changes have occurred that would impact its reportable segments.

Because of the change in our Chief Operating Decision Maker (“CODM”) at the end of 2018, we underwent a strategic shift in 2019 to refocus our businesses by its various investment strategies.

During the third quarter of 2019, we realigned the business and reportable segment information that the CODM regularly reviews to evaluate performance for operating decision-making purposes, including performance assessment and allocation of resources.

As a result, our segment reporting structure is based on our various investment strategies.

As a result of the change noted above, effective from the quarter ended September 30, 2019, we have the following business segments:

Quant & Solutions —comprised of versatile, often highly-tailored strategies that leverage data and technology in a computational, factor-based investment process across a range of asset classes and geographies, including Global, non-U.S., emerging markets and managed volatility equities, as well as multi-asset products.

Our segment reporting structure is based on our various investment strategies.

We have the following business segments:

• Quant & Solutions —comprised of versatile, often highly-tailored strategies that leverage data and technology in a computational, factor-based investment process across a range of asset classes and geographies, including Global, non-U.S., and emerging markets equities, as well as multi-asset and managed volatility products.

• Alternatives —comprised of illiquid and differentiated liquid investment strategies that include private equity, real estate and real assets, including forestry, as well as a growing suite of liquid alternative capabilities in areas such as long/short, market neutral and absolute return.

Liquid Alpha —comprised of specialized investment strategies with a focus on alpha-generation across market cycles in long-only small-, mid-, and large-cap U.S., global, non-U.S.

and emerging markets equities, as well as fixed income.

• Liquid Alpha (1) —comprised of specialized investment strategies with a focus on alpha-generation across market cycles in long-only small-, mid-, and large-cap U.S.

equities, as well as fixed income.

(1) On July 24, 2020, we sold all of our equity interests in Copper Rock, a former Affiliate in the Liquid Alpha segment, to Spouting Rock Asset Management LLC.

On November 17, 2020, we completed the sale of all of our equity interests in Barrow Hanley, a former Affiliate in the Liquid Alpha segment, to Perpetual U.S.

Holdings Company Inc.

(“Perpetual”).

On February 6, 2021, we entered into a definitive agreement to sell all our interests in ICM, an Affiliate in the Liquid Alpha segment.

The transaction is expected to close during second quarter of 2021.

Products and Investment Performance

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The chart below presents our assets under management by asset class and illustrates the diversification benefits of our business model.

Each of the five major asset classes represents 10% or more of our AUM in 2019, providing a balanced earnings stream to our business.

Moreover, within our three largest asset classes of revenue — international equities, alternative investments and emerging markets equity — we offer a range of strategies which provide further stability to our earnings.

Data as of December 31, 2019

Each of the five major asset classes provides a balanced earnings stream to our business.

Moreover, within our three largest asset classes of revenue — international equity, global equity and emerging markets equity — we offer a range of strategies which provide further stability to our earnings.

Data as of December 31, 2020

* Excludes equity-accounted Affiliates

We have product breadth and diversity within individual Affiliates as well as across our Affiliates.

For example, Barrow Hanley, whose core offerings consist of leading value-oriented U.S.

equity strategies, also offers a highly-rated suite of non-U.S.

equity and U.S.

investment grade fixed income investment products that adhere to the firm’s traditional value discipline.

Similarly, Acadian applies its quantitative approach across a range of equities, in terms of geography as well as market capitalization.

Our Affiliates’ product offerings are well-positioned in areas of investor demand, and the diversity of investment style and asset class enables us to participate in growing segments of the industry in multiple investing environments.

* Excludes equity-accounted Affiliate

We believe our Affiliates’ product offerings are well-positioned in areas of investor demand, and the diversity of investment style and asset class enables us to participate in growing segments of the industry in multiple investing environments.

The chart below illustrates the diversity of our assets under management by asset class and Affiliate.

In total, our Affiliates manage 99 strategy composites, including three Affiliates that manage at least ten strategies each.

In total, our Affiliates manage 64 strategy composites.

Investment Performance

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Investment performance is calculated on a gross basis, excluding the impact of management, administration, and performance fees.

In the chart below, which measures revenue-weighted performance relative to benchmarks for the Quant & Solutions and Liquid Alpha segments over the last five years, we typically have had between 50% and 90% of our revenue derived from benchmarked products (which represent approximately 89% of our total AUM) performing ahead of their respective benchmarks on a three-, five- and ten-year basis.

In evaluating prospective investments, we believe institutional investors generally give the three-year performance of an investment product the greatest weighting.

Three-year results in the Quant & Solutions segment declined against benchmarks compared to 2018 due to lagging performance in global quant strategies, and continued headwind for value-tilted managers.

Three-year results in the Liquid Alpha segment improved against benchmarks compared to 2018 due to stronger company fundamentals.

In the chart below, which measures revenue-weighted performance relative to benchmarks for the Quant & Solutions and Liquid Alpha segments over the last five years, we typically derive between 45% and 90% of our revenue from benchmarked products (which represented approximately 76% of our total AUM as of December 31, 2020) performing ahead of their respective benchmarks on a three-, five- and ten-year basis.

Data as of December 31 for the years 2016 to 2020

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The chart below indicates performance on a revenue-weighted and equal-weighted (by product) basis relative to benchmark, as at December 31, 2020.

In addition, we

have indicated the percentage of our assets beating their benchmarks over the same time periods.

In addition, we have indicated the percentage of our assets beating their benchmarks over the same time periods.

While we believe the first two methodologies provide better insight into our performance trends, we have also included AUM-weighted performance, as this is a more standard industry performance metric.

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Many of the organizations our Affiliates compete with offer investment strategies similar to those offered by our firms, and these organizations may have greater financial resources and distribution capabilities than we or our Affiliates are able to offer.

Some of these firms offer other products and services in particular investment strategies such as passively-managed products, including exchange traded funds, that typically carry lower fee rates, as well as environmental, social, and governance (“ESG”) strategies and other developing strategies or trends.

Additionally, there are limited barriers to entry for new investment managers.

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See Note 1, “Organization and Description of the Business” in our Consolidated Financial Statements included in Item 8 herein for a further description of these transactions.

In August 2016, we completed the acquisition of Landmark Partners and in January 2018, we completed the sale of our stake in Heitman to members of Heitman’s management.

In August 2016, we completed the acquisition of Landmark Partners and in January 2018, we completed the sale of our stake in Heitman LLC (“Heitman”) to members of Heitman’s management.

In July 2020, we completed the sale of Copper Rock Capital Partners LLC and in November 2020 we completed the sale of Barrow Hanley Mewhinney & Strauss, LLC.

In February 2021, we entered into a definitive agreement to sell all our interests in ICM.

This transaction is expected to close during second quarter of 2021.

We believe these acquisitions and divestitures have resulted in a mix of Affiliates well positioned to meet the ever changing needs of asset management clients.

Employees and Human Capital

As of December 31, 2020, we had 800 full-time equivalent employees, of which 30 were employees of the Company and 770 were employees of our Affiliates.

None of our employees or those of our Affiliates are subject to any collective bargaining agreements.

We believe our relationships with our employees to be good and have not experienced interruptions to operations due to labor disagreements.

Neither the Company’s employees nor our Affiliates’ employees are represented by any collective bargaining agreements.

Management considers its employee relations to be good.

We believe our ability and the ability of our Affiliates to attract and retain employees is a key to our success.

Accordingly, the Company and our Affiliates each strive to offer competitive compensation and employee benefits and monitor compensation and benefits to the competitive market.

BrightSphere and our Affiliates are committed to pay equity for employees doing similar work, regardless of gender, race or ethnicity and comply with applicable local regulations.

Operations, Systems and Technology

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business