Quantitative and Qualitative Disclosures About Market Risk.
−Removed: Our exposure to market risk is directly related to the role of our Affiliates as asset managers.
−Removed: Substantially all of our investment management revenues are derived from our Affiliates’ agreements with their clients.
+Added: Our exposure to market risk is directly related to the role of our Affiliate as an asset manager.
+Added: Substantially all of our investment management revenues are derived from our Affiliate’s agreements with its clients.
Under these agreements, the revenues we receive are based on the value of our assets under management or the investment performance on client accounts for which we earn performance fees.
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In addition, such depreciation could cause our clients to withdraw their funds in favor of investments offering higher returns or lower risk, which would cause our revenues and net income to decline further.
−Removed: Our model for assessing the impact of market risk on our results uses June 30, 2021 ending AUM and management fee rates as the basis for management fee revenue calculations.
−Removed: In February 2021 we announced the divestiture of ICM, which we completed in July 2021.
+Added: Our model for assessing the impact of market risk on our results uses September 30, 2021 ending AUM and management fee rates as the basis for management fee revenue calculations.
+Added: In July 2021 we completed the divestiture of ICM.
ICM was included in our AUM until the date the transaction closed.
−Removed: In June 2021 we announced the divestiture of Campbell, expected to close during third quarter of 2021.
−Removed: Campbell will be included in our AUM until the transaction closes.
−Removed: In June 2021, we completed the sale of Landmark.
−Removed: In May 2021 we entered into a definitive agreement to sell our equity interests in TSW.
−Removed: We completed the sale in July 2021.
−Removed: TSW was included in our AUM until the date the transaction closed.
+Added: In August 2021 we completed the divestiture of Campbell.
+Added: Campbell was included in our AUM until the transaction closed.
+Added: In June 2021, we completed the divestiture of Landmark.
+Added: In July 2021 we completed the divestiture of TSW.
As a result, Landmark and TSW are reported within discontinued operations and excluded from AUM.
−Removed: With respect to performance fee revenue, we assume that relative investment performance is the same as in the past four quarters ended June 30, 2021.
+Added: With respect to performance fee revenue, we assume that relative investment performance is the same as in the past four quarters ended September 30, 2021.
Therefore, market-driven changes in performance fees, which are typically based on relative performance versus market indices, reflect changes in the underlying AUM used in the calculation rather than differences in relative performance as a result of a changed market environment.
−Removed: The basis for the analysis is performance fees earned for the twelve months ended June 30, 2021.
+Added: The basis for the analysis is performance fees earned for the twelve months ended September 30, 2021.
Our profit sharing economic structure results in a sharing of market risk between us and our employees.
−Removed: Approximately 40% of our ENI cost structure is variable, representing variable compensation and key employee distributions for the Affiliates.
+Added: Approximately 40% of our ENI cost structure is variable, representing variable compensation and key employee distributions at our Affiliate.
These variable expenses generally are linked in a formulaic manner to the profitability of the business after covering operating expenses, which include base compensation and benefits, general and administrative expenses, and depreciation and amortization.
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Any change in pre-tax profit is tax-affected at our statutory combined state and federal rate of approximately 27% to calculate profit after tax.
−Removed: The value of our assets under management was $126.9 billion as of June 30, 2021.
−Removed: A 10% increase or decrease in the value of our assets under management, if proportionally distributed over all of our investment strategies, asset classes and client relationships, would cause an annualized increase or decrease in our gross management fee revenues of approximately $48.1 million based on our current weighted average fee rate of approximately 38 basis points, including our equity-accounted Affiliate.
−Removed: Approximately $20.0 billion, or 15%, of our AUM, including our equity-accounted Affiliate, are in accounts subject to performance fees.
+Added: The value of our assets under management was $113.7 billion as of September 30, 2021.
+Added: A 10% increase or decrease in the value of our assets under management, if proportionally distributed over all of our investment strategies, asset classes and client relationships, would cause an annualized increase or decrease in our gross management fee revenues of approximately $41.7 based on our current weighted average fee rate of approximately 37 basis points.
+Added: Approximately $14.0 billion, or 12%, of our AUM, are in accounts subject to performance fees.
Of these assets, approximately 90% are in accounts for which performance fees, or management fee adjustments, are calculated based on investment return that differs from the relative benchmark returns.
−Removed: Assuming the market change does not impact our relative performance, a 10% increase or decrease in AUM would have a $3.2 million impact to our gross performance fees based on our trailing twelve month performance fees of $31.5 million as of June 30, 2021.
+Added: Assuming the market change does not impact our relative performance, a 10% increase or decrease in AUM would have a $1.8 million impact to our gross performance fees based on our trailing twelve month performance fees of $17.6 million as of September 30, 2021.
The combined impact on our management fees and performance fees would have a direct impact on our earnings and result in an annual change of approximately $16.6 million in our post-tax economic net income, given our current cost structure and operating model.
Equity market risk, interest rate risk, and foreign currency risk are the market risks that could have the greatest impact on our management fees, performance fees and our business profitability.
−Removed: Impacts on our management and performance fees can be calculated based on the percentage of AUM constituting equity investments, fixed income
−Removed: investments, or foreign currency denominated investments, respectively, multiplied by the relevant weighted average management fee and performance fee attributable to that asset class.
+Added: Impacts on our management and performance fees can be calculated based on the percentage of AUM constituting equity investments, fixed income investments, or foreign currency denominated investments, respectively, multiplied by the relevant weighted average management fee and performance fee attributable to that asset class.
• Our equity markets-based AUM includes U.S.
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and emerging markets securities).
−Removed: A 10% increase or decrease in equity markets would cause our $120.3 billion of equity assets under management to increase or decrease by $12.0 billion, resulting in a change in annualized management fee revenue of $45.3 million and an annual change in post-tax economic net income of approximately $17.0 million, given our current cost structure, operating model, and weighted average fee rate of 38 basis points at the mix of strategies as of June 30, 2021.
+Added: A 10% increase or decrease in equity markets would cause our $111.6 billion of equity assets under management to increase or decrease by $11.2 billion, resulting in a change in annualized management fee revenue of $40.7 million and an annual change in post-tax economic net income of approximately $15.8 million, given our current cost structure, operating model, and weighted average fee rate of 37 basis points at the mix of strategies as of September 30, 2021.
Approximately $13.5 billion, or 12%, of our equity markets-based AUM are in accounts subject to performance fees.
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A 10% increase or decrease in foreign exchange rates against the U.S.
−Removed: dollar would cause our $93.6 billion of foreign currency denominated AUM to increase or decrease by $9.4 billion, resulting in a change in annualized management fee revenue of $37.3 million and an annual change in post-tax economic net income of $14.5 million, based on weighted average fees earned on our foreign currency denominated AUM of 39 basis points at the mix of strategies as of June 30, 2021.
+Added: dollar would cause our $89.8 billion of foreign currency denominated AUM to increase or decrease by $9.0 billion, resulting in a change in annualized management fee revenue of $35.2 million and an annual change in post-tax economic net income of $13.7 million, based on weighted average fees earned on our foreign currency denominated AUM of 39 basis points at the mix of strategies as of September 30, 2021.
Approximately $12.5 billion, or 14%, of our foreign currency denominated AUM are in accounts subject to performance fees.
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Interest on borrowings under the Acadian credit facility is based upon variable interest rates.
−Removed: Borrowings under the Credit Facility were $53.9 million as of June 30, 2021.
+Added: Borrowings under the credit facility were $33.0 million as of September 30, 2021.
We currently do not hedge against interest rate risk.
−Removed: As of June 30, 2021, a hypothetical 10% change in interest rates would have resulted in an immaterial change to our interest expense during the six months ended June 30, 2021.
+Added: As of September 30, 2021, a hypothetical 10% change in interest rates would have resulted in an immaterial change to our interest expense during the nine months ended September 30, 2021.
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.