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INVESTMENTS
12 Months Ended
Dec. 31, 2021
Investments [Abstract]  
INVESTMENTS INVESTMENTS
Corporate Investments
Corporate investments may consist of investments in funds, companies in which the Company does not have a controlling financial interest, and non-investment grade debt securities. Investments for which the Company is deemed to exert significant influence are accounted for under the equity method of accounting and reflect the Company’s ownership interest in each fund or company. In the case of investments for which the Company is not deemed to exert significant influence or control, the fair value option of accounting has been elected. Investment income represents the Company’s pro-rata share of income or loss from these funds or companies, or the change in fair value of the investment, as applicable. The Company’s general partnership interests are substantially illiquid. While investments in funds reflect each respective fund’s holdings at fair value, equity-method investments in companies are not adjusted to reflect the fair value of the underlying company. The fair value of the underlying investments in Oaktree funds is based on the Company’s assessment, which takes into account expected cash flows, earnings multiples and/or comparisons to similar market transactions, among other factors. Valuation adjustments reflecting consideration of credit quality, concentration risk, sales restrictions and other liquidity factors are integral to valuing these instruments.
Corporate investments consisted of the following:
As of December 31,
Corporate Investments20212020
Equity-method investments:
Funds
$915,185 $951,660 
Companies
36,225 4,863 
Other investments, at fair value71,154 15,429 
Total corporate investments$1,022,564 $971,952 
The components of investment income are set forth below:
Year Ended December 31,
Investment Income (Loss)202120202019
Equity-method investments:
Funds
$203,142 $117,866 $68,145 
Companies
9,086 1,008 57,475 
Other investments, at fair value(9,187)(15,046)20,949 
Total investment income$203,041 $103,828 $146,569 
Equity-method Investments
The Company’s equity-method investments include its investments in Oaktree funds for which it serves as general partner, and other third-party funds and companies that are not consolidated, but for which the Company is deemed to exert significant influence. The Company’s share of income or loss generated by these investments is recorded within investment income in the consolidated statements of operations. The Company’s equity-method investments in Oaktree funds principally reflect the Company’s general partner interests in those funds, which typically does not exceed 2.5% in each fund. The Oaktree funds are investment companies that follow a specialized basis of accounting established by GAAP.
Each reporting period, the Company evaluates each of its equity-method investments to determine if any are considered significant, as defined by the SEC. As of December 31, 2021 and 2020, or for the years ended December 31, 2021, 2020 and 2019, no individual equity-method investment met the significance criteria.
Summarized financial information of the Company’s equity-method investments is set forth below:
As of December 31,
Statements of Financial Condition20212020
Assets:
Cash and cash-equivalents$4,116,251 $3,627,763 
Investments, at fair value52,629,756 42,314,215 
Other assets1,216,301 1,512,269 
Total assets
$57,962,308 $47,454,247 
Liabilities and Capital:
Debt obligations$3,477,050 $5,959,409 
Other liabilities8,112,941 3,018,263 
Total liabilities
11,589,991 8,977,672 
Total capital
46,372,317 38,476,575 
Total liabilities and capital
$57,962,308 $47,454,247 
Year Ended December 31,
202120202019
Statements of Operations
Revenues / investment income$1,932,884 $5,061,676 $766,096 
Interest expense(184,829)(341,823)(150,078)
Other expenses(795,570)(1,607,354)(402,814)
Net realized and unrealized gain on investments10,242,513 7,202,148 1,077,761 
Net income
$11,194,998 $10,314,647 $1,290,965 
Other Investments, at Fair Value
Other investments, at fair value primarily consist of: (a) investments in certain Oaktree and non-Oaktree funds, (b) non-investment grade debt securities, and (c) derivatives utilized to hedge the Company’s exposure to investment income earned from its funds.
The following table summarizes net gains (losses) attributable to the Company’s other investments:
Year Ended December 31,
202120202019
Realized gain$9,306 $8,946 $7,763 
Net change in unrealized gain (loss)(18,493)(23,992)13,186 
Total gain (loss)$(9,187)$(15,046)$20,949 
Investments of Consolidated Funds
Investments, at Fair Value
Investments held and securities sold short by the consolidated funds are summarized below:
Fair Value as of December 31,Fair Value as a Percentage of Investments of Consolidated Funds as of December 31,
Investments2021202020212020
United States:    
Debt securities:    
Communication services$635,930 $554,779 5.6 %7.1 %
Consumer discretionary665,405 568,195 5.8 7.3 
Consumer staples190,391 118,641 1.7 1.5 
Energy354,585 232,309 3.1 3.0 
Financials463,412 287,291 4.0 3.7 
Health care459,713 410,317 4.0 5.3 
Industrials891,850 727,471 7.8 9.3 
Information technology685,959 504,442 6.0 6.5 
Materials436,434 251,978 3.8 3.2 
Real estate202,131 111,622 1.8 1.4 
Utilities305,220 264,758 2.7 3.4 
Other10,683 11,847 0.1 0.2 
Total debt securities (cost: $5,303,858 and $4,064,289 as of December 31, 2021 and 2020, respectively)
5,301,713 4,043,650 46.3 51.9 
Equity securities:    
Communication services54,635 16,822 0.5 0.2 
Consumer discretionary126,978 604 1.1 0.0 
Energy369,912 21,747 3.2 0.3 
Financials151,501 85,715 1.3 1.1 
Health care33,475 — 0.3 — 
Industrials246,856 8,752 2.2 0.1 
Materials82,273 — 0.7 — 
Utilities81,989 77,085 0.7 1.0 
Total equity securities (cost: $1,086,667 and $282,682 as of December 31, 2021 and 2020, respectively)
1,147,619 210,725 10.0 2.7 
Real estate:
Real estate— 6,879 — 0.1 
Total real estate securities (cost: $— and $6,760 as of December 31, 2021 and 2020, respectively)
— 6,879 — 0.1 
Fair Value as of December 31,Fair Value as a Percentage of Investments of Consolidated Funds as of December 31,
Investments2021202020212020
Europe:  
Debt securities:    
Communication services$756,728 $471,595 6.6 %6.0 %
Consumer discretionary915,535 755,084 8.0 9.7 
Consumer staples206,590 219,934 1.8 2.8 
Energy1,251 8,033 0.0 0.1 
Financials98,126 75,988 0.9 1.0 
Health care751,936 629,210 6.6 8.1 
Industrials656,033 487,243 5.7 6.2 
Information technology383,041 255,662 3.3 3.3 
Materials466,181 303,468 4.1 3.9 
Real estate34,116 26,100 0.3 0.3 
Utilities1,777 9,397 0.0 0.1 
Other15,049 4,628 0.1 0.1 
Total debt securities (cost: $4,289,708 and $3,233,125 as of December 31, 2021 and 2020, respectively)
4,286,363 3,246,342 37.4 41.6 
Equity securities:
Consumer discretionary102,919 — 0.9 — 
Financials19,987 2,917 0.2 0.0 
Industrials27,475 — 0.2 — 
Total equity securities (cost: $119,114 and $2,919 as of December 31, 2021 and 2020, respectively)
150,381 2,917 1.3 0.0 
Real estate:
Real estate33,834 — 0.3 — 
Total real estate securities (cost: $34,927 and $— as of December 31, 2021 and 2020, respectively)
33,834 — 0.3 — 
Asia and other:    
Debt securities:    
Communication services6,087 18,741 0.1 0.2 
Consumer discretionary71,082 35,580 0.6 0.5 
Consumer staples13,378 23,755 0.1 0.3 
Energy24,325 9,247 0.2 0.1 
Financials14,739 12,335 0.1 0.2 
Health care4,084 1,084 0.0 0.0 
Industrials7,084 4,759 0.1 0.1 
Information technology714 3,631 0.0 0.0 
Materials121,151 68,791 1.1 0.9 
Real estate131,155 75,187 1.1 1.0 
Utilities3,743 9,619 0.0 0.1 
Other9,482 26,067 0.1 0.3 
Total debt securities (cost: $417,825 and $288,452 as of December 31, 2021 and 2020, respectively)
407,024 288,796 3.6 3.7 
Fair Value as of December 31,Fair Value as a Percentage of Investments of Consolidated Funds as of December 31,
Investments2021202020212020
Asia and other:
Equity securities:    
Consumer discretionary$1,057 $— 0.0 %— %
Energy8,332 — 0.1 — 
Industrials81,782 — 0.7 — 
Real estate38,614 — 0.3 — 
Utilities176 — 0.0 — 
Total equity securities (cost: $120,308 and $0 as of December 31, 2021 and 2020, respectively)
129,961 — 1.1 — 
Total debt securities9,995,100 7,578,788 87.2 97.2 
Total equity securities1,427,961 213,642 12.5 2.7 
Total real estate33,834 6,879 0.3 0.1 
Total investments, at fair value$11,456,895 $7,799,309 100.0 %100.0 %
As of December 31, 2021 and 2020, no single issuer or investment had a fair value that exceeded 5% of Oaktree’s total consolidated net assets.  
Net Gains (Losses) From Investment Activities of Consolidated Funds
Net gains (losses) from investment activities in the consolidated statements of operations consist primarily of realized and unrealized gains and losses on the consolidated funds’ investments (including foreign exchange gains and losses attributable to foreign-denominated investments and related activities) and other financial instruments. Unrealized gains or losses result from changes in the fair value of these investments and other financial instruments. Upon disposition of an investment, unrealized gains or losses are reversed and an offsetting realized gain or loss is recognized in the current period.
The following table summarizes net gains (losses) from investment activities:
Year Ended December 31,
 202120202019
Net Realized Gain (Loss) on InvestmentsNet Change in Unrealized Appreciation (Depreciation) on InvestmentsNet Realized Gain (Loss) on InvestmentsNet Change in Unrealized Appreciation (Depreciation) on InvestmentsNet Realized Gain (Loss) on InvestmentsNet Change in Unrealized Appreciation (Depreciation) on Investments
Investments and other financial instruments
$25,599 $135,306 $(8,926)$(137,882)$(11,227)$137,521 
CLO liabilities (1)
(6,951)(14,370)(85,592)(21,971)— (131,948)
Foreign-currency forward contracts (2)
6,232 4,477 (11,184)(23,813)(6,546)4,364 
Total-return and interest-rate swaps (2)
(92)(57)(148)(69)— — 
Options and futures (2)
(2,550)(3,697)(107)(112)— — 
Warrants (2)
— 858 — — — — 
Total$22,238 $122,517 $(105,957)$(183,847)$(17,773)$9,937 
(1)    Represents the net change in the fair value of CLO liabilities based on the more observable fair value of CLO assets, as measured under the CLO measurement guidance. Please see note 2 for more information.
(2)    Please see note 7 for additional information.