Derivatives and Hedging |
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Jun. 30, 2025 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Derivatives and Hedging | 9. Derivatives and Hedging The Company maintains a program to enter into exchange traded futures as a macro hedging strategy to hedge market price and interest rate exposures with respect to its total portfolio of seed investments in sponsored investment products. The Company had outstanding exchange traded futures related to this macro hedging strategy with aggregate notional values of approximately $1.9 billion and $1.8 billion at June 30, 2025 and December 31, 2024, with expiration dates during the and , respectively. In addition, the Company enters into exchange traded futures to economically hedge the exposure to market movements on certain deferred cash compensation plans. At June 30, 2025 and December 31, 2024, the Company had outstanding exchange traded futures with aggregate notional values related to its deferred cash compensation hedging program of approximately $221 million and $197 million, with expiration dates during the and , respectively. Changes in the value of the futures contracts are recognized as gains or losses within nonoperating income (expense). Variation margin payments, which represent settlements of profit/loss, are generally received or made daily, and are reflected in other assets and other liabilities on the condensed consolidated statements of financial condition. These amounts were not material as of June 30, 2025 and December 31, 2024. The Company executes forward foreign currency exchange contracts to mitigate the risk of certain foreign exchange movements. At June 30, 2025 and December 31, 2024, the Company had outstanding forward foreign currency exchange contracts with aggregate notional values of approximately $2.4 billion, with expiration dates in July 2025, and $3.6 billion, with expiration dates in January 2025, respectively. At both June 30, 2025 and December 31, 2024, the Company had a derivative providing credit protection with a notional amount of approximately $17 million to a counterparty, representing the Company’s maximum risk of loss with respect to the derivative. The Company carries the derivative at fair value based on the expected discounted future cash outflows under the arrangement. The following table presents the fair values of derivative instruments recognized in the condensed consolidated statements of financial condition at June 30, 2025 and December 31, 2024:
The following table presents realized and unrealized gains (losses) recognized in the condensed consolidated statements of income on derivative instruments:
(1) Amounts for the three months ended June 30, 2025 and 2024 include $125 million and $6 million of losses on futures used in a macro hedging strategy of seed investments, respectively, and $19 million and $3 million of gains on futures used to economically hedge certain deferred cash compensation plans, respectively. Amounts for the six months ended June 30, 2025 and 2024 include $115 million and $49 million of losses on futures used in a macro hedging strategy of seed investments, respectively, and $13 million and $14 million of gains on futures used to economically hedge certain deferred cash compensation plans, respectively. The Company's CIPs may utilize derivative instruments as a part of the funds' investment strategies. The change in fair value of such derivatives, which is recorded in nonoperating income (expense), was not material for the three and six months ended June 30, 2025 and 2024. See Note 14, Borrowings in this filing and Note 15, Borrowings, in the 2024 Form 10-K, for more information on the Company’s net investment hedge. |
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