We regularly provide seed capital to new company-sponsored investment funds. As such, we may consolidate or de-consolidate a variety of company-sponsored investment funds each quarter. Due to the similarity of risks related to our involvement with each company-sponsored investment fund, disclosures required under the VIE model are aggregated, such as disclosures regarding the carrying amount and classification of assets.

We are not required to provide financial support to company-sponsored investment funds, and only the assets of such funds are available to settle each fund's own liabilities. Our exposure to loss regarding consolidated company-sponsored investment funds is limited to our investment in, and our management fee earned from, such funds. Equity and debt holders of such funds have no recourse to AB’s assets or to the general credit of AB.


	September 30, 2023						December 31, 2022
	(in thousands)
	VIEs		VOEs		Total		VIEs		VOEs		Total
Cash and cash equivalents	$	13,247	$	—	$	13,247	$	19,751	$	—	$	19,751
Investments	297,386		22,419		319,805		516,536		—		516,536
Other assets	13,516		918		14,434		44,424		—		44,424
Total assets	$	324,149	$	23,337	$	347,486	$	580,711	$	—	$	580,711

Liabilities	$	13,363	$	938	$	14,301	$	55,529	$	—	$	55,529
Redeemable non-controlling interest	176,307		6,627		182,934		368,656		—		368,656
Partners' capital attributable to AB Unitholders	134,479		15,772		150,251		156,526		—		156,526
Total liabilities, redeemable non-controlling interest and partners' capital	$	324,149	$	23,337	$	347,486	$	580,711	$	—	$	580,711

During the nine-month period ended September 30, 2023, we deconsolidated three funds in which we had a seed investment of approximately $40.6 million as of December 31, 2022, due to no longer having a controlling financial interest.

Changes in the redeemable non-controlling interest balance during the nine-month period ended September 30, 2023 are as follows (in thousands):



Redeemable non-controlling interest as of December 31, 2022	$	368,656
Deconsolidated funds	(196,277)
Changes in third-party seed investments in consolidated funds	10,555
Redeemable non-controlling interest as of September 30, 2023	$	182,934

Cash and cash equivalents include cash on hand, demand deposits, overnight commercial paper and highly liquid investments with original maturities of three months or less. Due to the short-term nature of these instruments, the recorded value has been determined to approximate fair value.

Valuation of consolidated company-sponsored investment funds' financial instruments by pricing observability levels as of September 30, 2023 and December 31, 2022 was as follows (in thousands):


	Level 1		Level 2		Level 3		Total
September 30, 2023:
Investments - VIEs	$	50,467	$	246,919	$	—	$	297,386
Investments - VOEs	22,419		—		—		22,419
Derivatives - VIEs	343		1,568		—		1,911

Total assets measured at fair value	$	73,229	$	248,487	$	—	$	321,716

Derivatives - VIEs	1,192		2,549		—		3,741

Total liabilities measured at fair value	$	1,192	$	2,549	$	—	$	3,741

December 31, 2022:
Investments - VIEs	$	129,706	$	386,830	$	—	$	516,536

Derivatives - VIEs	1,529		6,023		—		7,552

Total assets measured at fair value	$	131,235	$	392,853	$	—	$	524,088


Derivatives - VIEs	$	14,932	$	6,608	$	—	$	21,540

Total liabilities measured at fair value	$	14,932	$	6,608	$	—	$	21,540

See Note 11 for a description of the fair value methodologies used for instruments measured at fair value, as well as the general classification of such instruments pursuant to the valuation hierarchy.

The change in carrying value associated with Level 3 financial instruments carried at fair value within consolidated company-sponsored investment funds was as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
	(in thousands)
Balance as of beginning of period	$	—	$	—	$	—	$	3,357
Deconsolidated funds	—		—		—		(3,351)
Transfers (out)	—		—		—		(6)
Purchases	—		—		—		248
Sales	—		—		—		(248)



Balance as of end of period	$	—	$	—	$	—	$	—

The Level 3 securities primarily consist of corporate bonds that are vendor priced with no ratings available, bank loans, non-agency collateralized mortgage obligations and asset-backed securities.

Transfers into and out of all levels of the fair value hierarchy are reflected at end-of-period fair values. Realized and unrealized gains and losses on Level 3 financial instruments are recorded in investment gains and losses in the condensed consolidated statements of income.

As of September 30, 2023 and December 31, 2022, the VIEs held $1.8 million and $14.0 million (net), respectively, of futures, forwards and swaps within their portfolios. For the three and nine months ended September 30, 2023, we recognized $3.3 million and $2.9 million of losses, respectively, on these derivatives. For the three and nine months ended September 30, 2022, we recognized $4.9 million and $10.1 million of losses, respectively, on these derivatives. These gains and losses are recognized in investment gains (losses) in the condensed consolidated statements of income.

As of September 30, 2023 and December 31, 2022, the VIEs held $0.6 million and $2.7 million, respectively, of cash collateral payable to trade counterparties. This obligation to return cash is reported in the liabilities of consolidated company-sponsored investment funds in our condensed consolidated statements of financial condition.

As of September 30, 2023 and December 31, 2022, the VIEs delivered $3.3 million and $5.4 million, respectively, of cash collateral into brokerage accounts. The VIEs report this cash collateral in the consolidated company-sponsored investment funds cash and cash equivalents in our condensed consolidated statements of financial condition.

Offsetting of derivative assets of consolidated company-sponsored investment funds as of September 30, 2023 and December 31, 2022 was as follows:


	Gross Amounts of Recognized Assets		Gross Amounts Offset in the Statement of Financial Condition		Net Amounts of Assets Presented in the Statement of Financial Condition		Financial Instruments Collateral		Cash Collateral Received		Net Amount
	(in thousands)
September 30, 2023:
Derivatives - VIEs	$	1,911	$	—	$	1,911	$	—	$	(621)	$	1,290

December 31, 2022:
Derivatives - VIEs	$	7,552	$	—	$	7,552	$	—	$	(2,731)	$	4,821

Offsetting of derivative liabilities of consolidated company-sponsored investment funds as of September 30, 2023 and December 31, 2022 was as follows:


	Gross Amounts of Recognized Liabilities		Gross Amounts Offset in the Statement of Financial Condition		Net Amounts of Liabilities Presented in the Statement of Financial Condition		Financial Instruments Collateral		Cash Collateral Pledged		Net Amount
	(in thousands)
September 30, 2023:
Derivatives - VIEs	$	3,741	$	—	$	3,741	$	—	$	(3,337)	$	404

December 31, 2022:
Derivatives - VIEs	$	21,540	$	—	$	21,540	$	—	$	(5,444)	$	16,096

Cash collateral, whether pledged or received on derivative instruments, is not considered material and, accordingly, is not disclosed by counterparty.

As of September 30, 2023, the net assets of company-sponsored investment products that are non-consolidated VIEs are approximately $54.9 billion, and our maximum risk of loss is our investment of $11.0 million in these VIEs and our advisory fee receivables from these VIEs is $99.3 million. As of December 31, 2022, the net assets of company-sponsored investment products that were non-consolidated VIEs was approximately $46.4 billion; our maximum risk of loss was our investment of $5.7 million in these VIEs and our advisory fees receivable from these VIEs was $54.2 million.