Investments

9 Months Ended

Sep. 30, 2023

Investments, Fair Value Disclosure [Abstract]

Investments includes debt instruments and equity securities that are accounted for at fair value and are generally held by the firm in connection with its long-term investing activities. In addition, investments includes debt securities classified as available-for-sale and held-to-maturity that are generally held in connection with the firm’s asset-liability management activities. Investments also consists of equity securities that are accounted for under the equity method.

The table below presents information about investments.


	As of
	September		December
$ in millions	2023		2022
Equity securities, at fair value	$	13,742	$	14,892
Debt instruments, at fair value	13,305		14,075
Available-for-sale securities, at fair value	49,260		49,234
Investments, at fair value	76,307		78,201
Held-to-maturity securities	68,510		51,662
Equity-method investments	713		766
Total investments	$	145,530	$	130,629

See Note 4 for an overview of the firm’s fair value measurement policies, valuation techniques and significant inputs used to determine the fair value of investments, and Note 5 for information about investments within the fair value hierarchy.

Equity Securities and Debt Instruments, at Fair Value

Equity securities and debt instruments, at fair value are accounted for at fair value either under the fair value option or in accordance with other U.S. GAAP, and the related fair value gains and losses are recognized in the consolidated statements of earnings.

Equity Securities, at Fair Value. Equity securities, at fair value consists of the firm’s public and private equity investments in corporate and real estate entities.

The table below presents information about equity securities, at fair value.


	As of
	September			December
$ in millions	2023			2022
Equity securities, at fair value	$	13,742		$	14,892

Equity Type
Public equity	9		%	13		%
Private equity	91		%	87		%
Total	100		%	100		%

Asset Class
Corporate	72		%	71		%
Real estate	28		%	29		%
Total	100		%	100		%

In the table above:

•Equity securities, at fair value included investments accounted for at fair value under the fair value option where the firm would otherwise apply the equity method of accounting of $5.06 billion as of September 2023 and $5.35 billion as of December 2022. Gains/(losses) recognized as a result of changes in the fair value of equity securities for which the fair value option was elected were $(179) million for the three months ended September 2023, $(118) million for the three months ended September 2022, $(591) million for the nine months ended September 2023 and $(189) million for the nine months ended September 2022. These gains/(losses) are included in other principal transactions.

•Equity securities, at fair value included $1.22 billion as of September 2023 and $1.30 billion as of December 2022 of investments in funds that are measured at NAV.

Debt Instruments, at Fair Value. Debt instruments, at fair value primarily includes mezzanine, senior and distressed debt.

The table below presents information about debt instruments, at fair value.


	As of
	September		December
$ in millions	2023		2022
Corporate debt securities	$	9,362	$	10,098
Securities backed by real estate	785		1,003
Money market instruments	896		1,005
Other	2,262		1,969
Total	$	13,305	$	14,075

In the table above:

•Substantially all of the firm's money market instruments consist of time deposits.

•Other included $1.82 billion as of September 2023 and $1.64 billion as of December 2022 of investments in credit funds that are measured at NAV.

Investments in Funds at Net Asset Value Per Share. Equity securities and debt instruments, at fair value include investments in funds that are measured at NAV of the investment fund. The firm uses NAV to measure the fair value of fund investments when (i) the fund investment does not have a readily determinable fair value and (ii) the NAV of the investment fund is calculated in a manner consistent with the measurement principles of investment company accounting, including measurement of the investments at fair value.

Substantially all of the firm’s investments in funds at NAV consist of investments in firm-sponsored private equity, credit, real estate and hedge funds where the firm co-invests with third-party investors.

Private equity funds primarily invest in a broad range of industries worldwide, including leveraged buyouts, recapitalizations, growth investments and distressed investments. Credit funds generally invest in loans and other fixed income instruments and are focused on providing private high-yield capital for leveraged and management buyout transactions, recapitalizations, financings, refinancings, acquisitions and restructurings for private equity firms, private family companies and corporate issuers. Real estate funds invest globally, primarily in real estate companies, loan portfolios, debt recapitalizations and property. Substantially all private equity, credit and real estate funds are closed-end funds in which the firm’s investments are generally not eligible for redemption. Distributions will be received from these funds as the underlying assets are liquidated or distributed, the timing of which is uncertain.

The firm also invests in hedge funds, primarily multi-disciplinary hedge funds that employ a fundamental bottom-up investment approach across various asset classes and strategies. The firm’s investments in hedge funds primarily include interests where the underlying assets are illiquid in nature, and proceeds from redemptions will not be received until the underlying assets are liquidated or distributed, the timing of which is uncertain.

The firm's investments in funds at NAV includes investments in “covered funds” as defined in the Volcker Rule of the U.S. Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act). The firm achieved conformance with the covered fund provisions of the Volcker Rule in July 2023 in accordance with the extension received from the Board of Governors of the Federal Reserve System (FRB).

The table below presents the fair value of investments in funds at NAV and the related unfunded commitments.


$ in millions	Fair Value of Investments		Unfunded Commitments
As of September 2023
Private equity funds	$	815	$	493
Credit funds	1,814		282
Hedge funds	48		–
Real estate funds	360		66
Total	$	3,037	$	841

As of December 2022
Private equity funds	$	815	$	647
Credit funds	1,645		303
Hedge funds	68		–
Real estate funds	413		138
Total	$	2,941	$	1,088

Available-for-Sale Securities

Available-for-sale securities are accounted for at fair value, and the related unrealized fair value gains and losses are included in accumulated other comprehensive income/(loss) unless designated in a fair value hedging relationship. See Note 7 for information about available-for-sale securities that are designated in a hedging relationship.

The table below presents information about available-for-sale securities by tenor.


$ in millions	Amortized Cost		Fair Value		Weighted Average Yield
As of September 2023
Less than 1 year	$	25,004	$	24,401	0.37	%
1 year to 5 years	23,638		22,194		1.25	%
5 years to 10 years	530		478		1.86	%
Total U.S. government obligations	49,172		47,073		0.80	%

Less than 1 year	10		9		0.01	%
1 year to 5 years	1,562		1,296		0.10	%
5 years to 10 years	1,083		882		0.84	%
Total non-U.S. government obligations	2,655		2,187		0.40	%
Total available-for-sale securities	$	51,827	$	49,260	0.78	%
As of December 2022
Less than 1 year	$	8,103	$	7,861	0.37	%
1 year to 5 years	41,479		38,706		0.74	%
5 years to 10 years	538		488		1.86	%

Total U.S. government obligations	50,120		47,055		0.69	%

1 year to 5 years	10		10		0.27	%
5 years to 10 years	2,616		2,169		0.40	%
Total non-U.S. government obligations	2,626		2,179		0.40	%
Total available-for-sale securities	$	52,746	$	49,234	0.68	%

In the table above:

•The weighted average yield for available-for-sale securities is presented on a pre-tax basis and computed using the effective interest rate of each security at the end of the period, weighted based on the fair value of each security.

•The gross unrealized gains included in accumulated other comprehensive income/(loss) were not material and the gross unrealized losses included in accumulated other comprehensive income/(loss) were $2.57 billion as of September 2023 and primarily related to U.S. government obligations in a continuous unrealized loss position for more than a year. The gross unrealized gains included in accumulated other comprehensive income/(loss) were not material and the gross unrealized losses included in accumulated other comprehensive income/(loss) were $3.52 billion as of December 2022 and primarily related to U.S. government obligations in a continuous unrealized loss position for more than a year. Net unrealized gains/(losses) included in other comprehensive income/(loss) were $431 million ($317 million, net of tax) for the three months ended September 2023, $(836) million ($(615) million, net of tax) for the three months ended September 2022, $945 million ($720 million, net of tax) for the nine months ended September 2023 and $(3.23) billion ($(2.41) billion, net of tax) for the nine months ended September 2022.

•Substantially all available-for-sale securities were classified in level 1 of the fair value hierarchy as of both September 2023 and December 2022.

•If the fair value of available-for-sale securities is less than amortized cost, such securities are considered impaired. If the firm has the intent to sell the debt security, or if it is more likely than not that the firm will be required to sell the debt security before recovery of its amortized cost, the difference between the amortized cost (net of allowance, if any) and the fair value of the securities is recognized as an impairment loss in earnings. The firm did not record any such impairment losses during either the three or nine months ended September 2023 or September 2022. Impaired available-for-sale debt securities that the firm has the intent and ability to hold are reviewed to determine if an allowance for credit losses should be recorded. The firm considers various factors in such determination, including market conditions, changes in issuer credit ratings and severity of the unrealized losses. The firm did not record any provision for credit losses on such securities during either the three or nine months ended September 2023 or September 2022.

The table below presents gross realized gains and the proceeds from the sales of available-for-sale securities.



	Three Months Ended September				Nine Months Ended September
$ in millions	2023		2022		2023		2022
Gross realized gains	$	2	$	–	$	8	$	–
Proceeds from sales	$	540	$	–	$	3,161	$	2

In the table above, the specific identification method is used to determine realized gains on available-for-sale securities. Such amounts were reclassified from accumulated other comprehensive income/(loss) to other principal transactions in the consolidated statements of earnings.

Held-to-Maturity Securities

Held-to-maturity securities are accounted for at amortized cost.

The table below presents information about held-to-maturity securities by type and tenor.


$ in millions	Amortized Cost		Fair Value		Weighted Average Yield
As of September 2023
Less than 1 year	$	16,020	$	15,859	3.13	%
1 year to 5 years	50,391		48,627		3.45	%
5 years to 10 years	1,896		1,827		3.87	%
Total government obligations	68,307		66,313		3.38	%

1 year to 5 years	3		2		7.78	%
Greater than 10 years	200		200		5.87	%
Total securities backed by real estate	203		202		5.90	%
Total held-to-maturity securities	$	68,510	$	66,515	3.39	%
As of December 2022
Less than 1 year	$	5,319	$	5,282	2.98	%
1 year to 5 years	45,154		43,852		3.00	%
5 years to 10 years	1,026		966		2.89	%
Total government obligations	51,499		50,100		2.99	%

5 years to 10 years	2		2		5.63	%
Greater than 10 years	161		158		3.18	%
Total securities backed by real estate	163		160		3.24	%
Total held-to-maturity securities	$	51,662	$	50,260	2.99	%

In the table above:

•Substantially all of the government obligations consist of U.S. government obligations.

•Substantially all of the securities backed by real estate consist of securities backed by residential real estate.

•As these securities are not accounted for at fair value, they are not included in the firm’s fair value hierarchy in Notes 4 and 5. Had these securities been included in the firm’s fair value hierarchy, government obligations would have been classified in level 1 and securities backed by real estate would have been primarily classified in level 2 of the fair value hierarchy as of both September 2023 and December 2022.

•The weighted average yield for held-to-maturity securities is presented on a pre-tax basis and computed using the effective interest rate of each security at the end of the period, weighted based on the amortized cost of each security.

•The gross unrealized gains were not material as of both September 2023 and December 2022. The gross unrealized losses were $2.00 billion as of September 2023 and $1.44 billion as of December 2022.

•Held-to-maturity securities are reviewed to determine if an allowance for credit losses should be recorded in the consolidated statements of earnings. The firm considers various factors in such determination, including market conditions, changes in issuer credit ratings, historical credit losses and sovereign guarantees. Provision for credit losses on such securities was not material during either the three or nine months ended September 2023 or September 2022.