BRIGHTSPHERE INVESTMENT GROUP INC. Unless we state otherwise or the context otherwise requires, references in this Quarterly Report on Form 10-Q to "BrightSphere" or "BSIG" refer toBrightSphere Investment Group Inc. , references to the "Company" refer to BSIG, and references to "we," "our" and "us" refer to BSIG and its consolidated subsidiaries and equity-accounted Affiliate, excluding discontinued operations. References to the holding company or "Center" excluding the Affiliates refer toBrightSphere Inc. , or "BSUS," aDelaware corporation and wholly owned subsidiary of BSIG. Unless we state otherwise or the context otherwise requires, references in this Quarterly Report on Form 10-Q to "Affiliates" or an "Affiliate" refer to the asset management firms in which we have or had an ownership interest. References in this Quarterly Report on Form 10-Q to "OM plc " refer toOld Mutual plc , our former parent. None of the information in this Quarterly Report on Form 10-Q constitutes either an offer or a solicitation to buy or sell any of our Affiliates' products or services, nor is any such information a recommendation for any of our Affiliates' products or services. The following discussion of our financial condition and results of operations should be read in conjunction with our Condensed Consolidated Financial Statements and related notes which appear elsewhere in this Quarterly Report on Form 10-Q. This discussion contains forward-looking statements that involve risks and uncertainties. See "Forward-Looking Statements" at the end of this Item 2 for more information. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of various factors, including those discussed below. This Management's Discussion and Analysis of Financial Condition and Results of Operations, or MD&A, is designed to provide a reader of our financial statements with a narrative from the perspective of our management on our financial condition, results of operations, liquidity and certain other factors that may affect our future results.
Our MD&A is presented in five sections:
•Overview provides a brief description of our business. It includes information on our reporting segment and underlying Affiliate, a summary of The Economics of Our Business and an explanation of How We Measure Performance using a non-GAAP measure which we refer to as economic net income, or ENI. This section also provides a Summary Results of Operations and information regarding our Assets Under Management by strategy, client type and location, and net flows by segment, client type and client location.
•U.S. GAAP Results of Operations for the Three and Nine Months Ended
•Non-GAAP Supplemental Performance Measure - Economic Net Income and Segment Analysis includes an explanation of the key differences betweenU.S. GAAP net income and ENI, the key measure management uses to evaluate our performance. This section also provides a reconciliation betweenU.S. GAAP net income attributable to controlling interests and ENI for the three and nine months endedSeptember 30, 2022 and 2021 as well as a reconciliation of key ENI operating items including ENI revenue and ENI operating expenses. This section also provides key non-GAAP operating metrics. In addition, this section provides segment analysis for our business segments. •Capital Resources and Liquidity discusses our key balance sheet data. This section discusses Cash Flows from the business; Adjusted EBITDA;Future Capital Needs; Borrowings and Long-Term Debt. The discussion of Adjusted EBITDA includes an explanation of how we calculate Adjusted EBITDA and a reconciliation ofU.S. GAAP net income attributable to controlling interests to Adjusted EBITDA. •Critical Accounting Policies and Estimates provides a discussion of the key accounting policies and estimates that we believe are the most critical to an understanding of our results of operations and financial condition. These accounting policies and estimates require complex management judgment regarding matters that are highly uncertain at the time the policies were applied and estimates were made. 33
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Overview
We are a global asset management holding company headquartered inBoston, Massachusetts . We historically held interests in a group of investment management firms (the "Affiliates") individually headquartered inthe United States . We have completed the disposition of certain Affiliates and currently operate our business through the following segment: •Quant & Solutions-comprised of versatile, often highly-tailored strategies that leverage data and technology in a computational, factor-based investment process across a range of asset classes in developed and emerging markets, including global, non-U.S. and small-cap equities, as well as managed volatility, ESG, multi-asset, equity alternatives, and long/short strategies. This segment is comprised of our interest in our sole Affiliate,Acadian Asset Management LLC ("Acadian").
Through Acadian, we offer a diverse range of actively-managed investment strategies and products to institutional investors around the globe.
The corporate head office is included within the Other category, along with our previously disposed Affiliates,Campbell Global, LLC ("Campbell Global") andInvestment Counselors of Maryland, LLC ("ICM"), for the three and nine months endedSeptember 30, 2021 . We completed the sale of our equity interests in ICM inJuly 2021 . We completed the sale of our equity interest in Campbell Global inAugust 2021 . The corporate head office expenses are not allocated to the Company's business segment but the Chief Operating Decision Maker ("CODM") does consider the cost structure of the corporate head office when evaluating the financial performance of our segment. UnderU.S. GAAP, Acadian is consolidated into our financial statements. We may also be required to consolidate Acadian's sponsored investment entities, or Funds, due to the nature of our decision-making rights, our economic interests in these Funds or the rights of third party clients in those Funds.
Recent Developments
Russia Invasion of
Russia's military invasion ofUkraine inFebruary 2022 , the resulting responses by theU.S. and other countries (including the imposition of broad-ranging economic sanctions), and the potential for wider conflict has increased volatility and uncertainty in global financial markets and adversely affected regional and global economies. Although our overall exposure to Russian securities is limited, the extent and duration ofRussia's military actions and the repercussions of such actions (including any retaliatory actions or countermeasures that may be taken by those subject to sanctions, such as cyber attacks) are impossible to predict, but could result in significant market disruptions, including in certain industries or sectors, and may negatively affect global supply chains, inflation and global growth. 34
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The Economics of Our Business
Our profitability is affected by a variety of factors including the level and composition of our average assets under management, or AUM, fee rates charged on AUM and our expense structure. We earn management fees based on assets under management. Approximately 80% of our management fees for the three months endedSeptember 30, 2022 were calculated based on average AUM (calculated on either a daily or monthly basis) with the remainder of our management fees calculated based on period-end AUM or other measuring methods. Changes in the levels of our AUM are driven by our investment performance and net client cash flows. We may also earn performance fees, or adjust management fees, when certain accounts differ in relation to relevant benchmarks or exceed or fail to exceed required returns. Approximately$11 billion , or 13%, of our AUM are in accounts in which we participate in the performance fee. The majority of these performance fees are calculated based on value added over the relevant benchmarks on a rolling one-year basis. Our largest expense item is compensation and benefits paid to our employees, which consists of both fixed and variable components. Fixed compensation and benefits represents base salaries and wages, payroll taxes and the costs of our employee benefit programs. Variable compensation, calculated as described below, may be awarded in cash, equity, or profit interests.
The arrangements in place with Acadian result in the sharing of economics between BSUS and Acadian's key management personnel using a profit-sharing model. Profit sharing affects two elements within our earnings: (i) the calculation of variable compensation and (ii) the level of equity or profit interests distribution to our employees.
Variable compensation is the portion of earnings that is contractually allocated to Acadian employees as a bonus pool, typically representing a fixed percentage of earnings before variable compensation, which is measured as revenues less fixed compensation and benefits and other operating and administrative expenses. Profits after variable compensation are shared between us and Acadian key employee equity holders according to our respective equity or profit interests ownership. The sharing of profits in this manner ensures that the economic interests of Acadian key employees and those of BSUS are aligned, both in terms of generating strong annual earnings as well as investing those earnings back into the business in order to generate growth over the long term. We view profit sharing as an attractive operating model, as it allows us to share in the benefits of operating leverage as the business grows, and ensures all equity and profit interests holders are incentivized to achieve that growth. Equity or profit interests owned by Acadian key employees are awarded as part of their variable compensation arrangements. Over time, key employee-owned equity or profit interests are recycled from one generation of employee-owners to the next, either by the next generation purchasing equity or profit interests directly from retiring principals, or by key employees forgoing cash bonuses in exchange for the equivalent value in Acadian equity or profit interests. The recycling of equity or profit interests is often facilitated by BSUS; see "-U.S. GAAP Results of Operations-U.S. GAAP Expenses-Compensation and Benefits Expense" for a further discussion. How We Measure Performance
We manage our business based on one business segment, reflecting how our management assesses the performance of our business.
In measuring and monitoring the key components of our earnings, our management
uses a non-GAAP financial measure, ENI, to evaluate the financial performance
of, and to make operational decisions for, our business. We also use ENI to make
resource allocation decisions, determine appropriate levels of investment or
dividend payout, manage balance sheet leverage, determine variable compensation
and equity distributions, and incentivize management. It is an important measure
in evaluating our financial performance because we believe it most accurately
represents our operating performance and cash generation capability.
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ENI differs from net income determined in accordance with U.S. GAAP as a result
of both the reclassification of certain income statement items and the exclusion
of certain non-cash or non-recurring income statement items. In particular, ENI
excludes non-cash charges representing the changes in the value of Affiliate
equity and profit interests held by Affiliate key employees, the results of
discontinued operations which are no longer part of our business, restructuring
costs, capital transaction costs, seed capital and co-investment gains, losses
and related financing costs and that portion of consolidated Funds which are not
attributable to our stockholders.
ENI revenue is primarily comprised of the fee revenues paid to us by our clients
for our advisory services and earnings from our former equity-accounted
Affiliate. Revenue included within ENI differs from U.S. GAAP revenue in that it
excludes amounts from consolidated Funds which are not attributable to our
stockholders, it excludes reimbursement of certain costs we paid on behalf of
our customers and includes our share of earnings from our former
equity-accounted Affiliate.
ENI expenses are calculated to reflect all usual expenses from ongoing
continuing operations attributable to our stockholders. Expenses included within
ENI differ from U.S. GAAP expenses in that they exclude amounts from
consolidated Funds which are not attributable to our stockholders, revaluations
of Affiliate key employee owned equity and profit interests, amortization and
impairment of acquired intangibles and other acquisition-related items, costs we
paid on behalf of our customers which were subsequently reimbursed and certain
other non-cash expenses.
"Non-controlling interests" is a concept under U.S. GAAP that identifies net
components of revenues and expenses that are not attributable to our
stockholders. For example, the portion of the net income (loss) of any
consolidated Fund that is attributable to the outside investors or clients of
the consolidated Fund is included in "Non-controlling interests" in our
Condensed Consolidated Financial Statements. Conversely, "controlling interests"
is the portion of revenue or expense that is attributable to our stockholders.
For a more detailed discussion of the differences between
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Summary Results of Operations
The following table summarizes our unaudited results of operations for the three
and nine months ended
($ in millions, unless otherwise noted) Three Months Ended September 30, Nine Months Ended September 30,
2022 vs. 2022 vs.
2022 2021 2021 2022 2021 2021
U.S. GAAP Basis
Revenue $ 86.8 $ 117.9 $ (31.1) $ 294.5 $ 360.9
25.3 57.4 (32.1) 100.0 119.6 (19.6)
Net income from continuing operations attributable to controlling interests
17.8 42.9 (25.1) 70.2 86.1 (15.9)
Net income attributable to controlling interests 17.8 229.5 (211.7) 70.2 789.2 (719.0) U.S. GAAP operating margin(1) 34.7 % 24.3 % 1033 bps 40.7 % 27.0 % 1379 bps Earnings per share, basic ($)$ 0.43 $ 2.88 $ (2.45) $ 1.66 $ 9.93 $ (8.27) Earnings per share, diluted ($)$ 0.42 $ 2.76 $ (2.34) $ 1.62 $ 9.53 $ (7.91) Basic shares outstanding (in millions) 41.4 79.6 (38.2) 42.3 79.4
(37.1)
Diluted shares outstanding (in millions) 42.4 83.2 (40.8) 43.4 82.8
(39.4)
Economic Net Income Basis(2)(3) (Non-GAAP measure used by management) ENI revenue(4)$ 86.8 $ 117.4 $ (30.6) $ 294.5 $ 360.6 $ (66.1) Pre-tax economic net income(5) 17.1 32.6 (15.5) 72.9 108.0 (35.1) Adjusted EBITDA 26.0 44.2 (18.2) 103.0 142.6 (39.6) ENI operating margin(6) 25.9 %
37.0 % (1105) bps 30.5 % 37.2 % (666) bps Economic net income(7) 12.5 23.6 (11.1) 53.2 79.0 (25.8) ENI diluted EPS ($)$ 0.30 $ 0.28 $ 0.02 $ 1.23 $ 0.95 $ 0.28 Other Operational Information Assets under management (AUM) at period end (in billions)$ 83.3 $ 113.7 $ (30.4) $ 83.3 $ 113.7 $ (30.4) Net client cash flows (in billions) 0.6 (0.7) 1.3 (4.4) (5.1)
0.7
Annualized revenue impact of net flows(8) 0.3 (1.6) 1.9 (8.2) (10.4) 2.2
(1)
(2)Economic net income is a non-GAAP measure we use to evaluate the performance of our business. For a reconciliation toU.S. GAAP financial information and a further discussion of economic net income refer to "-Non-GAAP Supplemental Performance Measure-Economic Net Income and Segment Analysis." (3)Excludes restructuring costs of$0.1 million and costs associated with the transfer of an insurance policy from our former parent of$0.3 million for the three months endedSeptember 30, 2022 . Excludes restructuring costs of$0.2 million and costs associated with the transfer of an insurance policy from our former parent of$0.9 million for the nine months endedSeptember 30, 2022 . Excludes income from discontinued operations attributable to controlling interests, as well as restructuring costs at the Center and Affiliates of$0.5 million and costs associated with the transfer of an insurance policy from our former parent of$0.3 million and the gain on sale of subsidiaries of$34.6 million for the three months endedSeptember 30, 2021 . Excludes income from discontinued operations attributable to controlling interests, as well as restructuring costs at the Center and Affiliates of$4.0 million , costs associated with the transfer of an insurance policy from our former parent of$0.9 million and the gain on sale of subsidiaries of$33.3 million for the nine months endedSeptember 30, 2021 . 37 -------------------------------------------------------------------------------- Table of Contents (4)ENI revenue is the ENI measure which corresponds toU.S. GAAP revenue.
(5)Pre-tax economic net income is the ENI measure which corresponds to
(6)ENI operating margin is a non-GAAP efficiency measure, calculated based on ENI operating earnings divided by ENI revenue. ENI operating earnings is calculated as ENI revenue, less ENI operating expense, less ENI variable compensation. The ENI operating margin corresponds to ourU.S. GAAP operating margin, excluding the effect of consolidated Funds.
(7)Economic net income is the ENI measure which is most directly comparable to
(8)Annualized revenue impact of net flows represents annualized management fees expected to be earned on new accounts and net assets contributed to existing accounts (inflows), less the annualized management fees lost on terminated accounts or net assets withdrawn from existing accounts (outflows), plus revenue impact from reinvested income and distribution. Annualized management fee for client flow is calculated by multiplying the annual gross fee rate for the relevant account by the net assets gained in the account in the event of a positive flow, excluding any current or future market appreciation or depreciation, or the net assets lost in the account in the event of an outflow, excluding any current or future market appreciation or depreciation. In addition, reinvested income and distribution for each segment is multiplied by average fee rate for the respective segment to compute the revenue impact. For a further discussion of the uses and limitations of the annualized revenue impact of net flows, see "Assets Under Management" herein.
Assets Under Management
The following table presents our assets under management as of each of the dates indicated: ($ in billions) September 30, 2022 December 31, 2021 Acadian Asset Management $ 83.3 $ 117.2 Our strategies include:
i.Developed Markets equity, which includes Quant & Solutions
ii.Emerging Markets equity, which includes Quant & Solutions equity investments in the emerging and frontier markets.
The following table presents our assets under management by strategy as of each
of the dates indicated:
($ in billions) September 30, 2022 December 31, 2021
Developed Markets 64.7 89.3
Emerging Markets 18.6 27.9
Total assets under management $ 83.3 $ 117.2
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The following table shows assets under management by client type as of each of
the dates indicated:
($ in billions) September 30, 2022 December 31, 2021
AUM % of total AUM % of total
Public/Government $ 34.5 41.4 % $ 52.6 44.9 %
Commingled Trust/UCITS 19.2 23.0 % 26.1 22.3 %
Corporate/Union 12.4 14.9 % 15.8 13.5 %
Sub-advisory 10.7 12.8 % 14.1 12.0 %
Endowment/Foundation 2.5 3.0 % 3.3 2.8 %
Mutual Fund 0.6 0.7 % 1.0 0.9 %
Other 3.4 4.2 % 4.3 3.6 %
Total assets under management $ 83.3 $ 117.2
The following table shows assets under management by client location as of each
of the dates indicated:
($ in billions) September 30, 2022 December 31, 2021
AUM % of total AUM % of total
U.S. $ 56.0 67.2 % $ 77.1 65.8 %
Europe 14.4 17.3 % 20.1 17.2 %
Asia 2.7 3.2 % 5.5 4.7 %
Australia 5.0 6.0 % 5.9 5.0 %
Other 5.2 6.3 % 8.6 7.3 %
Total assets under management $ 83.3 $ 117.2 AUM flows and the annualized revenue impact of net flows
Net client cash flows and revenue impact of net client cash flows for all periods include reinvested income and distributions, and exclude realizations. Reinvested income and distributions represent investment yield that is reinvested back into the portfolios as opposed to distributed as cash.
In the following table, we present our asset flows and market appreciation
(depreciation) by segment. We also present a key metric used to better
understand our asset flows, the annualized revenue impact of net client cash
flows. Annualized revenue impact of net flows represents annualized management
fees expected to be earned on new accounts and net assets contributed to
existing accounts (inflows), less the annualized management fees lost on
terminated accounts or net assets withdrawn from existing accounts (outflows),
plus revenue impact from reinvested income and distributions. Annualized
management fee for client flow is calculated by multiplying the annual gross fee
rate for the relevant account with the inflow or the outflow, including our
equity-accounted Affiliate. In addition, reinvested income and distributions for
each segment is multiplied by average fee rate for the respective segment to
compute the revenue impact.
The annualized revenue impact of net flows metric is designed to provide
investors with a better indication of the potential financial impact of net
client cash flows, however it has certain limitations. For instance, it does not
include assumptions for the next twelve months' market appreciation or
depreciation and investment performance associated with the assets gained or
lost. Nor does it account for factors such as future client terminations or
additional contributions or withdrawals over the next twelve months.
Additionally, the basis points reported are fee rates based on the asset levels
at the time of the transactions and do not consider the fact that client fee
rates may change over the next twelve months.
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Table of Contents The following table summarizes our asset flows and market appreciation (depreciation) by segment for each of the periods indicated:
Three Months Ended September 30, Nine Months Ended September 30,
($ in billions, unless otherwise noted) 2022 2021 2022 2021
Quant & Solutions
Beginning balance $ 90.5 $ 117.8 $ 117.2 $ 107.0
Gross inflows 2.0 2.8 8.0 7.7
Gross outflows (2.3) (4.2) (15.2) (15.3)
Reinvested income and distributions 0.9 0.7 2.8 2.0
Net flows 0.6 (0.7) (4.4) (5.6)
Market appreciation (depreciation) (7.8) (3.4) (29.5) 11.2
Other - - - 1.1
Ending balance $ 83.3 $ 113.7 $ 83.3 $ 113.7
Average AUM(1) $ 90.3 $ 116.8 $ 100.9 $ 113.9
Liquid Alpha
Beginning balance $ - $ - $ - $ 3.2
Sale of Affiliate - - - -
Gross inflows - - - -
Gross outflows - - - -
Reinvested income and distributions - - - -
Net flows - - - -
Market appreciation - - - -
Other(2) - - - (3.2)
Ending balance $ - $ - $ - $ -
Average AUM $ - $ - $ - $ -
Average AUM of consolidated Affiliates $ - $ - $ - $ -
Other(2)
Beginning balance $ - $ 9.1 $ - $ 5.8
Sale of Affiliates - (8.9) - (8.9)
Gross inflows - - - 0.7
Gross outflows - - - (0.2)
Net flows - - - 0.5
Market appreciation - (0.2) - 0.6
Other - - - 2.0
Ending balance $ - $ - $ - $ -
Average AUM $ 5.1 $ - $ 7.4
Average AUM of consolidated Affiliates $ - $ 3.1 $ - $ 4.2
Total
Beginning balance $ 90.5 $ 126.9 $ 117.2 $ 116.0
Sale of Affiliate - (8.9) - (8.9)
Gross inflows 2.0 2.8 8.0 8.4
Gross outflows (2.3) (4.2) (15.2) (15.5)
Reinvested income and distributions 0.9 0.7 2.8 2.0
Net flows 0.6 (0.7) (4.4) (5.1)
Market appreciation (depreciation) (7.8) (3.6) (29.5) 11.8
Other - - - (0.1)
Ending balance $ 83.3 $ 113.7 $ 83.3 $ 113.7
Average AUM $ 90.3 $ 121.9 $ 100.9 $ 121.3
Average AUM of consolidated Affiliates $ 90.3 $
119.9
Annualized basis points: inflows 43.7 47.1 48.9 48.1 Annualized basis points: outflows 51.7 41.2 38.0 37.5 Annualized revenue impact of net flows ($ in millions) $ 0.3$ (1.6) $ (8.2) $ (10.4) 40
-------------------------------------------------------------------------------- Table of Contents (1)Average AUM equals average AUM of consolidated Affiliates. (2)ICM has been reclassified to the Other category as of the beginning of the first quarter of 2021. The Other category consists of our previously disposed affiliates, Campbell Global and ICM, for the three and nine months endedSeptember 30, 2021 .
We also analyze our asset flows by client type and client location. Our client types include:
i.Sub-advisory, which includes assets managed for underlying mutual fund and variable insurance products which are sponsored by insurance companies and mutual fund platforms, where the end client is typically retail;
ii.Institutional, which includes assets managed for public/government pension funds, includingU.S. state and local government funds and non-U.S. sovereign wealth, local government and national pension funds; also includes corporate and union-sponsored pension plans; and iii.Retail/other, which includes assets managed for mutual funds sponsored by our Affiliates, defined contribution plans and accounts managed for high net worth clients. 41
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The following table summarizes our asset flows by client type for each of the
periods indicated:
($ in billions) Three Months Ended September 30, Nine Months Ended September 30,
2022 2021 2022 2021
Sub-advisory
Beginning balance $ 11.8 $ 13.6 $ 14.1 $ 11.5
Sale of Affiliate - (0.4) - (0.4)
Gross inflows 0.2 0.2 1.0 2.1
Gross outflows (0.5) (0.2) (1.4) (1.5)
Reinvested income and distributions 0.1 0.1 0.3 0.2
Net flows (0.2) 0.1 (0.1) 0.8
Market appreciation (depreciation) (0.9) (0.2) (3.3) 1.2
Ending balance $ 10.7 $ 13.1 $ 10.7 $ 13.1
Institutional
Beginning balance $ 74.3 $ 105.5 $ 97.8 $ 97.8
Sale of Affiliate - (6.0) - (6.0)
Gross inflows 1.7 1.9 6.1 4.9
Gross outflows (1.7) (3.6) (13.0) (12.8)
Reinvested income and distributions 0.7 0.6 2.3 1.7
Net flows 0.7 (1.1) (4.6) (6.2)
Market appreciation (depreciation) (6.4) (3.3) (24.6) 9.6
Other(1) - - - (0.1)
Ending balance $ 68.6 $ 95.1 $ 68.6 $ 95.1
Retail/Other
Beginning balance $ 4.4 $ 7.8 $ 5.3 $ 6.7
Sale of Affiliate - (2.5) - (2.5)
Gross inflows 0.1 0.7 0.9 1.4
Gross outflows (0.1) (0.4) (0.8) (1.2)
Reinvested income and distributions 0.1 - 0.2 0.1
Net flows 0.1 0.3 0.3 0.3
Market appreciation (depreciation) (0.5) (0.1) (1.6) 1.0
Ending balance $ 4.0 $ 5.5 $ 4.0 $ 5.5
Total
Beginning balance $ 90.5 $ 126.9 $ 117.2 $ 116.0
Sale of Affiliate - (8.9) - (8.9)
Gross inflows 2.0 2.8 8.0 8.4
Gross outflows (2.3) (4.2) (15.2) (15.5)
Reinvested income and distributions 0.9 0.7 2.8 2.0
Net flows 0.6 (0.7) (4.4) (5.1)
Market appreciation (depreciation) (7.8) (3.6) (29.5) 11.8
Other(1) - - - (0.1)
Ending balance 83.3 113.7 83.3 113.7
(1)Other movements related to billable assets adjustment.
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Our categorization by client location includes:
i.
ii. Non-
The following table summarizes asset flows by client location for each of the periods indicated:
($ in billions) Three Months Ended September 30, Nine Months Ended September 30,
2022 2021 2022 2021
U.S.
Beginning balance $ 60.9 $ 85.9 $ 77.1 $ 77.4
Sale of Affiliate - (7.9) - (7.9)
Gross inflows 1.2 1.4 4.5 4.7
Gross outflows (1.2) (3.4) (7.3) (10.1)
Reinvested income and distributions 0.6 0.5 1.9 1.4
Net flows 0.6 (1.5) (0.9) (4.0)
Market appreciation (depreciation) (5.5) (2.4) (20.2) 8.6
Ending balance $ 56.0 $ 74.1 $ 56.0 $ 74.1
Non-U.S.
Beginning balance $ 29.6 $ 41.0 $ 40.1 $ 38.6
Sale of Affiliate - (1.0) - (1.0)
Gross inflows 0.8 1.4 3.5 3.7
Gross outflows (1.1) (0.8) (7.9) (5.4)
Reinvested income and distributions 0.3 0.2 0.9 0.6
Net flows - 0.8 (3.5) (1.1)
Market appreciation (depreciation) (2.3) (1.2) (9.3) 3.2
Other(1) - - - (0.1)
Ending balance $ 27.3 $ 39.6 $ 27.3 $ 39.6
Total
Beginning balance $ 90.5 $ 126.9 $ 117.2 $ 116.0
Sale of Affiliate - (8.9) - (8.9)
Gross inflows 2.0 2.8 8.0 8.4
Gross outflows (2.3) (4.2) (15.2) (15.5)
Reinvested income and distributions 0.9 0.7 2.8 2.0
Net flows 0.6 (0.7) (4.4) (5.1)
Market appreciation (depreciation) (7.8) (3.6) (29.5) 11.8
Other(1) - - - (0.1)
Ending balance $ 83.3 $ 113.7 $ 83.3 $ 113.7 (1)Other movements related to billable assets adjustment.
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At September 30, 2022 , our total assets under management were $83.3 billion , a
decrease of $(7.2) billion , or (8.0)%, compared to $90.5 billion at June 30,
2022 and a decrease of $(30.4) billion , or (26.7)%, compared to $113.7 billion
at September 30, 2021 . The decrease in assets under management compared to
September 30, 2021 is a result of market depreciation and net outflows in the
last twelve months. The change in assets under management during the three
months ended September 30, 2022 reflects net market depreciation of $(7.8)
billion , slightly offset by net inflows of $0.6 billion . The change in assets
under management during the nine months ended September 30, 2022 reflects net
market deprecation of $(29.5) billion , and net outflows of $(4.4) billion .
Market appreciation or depreciation reported in current and prior periods
includes changes in equity prices, as well as the impact from exchange rate
fluctuations on our foreign-denominated AUM. Given a substantial portion of our
AUM is denominated in foreign currencies, foreign exchange rate movements in
2022 had a more pronounced negative impact on AUM, as a result of the
strengthening of the U.S. dollar relative to other currencies in the current
quarter.
For the three months ended September 30, 2022 , our net flows were $0.6 billion
compared to $(2.8) billion for the three months ended June 30, 2022 and $(0.7)
billion for the three months ended September 30, 2021 . The change in net flows
during the three months ended September 30, 2022 compared to the three months
ended September 30, 2021 was primarily due to a reduction in large terminations
and withdrawals in the three months ended September 30, 2022 . Reinvested income
and distributions of $0.9 billion , $1.0 billion , and $0.7 billion are reflected
in the net flows for the three months ended September 30, 2022 , June 30, 2022
and September 30, 2021 , respectively. For the three months ended September 30,
2022 , the annualized revenue impact of the net flows was $0.3 million . This is
compared to the annualized revenue impact of net flows of $(7.4) million for the
three months ended June 30, 2022 and $(1.6) million for the three months ended
September 30, 2021 . Gross inflows of $2.0 billion during the three-month period
yielded approximately 44 bps compared to $2.8 billion yielding approximately 47
bps in the year-ago period, and gross outflows in the same period of $(2.3)
billion yielded approximately 52 bps compared to $(4.2) billion yielding
approximately 41 bps in the year-ago period.
For the nine months ended September 30, 2022 , our net flows were $(4.4) billion
compared to $(5.1) billion for the nine months ended September 30, 2021 . The
change in net flows during the nine months ended September 30, 2022 compared to
the nine months ended September 30, 2021 was primarily driven by lower outflows
in the nine months ended September 30, 2022 . Reinvested income and distributions
of $2.8 billion and $2.0 billion are reflected in the net flows for the nine
months ended September 30, 2022 and September 30, 2021 , respectively. For the
nine months ended September 30, 2022 , the annualized revenue impact of the net
flows was $(8.2) million compared to $(10.4) million for the nine months ended
September 30, 2021 . Gross inflows of $8.0 billion in the nine months ended
September 30, 2022 yielded approximately 49 bps compared to $8.4 billion
yielding approximately 48 bps in the year-ago period. Gross outflows of $(15.2)
billion yielded approximately 38 bps in the nine months ended September 30, 2022
compared to $(15.5) billion yielding approximately 38 bps in the year-ago
period.
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