Investments

9 Months Ended

Jul. 31, 2013

Investments Disclosure [Abstract]

Investments

5. Investments

The following is a summary of investments at July 31, 2013 and October 31, 2012:

(in thousands)		July 31, 2013		October 31, 2012
Investment securities, trading:
Cash management assets		$	10,477	$	-
Consolidated sponsored funds			181,275		157,405
Separately managed accounts			57,373		32,848
Total investment securities, trading			249,125		190,253
Investment securities, available-for-sale			17,457		31,148
Investment in non-consolidated CLO entity			317		350
Investments in equity method investees			271,044		257,652
Investments, other			7,531		7,530
Total investments(1)		$	545,474	$	486,933
(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 cash management assets held by the Company, including certificates of deposit, commercial paper and corporate debt securities with original maturities ranging from three months up to twenty-four months, and debt and equity securities held in the portfolios of consolidated sponsored funds and separately managed accounts.A separately managed account seeded by the Company for product development purposes is not a legal entity subject to consolidation, but rather an individual portfolio of securities in the Company's name managed to establish an investment track record. As a result, the Company looks through the construct of the portfolio to the underlying debt and equity securities and treats these securities as trading investments for accounting and disclosure purposes.The following is a summary of the fair value of investments classified as trading at July 31, 2013 and October 31, 2012:

(in thousands)	July 31, 2013		October 31, 2012
Cash management assets	$	10,477	$	-
Debt securities - consolidated sponsored funds and
separately managed accounts		148,426		70,805
Equity securities - consolidated sponsored funds and
separately managed accounts		90,222		119,448
Total investment securities, trading	$	249,125	$	190,253

The Company seeds new investment strategies on a regular basis as a means of establishing investment records that can be used in marketing those strategies to retail and institutional clients. New investment strategies may be seeded as either sponsored funds or separately managed accounts. During the nine months ended July 31, 2013, the Company seeded investments in10sponsored funds and 15 separately managed accounts; during the nine months ended July 31, 2012, the Company seeded investments in14sponsored funds and 4 separately managed accounts.

The Company recognizedtrading (losses) gainsrelated to trading securities still held at the reporting date of $(5.0)million and $(1.0) million for the three months ended July 31, 2013 and 2012, respectively, and $10.9 million and $5.8millionfor the nine months ended July 31, 2013 and 2012, respectively.

Investment securities, available-for-sale

Investment securities, available-for-sale, consist exclusively of seed investments in certain sponsored funds, privately offered equity funds and closed-end funds, where the company has less than a 20 percent interest in the fund.The following is a summary of thegross unrealized gains and (losses) included in accumulated other comprehensive income related to securities classified as available-for-sale at July 31, 2013 and October 31, 2012:

July 31, 2013				Gross Unrealized
(in thousands)	Cost		Gains		Losses		Fair Value
Investment securities, available-for-sale	$	10,939	$	6,609	$	(91)	$	17,457
October 31, 2012				Gross Unrealized
(in thousands)	Cost		Gains		Losses		Fair Value
Investment securities, available-for-sale	$	22,331	$	8,835	$	(18)	$	31,148

Net unrealized holdinggains (losses)on investment securities, available-for-sale, included in other comprehensive (loss) income were $0.6 million and $(0.3)million for the three months endedJuly 31, 2013 and 2012, respectively, and$(2.3) millionand $2.5million for thenine months endedJuly 31,2013 and 2012, respectively.

The Company reviewed gross unrealized losses of $91,000 as of July 31, 2013 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 $1.2million at July 31, 2013. 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 investmentsclassified as available-for-sale for the three and nine months endedJuly 31, 2013 and 2012:

	Three Months Ended				Nine Months Ended
	July 31,				July 31,
(in thousands)	2013		2012		2013		2012
Gains	$	415	$	41	$	5,666	$	288
Losses		(235)		(230)		(235)		(353)
Net realized gains (losses)	$	180	$	(189)	$	5,431	$	(65)

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 July 31,2013, the investment in Hexavest was comprised of $5.0million of equity in the net assets of Hexavest, intangible assets of $39.7 million, goodwill of $142.6 million and a deferred tax liability of $10.7 million, for a total carrying value of $176.6 million. 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, if made, will 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 $8.1 million was assigned to this option. The option is included in other assets in the Company's Consolidated Balance Sheet at July 31,2013 and 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 $5.0million and $9.8 million at July 31, 2013 and October 31, 2012, respectively.

The Company had equity-method investments in the following sponsored funds as of July 31, 2013 and October 31, 2012:

		Equity Ownership Interest (%)		Carrying Value ($)(1)
		July 31,	October 31,		July 31,		October 31,
(dollar amounts in thousands)		2013	2012		2013		2012
Eaton Vance Atlanta Capital Select
Equity Fund		39%	-	$	23,835	$	-
Eaton Vance Hexavest Global Equity Fund		35%	-		23,308		-
Eaton Vance Real Estate Fund		39%	48%		13,465		16,494
Eaton Vance Municipal
Opportunities Fund		32%	-		10,250		-
Eaton Vance Focused Value
Opportunities Fund		39%	-		6,609		-
Eaton Vance Focused Growth
Opportunities Fund		41%	-		6,416		-
Eaton Vance Tax-Advantaged Bond
Strategies Long Term Fund		28%	31%		5,609		10,346
Eaton Vance Richard Bernstein
All Asset Strategy Fund		-	44%		-		23,341
AGF Floating Rate Income Fund		-	21%		-		15,334
Parametric Structured Currency Fund		-	33%		-		1,043
Total				$	89,492	$	66,558
(1)	The carrying value of equity method investments in Eaton Vance-managed 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. Not shown are Company
	investments in certain of the above-listed funds that were not accounted for as equity method investments as of the
	indicated date.

The Company did not recognize any impairment losses related to its investments in equity method investeesduring the three and nine months ended July 31, 2013 and 2012, respectively.

During the nine months endedJuly 31, 2013 and 2012, the Company received dividends of $13.2 million and $11.1 million, respectively, fromits investments in equity method investees.