Fair Value Measurements

6 Months Ended

Jun. 30, 2013

6. Fair Value Measurements

The Company’s assets measured at fair value on a recurring basis as of June 30, 2013 and December 31, 2012 by fair value hierarchy level were as follows:


June 30, 2013
	Level 1		Level 2 (a)		Level 3		Total
*($ in thousands)*
Assets
Marketable securities trading:
Sponsored mutual funds and variable insurance funds	$	13,371	$	—	$	—	$	13,371
Investments of consolidated sponsored investment products		13,649		29,465		—		43,114
Equity securities		4,649		—		—		4,649
Marketable securities available for sale:
Sponsored closed-end funds		2,713		—		—		2,713
Other assets
Nonqualified retirement plan assets		3,366		—		—		3,366

Total assets measured at fair value	$	37,748	$	29,465	$	—	$	67,213


December 31, 2012
	Level 1		Level 2 (a)		Level 3		Total
*($ in thousands)*
Assets
Marketable securities trading:
Sponsored mutual funds and variable insurance funds	$	8,013	$	—	$	—	$	8,013
Investments of consolidated sponsored investment products		10,092		33,135		—		43,227
Equity securities		4,379		—		—		4,379
Marketable securities available for sale:
Sponsored closed-end funds		2,656		—		—		2,656
Other assets
Nonqualified retirement plan assets		2,970		—		—		2,970

Total assets measured at fair value	$	28,110	$	33,135	$	—	$	61,245

Debt securities are valued based on evaluated quotations received from independent pricing services or from dealers who make markets in such securities. For most bond types, the pricing service utilizes matrix pricing, which considers one or more of the following factors: yield or price of bonds of comparable quality, coupon, maturity, current cash flows, type and current day trade information, as well as dealer supplied prices. These valuations are categorized as Level 2.

The following is a discussion of the valuation methodologies used for assets measured at fair value.

Sponsored mutual funds and variable insurance funds represent investments in open-end mutual funds and variable insurance funds for which the Company acts as advisor and distributor. The fair value of these securities is determined based on their published net asset values and are categorized as Level 1.

Investments of consolidated sponsored investment products represent the underlying debt and equity securities held in sponsored mutual funds in which the Company has an investment in and are consolidated by the Company. Equity securities are valued at the official closing price on the exchange on which the securities are traded and are categorized within Level 1. Certain non-U.S. securities for which closing prices are not readily available or are deemed to not reflect readily available market prices are valued using an independent pricing service. These securities are categorized within Level 2. Most debt securities are valued based on quotations received from independent pricing services or from dealers who make markets in such securities. These investments are generally categorized within Level 2. Pricing services do not provide pricing for all securities and therefore indicative bids from dealers are utilized, which are based on pricing models used by market makers in the security and generally are categorized within Level 2.

Equity securities include securities traded on active markets and are valued at the official closing price (typically last sale or bid) on the exchange on which the securities are primarily traded and are classified within Level 1.

Sponsored closed-end funds represent investment for which the Company acts as advisor and are actively traded on the New York Stock Exchange. The fair value of these securities is determined based on their published net asset values and are categorized as Level 1.

Nonqualified retirement plan assets represent mutual funds within a nonqualified retirement plan whose fair value is determined based on their published net asset value and are classified as Level 1.

Cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities equal or approximate fair value based on the short-term nature of these instruments. The estimated fair value of long-term debt at June 30, 2013 and December 31, 2012, which has a variable interest rate, approximates its carrying value and is classified as Level 2. Marketable securities are reflected in the financial statements at fair value based upon publicly quoted market prices.

Transfers into and out of levels are reflected when significant inputs, including market inputs or performance attributes, used for the fair value measurement become observable or unobservable or when the Company determines it has the ability, or no longer has the ability, to redeem, in the near term, certain investments that the Company values using a net asset value, or if the book value of certain equity method investments no longer represents fair value. Securities held by the consolidated sponsored investment products, with an end-of-period value of $4.3 million were transferred from Level 2 to Level 1 during the six months ended June 30, 2013 due to the availability of unadjusted quoted market prices in active markets. There were no transfers from Level 1 to Level 2 during the six months ended June 30, 2013. There were no transfers between Level 1 and Level 2 during the six months ended June 30, 2012.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

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