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Investments

6 Months Ended

Apr. 30, 2020

Investments [Abstract]

3. Investments

The following is a summary of investments:

	(in thousands)			April 30,		October 31,
	(in thousands)			2020		2019
	Investments held at fair value:
	Short-term debt securities		$	16,427	$	297,845
	Debt and equity securities held by consolidated sponsored funds			374,689		514,072
	Debt and equity securities held in separately managed accounts			74,692		76,662
	Non-consolidated sponsored funds and other			13,902		10,329
	Total investments held at fair value			479,710		898,908
	Investments held at cost			20,928		20,904
	Investments in non-consolidated CLO entities			1,380		1,417
	Investments in equity method investees			133,061		139,510
	Total investments⁽¹⁾		$	635,079	$	1,060,739

	⁽¹⁾	Excludes bank loans and other investments held by consolidated CLO entities, which are discussed in Note 4.

Investments held at fair value

The Company recognized gains (losses) related to debt and equity securities held at fair value within gains (losses) and other investment income, net, in the Company’s Consolidated Statements of Income as follows:

			Three Months Ended					Six Months Ended
			April 30,					April 30,
	(in thousands)		2020		2019			2020		2019
	Realized gains (losses) on securities sold		$	(14,516)	$	4,162		$	(10,642)	$	(233)
	Unrealized gains (losses) on investments
	held at fair value			(53,017)		8,071			(45,379)		11,377
	Net gains (losses) on investments held at fair value		$	(67,533)	$	12,233		$	(56,021)	$	11,144

Investments held at cost

Investments held at cost primarily include the Company’s equity investment in a wealth management technology firm. At both April 30, 2020 and October 31, 2019, the carrying value of the Company’s investment in the wealth management technology firm was $19.0 million.

Investments in non-consolidated CLO entities

The Company provides investment management services for, and has made direct investments in, CLO entities that it does not consolidate, as described further in Note 4. The Company’s investments in non-consolidated CLO entities are carried at amortized cost unless impaired, at which point they are written down to fair value. At both April 30, 2020 and October 31, 2019, the carrying values of such investments

were $1.4 million. At both April 30, 2020 and October 31, 2019, combined assets under management in the pools of non-consolidated CLO entities were $0.4 billion.

The Company did not recognize any impairment losses related to the Company’s investments in non-consolidated CLO entities for the three and six months ended April 30, 2020 and 2019, respectively.

Investments in equity method investees

The Company has a 49 percent equity interest in Hexavest Inc. (Hexavest), a Montreal, Canada-based investment adviser. The carrying value of this investment consisted of the following:

	(in thousands)		April 30,		October 31,
	(in thousands)		2020		2019
	Equity in net assets of Hexavest	$	6,866	$	5,466
	Definite-lived intangible assets		17,563		19,486
	Goodwill		110,072		116,319
	Deferred tax liability		(4,725)		(5,243)
	Total carrying value	$	129,776	$	136,028

The Company’s investment in Hexavest is denominated in Canadian dollars and is subject to foreign currency translation adjustments, which are recorded in accumulated other comprehensive income (loss). Changes in the carrying value of goodwill is entirely attributable to foreign currency translation adjustments.

During the second quarter of fiscal 2020, the Company noted a decline in Hexavest’s managed assets driven primarily by equity market declines and net client withdrawals. An interim impairment test indicated that the estimated fair value of the Company’s investment in Hexavest had fallen below the carrying value as of April 30, 2020, an initial indicator of impairment. However, the Company determined that the investment was not other-than-temporarily impaired, as this was the first period end when the estimated fair value of the Company’s investment in Hexavest was less than its carrying value. The Company has no intention of disposing of its investment in Hexavest. Deeper or more extended declines in Hexavest’s managed assets could further reduce the fair value of the Company’s investment; as a result, future impairment tests could result in the Company recognizing an other-than-temporary impairment of its investment.

The Company also has a seven percent equity interest in a private equity partnership managed by a third party that invests in companies in the financial services industry. The carrying value of this investment was $3.3 million at April 30, 2020 and $3.5 million at October 31, 2019.

During the six months ended April 30, 2020 and 2019, the Company received dividends of $2.9 million and $5.6 million, respectively, from its investments in equity method investees.