Revenue

9 Months Ended

Sep. 30, 2020

Revenue from Contract with Customer [Abstract]

Revenue

Revenue

Management fees

The Company’s management fees are a function of the fee rates the Affiliates charge to their clients, which are typically expressed in basis points, and the levels of the Company’s assets under management. The most significant driver of increases or decreases in this average fee rate is changes in the mix of the Company’s assets under management caused by net inflows or outflows in certain asset classes or disproportionate market movements. For certain of the Company’s Alternative funds, management fee revenue is calculated based on a percentage of assets under management or total capital commitments. These Alternative funds can also include “catch-up” provisions such that the Company records revenue for payments of fund management fees back to the initial closing date for funds with multiple closings, less placement fees paid to third parties related to these funds.

    Performance fees

The Company’s products subject to performance fees earn these fees upon exceeding high-water mark performance thresholds or outperforming a hurdle rate. Conversely, the separate accounts / other products, which primarily earn management fees, are potentially subject to performance adjustments up or down based on investment performance versus benchmarks (i.e. fulcrum fees).     

    Other revenue

Included in other revenue are certain payroll and benefits costs and expenses paid on behalf of Funds by the Company’s Affiliates. In instances where a customer reimburses the Company for a cost paid on the customer’s behalf, the Company is acting as a principal and the reimbursement is accrued on a gross basis at cost as the corresponding reimbursable expenses are incurred. Revenue from expense reimbursement amounted to $1.1 million and $0.9 million for the three months ended September 30, 2020 and 2019, respectively. Revenues from expense reimbursement amounted to $3.3 million and $3.2 million for the nine months ended September 30, 2020 and 2019, respectively, are recorded in other revenue in the Company’s Condensed Consolidated Statements of Operations. Other revenue may also consist of other miscellaneous revenue, consisting primarily of administration and consulting services.

Disaggregation of management fee revenue

The Company classifies its revenue (including only consolidated Affiliates that are included in management fee revenue) among the following asset classes:

i.U.S. equity, which includes small cap through large cap securities and substantially value or blended investment styles;

ii.Global / non-U.S. equity, which includes global and international equities including emerging markets;

iii.Fixed income, which includes government bonds, corporate bonds and other fixed income investments in the United States; and

iv.Alternatives, which is 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.

Management fee revenue by segment and asset class is comprised of the following for the three and nine months ended September 30 (in millions):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
Quant & Solutions
Global / non-U.S. equity	$	87.9	$	92.7	$	255.3	$	276.8
Alternatives
Alternatives	43.2		37.2		126.4		124.5
Liquid Alpha(1)
Global / non-U.S. equity	17.8		21.9		56.5		70.6
Fixed income	6.1		6.6		18.5		19.5
U.S. equity	23.2		38.0		70.7		118.4
Management fee revenue	$	178.2	$	196.4	$	527.4	$	609.8

(1)In July 2020, the Company completed the sale of Copper Rock and announced the divestiture of Barrow Hanley. See Note 3, Divestitures and Assets and Liabilities Held for Sale for further discussion of divestitures. The financial results of Barrow Hanley are included in the Liquid Alpha segment for the three and nine months ended September 30, 2020. The financial results of Copper Rock are included in the Liquid Alpha segment until July 24, 2020, the completion of the sale.