4. Investments
A summary of the carrying value of total investments is as follows:
|
|
|
March 31, |
|
|
(in millions) |
|
2018(1) |
|
|
Debt securities: |
|
|
|
|
|
Available-for-sale investments |
|
$ |
151 |
|
|
Held-to-maturity investments |
|
|
132 |
|
|
Trading securities ($266 debt securities of consolidated sponsored investment funds) |
|
|
293 |
|
|
Total debt securities |
|
|
576 |
|
|
Equity securities at FVTNI ($284 equity securities of consolidated sponsored investment funds) |
|
|
648 |
|
|
Equity method investments(2) |
|
|
703 |
|
|
Federal Reserve Bank stock(3) |
|
|
91 |
|
|
Carried interest(4) |
|
|
32 |
|
|
Total investments |
|
$ |
2,050 |
|
|
|
|
|
|
|
|
(in millions) |
|
December 31,
2017(1) |
|
|
Available-for-sale investments |
|
$ |
103 |
|
|
Held-to-maturity investments |
|
|
102 |
|
|
Trading investments: |
|
|
|
|
|
Consolidated sponsored investment funds: |
|
|
|
|
|
Debt securities |
|
|
267 |
|
|
Equity securities |
|
|
245 |
|
|
Other equity and debt securities |
|
|
267 |
|
|
Deferred compensation plan mutual funds |
|
|
56 |
|
|
Total trading investments |
|
|
835 |
|
|
Equity method investments(2) |
|
|
816 |
|
|
Cost method investments(3) |
|
|
93 |
|
|
Carried interest(4) |
|
|
32 |
|
|
Total investments |
|
$ |
1,981 |
|
|
(1) |
Amounts at March 31, 2018 reflect the adoption of ASU 2016-01. See Note 2, Significant Accounting Policies, for further information. Amounts at December 31, 2017 reflect accounting guidance prior to ASU 2016-01. |
|
(2) |
Equity method investments primarily include BlackRock’s direct investments in certain BlackRock sponsored investment funds. |
|
(3) |
Amounts include Federal Reserve Bank stock, which is held for regulatory purposes and is restricted from sale. At December 31, 2017, amount also includes other nonmarketable securities, which were immaterial. At March 31, 2018 and December 31, 2017, there were no indicators of impairment on these investments. |
|
(4) |
Carried interest of consolidated sponsor investment funds accounted for as voting rights entities (“VREs”) represents allocations to BlackRock’s general partner capital accounts from certain funds. These balances are subject to change upon cash distributions, additional allocations or reallocations back to limited partners within the respective funds. |
Available-for-Sale Investments
At both March 31, 2018 and December 31, 2017, available-for-sale investments primarily included certain investments in CLOs. The cost of these investments approximated carrying value.
Held-to-Maturity Investments
The carrying value of held-to-maturity investments was $132 million and $102 million at March 31, 2018 and December 31, 2017, respectively. Held-to-maturity investments included foreign government debt held primarily for regulatory purposes and certain investments in CLOs. The amortized cost (carrying value) of these investments approximated fair value. At March 31, 2018, $12 million of these investments mature between five to ten years and $120 million mature after ten years.
Equity and Trading Debt Securities
A summary of the cost and carrying value of equity and trading debt securities is as follows:
|
|
|
|
|
|
|
|
March 31, 2018(1) |
|
|
(in millions) |
|
Cost |
|
|
Carrying
Value |
|
|
Trading debt securities: |
|
|
|
|
|
|
|
|
|
Corporate debt |
|
$ |
166 |
|
|
$ |
169 |
|
|
Government debt |
|
|
62 |
|
|
|
62 |
|
|
Asset/mortgage-backed debt |
|
|
62 |
|
|
|
62 |
|
|
Equity securities at FVTNI: |
|
|
|
|
|
|
|
|
|
Equity securities/multi-asset mutual funds |
|
|
577 |
|
|
|
614 |
|
|
Deferred compensation plan mutual funds |
|
|
21 |
|
|
|
34 |
|
|
Total equity and trading debt securities |
|
$ |
888 |
|
|
$ |
941 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December 31, 2017(1) |
|
|
(in millions) |
|
Cost |
|
|
Carrying
Value |
|
|
Trading investments: |
|
|
|
|
|
|
|
|
|
Deferred compensation plan mutual funds |
|
$ |
34 |
|
|
$ |
56 |
|
|
Equity securities/multi-asset mutual funds |
|
|
446 |
|
|
|
493 |
|
|
Debt securities |
|
|
|
|
|
|
|
|
|
Corporate debt |
|
|
152 |
|
|
|
157 |
|
|
Government debt |
|
|
72 |
|
|
|
73 |
|
|
Asset/mortgage backed debt |
|
|
56 |
|
|
|
56 |
|
|
Total trading investments |
|
$ |
760 |
|
|
$ |
835 |
|
|
(1) |
Amounts at March 31, 2018 reflect the adoption of ASU 2016-01. See Note 2, Significant Accounting Policies, for further information. Amounts at December 31, 2017 reflect accounting guidance prior to ASU 2016-01. |
Other
In addition, the Company accounts for its interest in PennyMac Financial Services, Inc. (“PennyMac”) as an equity method investment. At March 31, 2018 and December 31, 2017 the Company’s investment in PennyMac was excluded from investments in the table above and included in other assets on the condensed consolidated statements of financial condition. The carrying value and fair value of the Company’s interest (approximately 20% or 16 million shares and units) was approximately $363 million and $352 million, respectively, at March 31, 2018 and approximately $342 million and $348 million, respectively, at December 31, 2017. The fair value of the Company’s interest reflected the PennyMac stock price at March 31, 2018 and December 31, 2017, respectively (a Level 1 input). The fair value of the Company’s interest in the non-public units held of PennyMac is based on the stock price of the PennyMac public securities at March 31, 2018 and December 31, 2017.