Ameriprise 2010 Annual Report Download - page 26

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. To achieve such
performance, our investment teams are overseen utilizing a ‘‘5P’’ process that focuses on the five factors we believe are
most significant for delivering results to clients: product definition, investment philosophy, people, investment process and
performance expectation. These factors are continuously monitored and provide a framework around which portfolio
managers can better define their objectives and the processes through which they plan to achieve them.
Each investment management team focuses on particular investment strategies and product sets. Our U.S. investment
management teams are located in multiple locations, including Boston, Chicago, Los Angeles, Minneapolis, New York,
Menlo Park and Portland. We have implemented a multi-platform approach to equity asset management using individual,
accountable investment management teams with a combination of dedicated centralized analytical and equity trading
resources. The portfolios managed by these teams focus on varying sizes and categories of domestic and global equity
securities. Our U.S. fixed income teams are organized by sectors, including for example, investment grade, high yield,
municipal, global and structured. 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 response to changing market and investment conditions consistent with
established portfolio management principles.
In an effort to address changing market conditions and the evolving needs of investors, we may from time to time develop
and offer new retail and institutional investment products, including mutual funds, separately managed accounts and
collective funds. We may also provide seed money to our investment management teams to develop new products for our
institutional clients.
U.S. Asset Management Offerings
Mutual Funds
We provide investment advisory, distribution and other services to the Columbia family of mutual funds. The Columbia
family of funds includes retail mutual funds (both open- and closed-end funds) and variable product funds. Retail mutual
funds are available through unaffiliated third-party financial institutions and the Ameriprise financial advisor network and as
part of Ameriprise institutional 401(k) plans. Variable product funds are available as underlying investment options in
variable annuity and variable life products, including RiverSource products. The Columbia family of funds includes domestic
and international equity funds, fixed income funds, cash management funds, balanced funds and asset allocation funds,
including fund-of-funds, with a variety of investment objectives. The consolidation of our legacy asset management
business under the Columbia Management brand has involved numerous fund mergers, which are ongoing.
At December 31, 2010, our retail mutual funds had total managed assets of $164.2 billion in 176 funds. The variable
insurance trust funds (‘‘VIT Funds’’) that we manage had total managed assets at December 31, 2010 of $54.3 billion in
79 funds.
CMIA serves as investment manager for most of our U.S. mutual funds. Columbia Wanger Asset Management, LLC
(‘‘Columbia Wanger’’) also serves as investment manager for certain funds. In addition, several of our subsidiaries perform
ancillary services for the funds, including distribution, accounting, administrative and transfer agency services. CMIA and
Columbia Wanger perform investment management services pursuant to contracts with the mutual funds that are subject
to renewal by the mutual fund boards within two years after initial implementation, and thereafter, on an annual basis.
We earn management fees for managing the assets of the Columbia family of mutual funds based on the underlying asset
values. We also earn fees by providing ancillary services to the Columbia family of mutual funds. Certain Columbia equity
and balanced funds have a performance incentive adjustment that adjusts the level of management fees received, upward
or downward, based on the fund’s performance as measured against a designated external index of peers. This has a
corresponding impact on management fee revenue. In 2010, revenues were adjusted upward by approximately
$7.5 million due to performance incentive adjustments. This program is expected to be discontinued during 2011, subject
to fund shareholder approvals.
The Columbia family of funds also uses sub-advisors to diversify and enhance investment management expertise. Since the
end of 2003, Threadneedle personnel have provided investment management services to Columbia global and international
equity funds. In addition to Threadneedle, unaffiliated sub-advisors provide investment management services to certain
Columbia funds.
CMIA also acts as sub-advisor for certain domestic and international mutual funds advised by other firms and is pursuing
opportunities to sub-advise additional investment company assets in the U.S. and overseas. As with the Columbia funds,
we earn management fees for these services based on the underlying asset value of the funds we sub-advise. As of
December 31, 2010, we managed over $37.0 billion in assets in a sub-advisory capacity.
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