Investments

12 Months Ended

Oct. 31, 2012

Investments Disclosure [Abstract]

Investments

5. Investments

The following is a summary of the carrying value of investments at October 31, 2012 and 2011:

(in thousands)	2012		2011
Investment securities, trading:
Corporate debt securities	$	-	$	4,832
Consolidated sponsored funds		157,405		143,517
Separately managed accounts		32,848		44,860
Total investment securities, trading		190,253		193,209
Investment securities, available-for-sale		31,148		39,841
Investment in non-consolidated CLO entity		350		278
Investments in equity method investees		257,652		46,900
Investments, other		7,530		7,507
Total investments(1)	$	486,933	$	287,735
(1) Excludes the Company's investment in its consolidated CLO entity, which is discussed in Note 9.

Investment securities, trading

Investment securities, trading, consist of corporate debt securities held directly by the Company and debt and equity securities held in the portfolios of consolidated sponsored funds and separately managed accounts. The following is a summary of the fair value of investments classified as trading at October 31, 2012 and 2011:

(in thousands)	2012		2011
Debt securities	$	70,805	$	85,222
Equity securities		119,448		107,987
Total investment securities, trading	$	190,253	$	193,209

The Company recognized trading gains related to trading securities still held at the reporting date of $12.1 million, $6.8 million and $1.6million for the years ended October 31, 2012, 2011 and 2010 respectively.

Investment securities, available-for-sale

Investment securities, available-for-sale, consist exclusively of seed investments in certain Company-sponsored funds. The following is a summary of the gross unrealized gains and (losses) included in accumulated other comprehensive income related to securities classified as available-for-sale at October 31, 2012and 2011:

2012				Gross Unrealized
(in thousands)	Cost		Gains		Losses		Fair Value
Sponsored funds	$	22,331	$	8,835	$	(18)	$	31,148

2011				Gross Unrealized
(in thousands)	Cost		Gains		Losses		Fair Value
Sponsored funds	$	34,368	$	5,518	$	(45)	$	39,841

Net unrealized holding gains on investment securities, available-for-sale, included in other comprehensive income were $3.3 million, $2.2 million, and $1.3 million for the years ended October 31, 2012, 2011, and 2010respectively.

The Company reviewed gross unrealized losses of $18,000as of October 31, 2012 and determined that these losses were not other-than-temporary, primarily because the Company has both the ability and intent to hold the investments for a period of time sufficient to recover such losses. The aggregate fair value of investments with unrealized losses was $0.5million at October 31, 2012. No investment with a gross unrealized loss has been in a loss position for greater than one year.

The following is a summary of the Company's realized gains and losses upon disposition of sponsored funds classified as available-for-sale for the years ended October 31, 2012, 2011, and 2010:

(in thousands)	2012		2011		2010
Gains	$	348	$	3,212	$	3,108
Losses		(440)		(2,626)		(60)
Net realized (losses) gains	$	(92)	$	586	$	3,048

Investments in CLO entities

The Company provides investment management services for, and has made investments in, a number of CLO entities. The Company's ownership interests in the unconsolidated CLO entities are carried at amortized cost unless impaired. The Company earns investment management fees, including subordinated management fees, for managing the collateral of the CLO entities. At October 31, 2012 and 2011, combined assets under management in the pools of these unconsolidated CLO entities were $1.8 billion and $1.9 billion, respectively. The Company's maximum exposure to loss as a result of its investments in the equity of unconsolidated CLO entities is the carrying value of such investments, which was $0.4 million and $0.3 million at October 31, 2012and 2011, respectively. Investors in CLO entities have no recourse against the Company for any losses sustained in the CLO structures.

The Company did not recognize any impairment losses in fiscal 2012, 2011 or 2010.

In fiscal 2011, the Company sold its subordinated interest in a non-consolidated CLO entity and recognized a realized gain of $1.9million in its Consolidated Statement of Income.

Investments in equity method investees

On August 6, 2012, the Company completed the purchase of a 49 percent interest in Hexavest Inc. (“Hexavest”), a Montreal, Canada-based investment advisor that provides discretionary management of equity and tactical asset allocations using a predominantly top-down investment style. The Company accounted for the purchase using the equity method. As of October 31, 2012, the investment in Hexavest was comprised of $3.4 million of equity in the net assets of Hexavest, intangible assets of $42.7 million, goodwill of $146.6 million and a deferred tax liability of $11.5 million, for a total carrying value of $181.2 million. The Company will be obligated to make two additional payments in respect of the acquired interest if Hexavest exceeds defined annual revenue thresholds in the first and second twelve-month periods following the closing. These payments would be considered goodwill and will be recorded as additions to the carrying amount of the equity method investment. The Company's interest in finite-lived intangible assets acquired in the transaction is being amortized over an estimated useful life of seventeen years.

In connection with the transaction, the Company also acquired an option, executable in fiscal 2017, to purchase an additional 26 percent interest in Hexavest. As part of the purchase price allocation, a value of $8.3 million was assigned to this option. The option is included in other assets in the Company's Consolidated Balance Sheet at October 31, 2012.

The Company has a 7 percent equity interest in a private equity partnership managed by a third party that invests in companies in the financial services industry. The Company's investment in the partnership was $9.8million and $18.4 million at October 31, 2012 and 2011, respectively.

In fiscal 2011, the Company sold its equity interest in Lloyd George Management (BVI) Limited (“LGM”), an investment management company based in Hong Kong that primarily manages Asia Pacific and emerging market equity funds and separate accounts, including three funds sponsored by the Company. The Company recognized gains of $2.4 million and $5.5 million in the Company's Consolidated Statements of Income in connection with the sale during fiscal 2012 and fiscal 2011, respectively.

The Company had equity interests in the following sponsored funds as of October 31, 2012 and 2011.

		Equity Ownership Interest (%)		Carrying Value ($)(1)
		October 31,	October 31,		October 31,		October 31,
(dollar amounts in thousands)		2012	2011		2012		2011
Eaton Vance Richard Bernstein
All Asset Strategy Fund		44%	-	$	23,341	$	-
Eaton Vance Real Estate Fund		48%	-		16,494		-
AGF Floating Rate Income Fund		21%	-		15,334		-
Eaton Vance Tax-Advantaged Bond
Strategies Long Term Fund		31%	-		10,346		-
Eaton Vance Parametric Structured
Currency Fund		33%	-		1,043		-
Eaton Vance Parametric Option
Absolute Return Strategy Fund		-	27%		-		19,298
Eaton Vance Parametric Structured
Commodity Strategy Fund		-	47%		-		9,190
Total				$	66,558	$	28,488
(1)	The carrying value of equity method investments in sponsored funds is measured based on the funds’ net asset values. The
	Company has the ability to redeem its investments in these funds at any time.

Summarized financial information for the Company's equity method investees as of October 31, 2012 and 2011 and for the years ended October 31, 2012, 2011 and 2010 is as follows:

		2012						2011
				Other
(in thousands)	Hexavest			Investees		Total		Total
Balance Sheet
Total assets	$	25,182	$	363,539	$	388,721	$	323,126
Total liabilities		11,544		14,351		25,895		415

		2012						2011		2010
				Other
(in thousands)	Hexavest			Investees		Total		Total		Total
Statement of Income(1)
Revenue	$	10,691	$	8,788	$	19,479	$	20,609	$	41,715
Operating income		6,060		5,286		11,346		1,469		5,069
Net income		4,714		34,339		39,053		93,896		3,741
(1) Statement of income figures are included only for the time in which the investees were accounted for under the equity method.

The Company did not recognize any impairment losses related to its investments in equity method investees during the years ended October 31,2012, 2011 or 2010.

During the years ended October 31, 2012, 2011 and 2010, the Company received dividends of $11.4 million, $1.6 million and $1.3 million, respectively, from its investments in equity method investees.

Investments, other

Investments, other, consist of certain investments carried at cost totaling $7.5 million for the years ended October 31, 2012 and 2011, respectively, including a $6.6 million non-controlling capital interest in Atlanta Capital Management Holdings, LLC (“ACM Holdings”), a partnership that owns certain non-controlling interests of Atlanta Capital. The Company's interest in ACM Holdings is non-voting and entitles the Company to receive $6.6 million when put or call options for certain non-controlling interests of Atlanta Capital are exercised. Management believes that the carrying value ofits other investments approximates their fair value.