Invesco Ltd.IVZ
Invesco Ltd. Fair Value Disclosure
FAIR VALUE OF ASSETS AND LIABILITIES
The fair value of financial instruments are presented in the below summary table. The fair value of financial instruments held by CIP is presented in Note 18, "Consolidated Investment Products."
| (in millions) | December 31, 2025 | December 31, 2024 | |||||||||
| Cash and cash equivalents | $ | 1,037.5 | $ | 986.5 | |||||||
| Equity investments | 414.4 | 371.2 | |||||||||
| Total return swap related to deferred compensation plans | 7.8 | (9.4) | |||||||||
A three-level valuation hierarchy exists for disclosure of fair value measurements based upon the transparency of inputs to the valuation of an asset or liability as of the measurement date. The three levels are defined as follows:
•Level 1 - inputs to the valuation methodology are quoted prices (unadjusted) for identical assets or liabilities in active markets.
•Level 2 - inputs to the valuation methodology include quoted prices for similar assets and liabilities in active markets, and inputs that are observable for the asset or liability, either directly or indirectly, for substantially the full term of the financial instrument.
•Level 3 - inputs to the valuation methodology are unobservable and significant to the fair value measurement.
An asset or liability's categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement.
The following table presents, for each of the hierarchy levels described above, the carrying value of the company's assets and liabilities, including by major security type for equity investments, which are measured at fair value on the company's Consolidated Balance Sheets as of December 31, 2025 and 2024, respectively:
| December 31, 2025 | |||||||||||||||||||||||
| (in millions) | Fair Value Measurements | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | |||||||||||||||||||
| Assets: | |||||||||||||||||||||||
Cash equivalents: | |||||||||||||||||||||||
Money market funds (1) | $ | 477.9 | $ | 477.9 | $ | — | $ | — | |||||||||||||||
Investments: (2) | |||||||||||||||||||||||
Equity investments: | |||||||||||||||||||||||
| Seed capital | 286.2 | 139.8 | 146.4 | — | |||||||||||||||||||
Investments related to deferred compensation plans | 128.2 | 128.2 | — | — | |||||||||||||||||||
| Total return swap related to deferred compensation plans | 7.8 | — | 7.8 | — | |||||||||||||||||||
| Total | $ | 900.1 | $ | 745.9 | $ | 154.2 | $ | — | |||||||||||||||
| December 31, 2024 | |||||||||||||||||||||||
| (in millions) | Fair Value Measurements | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | |||||||||||||||||||
| Assets: | |||||||||||||||||||||||
Cash equivalents: | |||||||||||||||||||||||
Money market funds (1) | $ | 479.3 | $ | 479.3 | $ | — | $ | — | |||||||||||||||
Investments: (2) | |||||||||||||||||||||||
Equity investments: | |||||||||||||||||||||||
| Seed capital | 151.6 | 151.6 | — | — | |||||||||||||||||||
Investments related to deferred compensation plans | 219.6 | 219.6 | — | — | |||||||||||||||||||
| Total | $ | 850.5 | $ | 850.5 | $ | — | $ | — | |||||||||||||||
| Liabilities: | |||||||||||||||||||||||
| $ | (9.4) | $ | — | $ | (9.4) | $ | — | ||||||||||||||||
Contingent consideration liability | (1.3) | — | — | (1.3) | |||||||||||||||||||
| Total | $ | (10.7) | $ | — | $ | (9.4) | $ | (1.3) | |||||||||||||||
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(1)The balance primarily represents cash held in affiliated money market funds.
(2)Equity method and other investments of $937.1 million and $29.6 million, respectively, as of December 31, 2025 (December 31, 2024: $854.5 million and $14.3 million, respectively) are also excluded from this table. These investments are not measured at fair value, in accordance with applicable accounting standards.
Total Return Swap
In addition to holding equity investments, the company has a TRS to hedge economically certain deferred compensation liabilities. The notional value of the TRS at December 31, 2025 was $553.0 million, and the fair value of the TRS was an asset of $7.8 million (December 31, 2024 notional value was $421.2 million and the fair value was a liability of $9.4 million). During the year ended December 31, 2025, market valuation gains related to the TRS were $59.2 million (December 31, 2024: $23.8 million net gains).
The fair value of the TRS was determined under the market approach using quoted prices of the underlying investments and, as such, is classified as level 2 of the valuation hierarchy. The TRS is not designated as a hedging instrument for accounting purposes.
Nonrecurring Fair Value Measurements
Certain of the company's assets and liabilities are required to be recorded at fair value on a nonrecurring basis, typically upon identification of impairment indicators. We measured the fair value of indefinite-lived intangible assets related to acquired management contracts of U.S. retail mutual funds during our annual impairment assessment completed as of October 1, 2025. The fair value of these assets was determined using an income approach and is classified as level 3 of the valuation hierarchy. The most sensitive assumptions used in the income approach are the revenue forecast, the long-term growth rate and the discount rate applied to the cash flow forecast to determine present value. The revenue projections used reflect declines ranging from 3% to 9% over the forecast period. The long-term growth rate used in the fair-value measurement was 2.0%. The discount rate used in the fair-value measurement was 13.0%.
About Fair Value Disclosures
Fair value disclosures classify all assets and liabilities measured at fair value into a three-level hierarchy: Level 1 (quoted market prices), Level 2 (observable inputs like yield curves), and Level 3 (unobservable inputs requiring management estimates). The proportion of Level 3 assets directly reflects how much of the balance sheet depends on internal models rather than market evidence.
Key signals: a growing Level 3 balance relative to total fair-value assets increases valuation uncertainty and earnings volatility risk. Watch for transfers between levels — assets moving from Level 2 to Level 3 often signal deteriorating market liquidity. Unrealized gains and losses on Level 3 positions flow through earnings or other comprehensive income, so large swings deserve scrutiny. For financial institutions, examine the sensitivity disclosures that show how Level 3 valuations change under alternative assumptions. Compare the fair value of debt against its carrying amount to gauge hidden leverage.