Ameriprise 2008 Annual Report Download - page 32

distributed through third parties. Retail products include mutual funds, variable product funds underlying insurance and
annuity separate accounts, separately managed accounts and collective funds. Asset Management products are also
distributed directly to institutions through our institutional sales force. Institutional Asset Management products include
traditional asset classes, separate accounts, collateralized loan obligations, hedge funds and property funds. Revenues in this
segment are primarily earned as fees based on managed asset balances, which are impacted by both market movements and
net asset flows. This segment earns intersegment revenue for investment management services. Intersegment expenses for
this segment include distribution expenses for services provided by our Advice & Wealth Management, Annuities and
Protection segments. All intersegment activity is eliminated in our consolidated results. In 2008, 18% of our total revenues
from external clients were attributable to our Asset Management business.
At December 31, 2008, our Asset Management segment had $199.6 billion in managed assets worldwide, compared to
$285.1 billion at December 31, 2007. Managed assets include managed external client assets and managed owned assets.
Managed external client assets include client assets for which we provide investment management services, such as the
assets of the RiverSource family of mutual funds, the assets of the Threadneedle funds and the Seligman funds, and assets
of institutional clients. Managed assets include assets managed by sub-advisors we select. These external client assets are
not reported on our Consolidated Balance Sheets. Managed owned assets include certain assets on our Consolidated
Balance Sheets (such as the assets of the general account and the RiverSource Variable Product funds held in the separate
accounts of our life insurance subsidiaries) for which the Asset Management segment provides management services and
recognizes management fees. The assets managed by our Asset Management segment comprise approximately 54% of our
consolidated owned, managed and administered assets.
For additional details regarding our managed and administered assets, see ‘‘Management’s Discussion and Analysis of
Financial Condition and Results of Operations’’ included in Part II, Item 7 of this Annual Report on Form 10-K.
Investment Management Capabilities and Development
Our investment management teams manage the majority of assets in our RiverSource, Threadneedle and Seligman families
of mutual funds, as well as the assets we manage for institutional clients in separately managed accounts, the general and
separate accounts of the RiverSource Life companies and the assets of our face-amount certificate company. These
investment management teams also manage assets under sub-advisory arrangements.
We believe that delivering consistent and strong investment performance will positively impact our assets under management
by increasing the competitiveness and attractiveness of many of our investment products. We have implemented different
approaches to investment management depending on whether the investments in our portfolio are fixed income or equity.
•Fixed Income. In the United States, our fixed income investment management teams are centralized in Minneapolis, with
our leveraged loan team located in Los Angeles. Our fixed income teams are organized by sectors, including for example,
corporate, municipal, global and structured. They utilize valuation models with both quantitative and qualitative inputs to
drive duration, yield curve and credit decisions. This sector-based approach creates focused and accountable teams
organized by expertise. Portfolio performance is measured to align client and corporate interests, and asset managers are
incented to collaborate, employ best practices and execute in rapid response to changing market and investment
conditions consistent with established portfolio management principles.
•Equity. We have implemented a multi-platform approach to equity asset management using individual, accountable
investment management teams with dedicated analytical and equity trading resources. Each team focuses on particular
investment strategies and product sets. Investment management teams are located in Cambridge MA, Minneapolis, MN,
New York, NY and Palo Alto, CA, as well as at our affiliates Kenwood Capital Management LLC (‘‘Kenwood’’), and
Threadneedle.
Kenwood is an investment management joint venture we established in 1998. We own 47.7% of Kenwood and Kenwood’s
investment management principals own 47.5% of the firm, with the remainder held by Kenwood’s associate portfolio
managers. Kenwood investment management services are focused on the small- and mid-cap segments of the U.S. equity
market.
We offer international investment management products and services through Threadneedle, which is headquartered in
Luxembourg and which has its primary operations in London, England. The Threadneedle group of companies provides
investment management products and services independent from our other affiliates. Threadneedle offers a wide range of
asset management products and services, including segregated asset management, mutual funds and hedge funds to
institutional clients as well as to retail clients through intermediaries, banks and fund platforms in Continental Europe, the
United Kingdom and the Asia-Pacific region. These services comprise most asset classes, including equities, fixed income,
commodities, cash and real estate. Threadneedle also offers investment management products and services to U.S.
investment companies and other U.S. institutional clients, including certain RiverSource Funds.
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