APAM

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How APAM rewrote its risk factors

10-K ITEM 1A · FY2024 → FY2025

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In addition to our key investment professionals, we also depend on the contributions of our senior management team led by Jason A.
Colson, and certain marketing and client service personnel who have direct contact with our institutional clients, consultants, intermediaries and other key individuals within our distribution channels.
Despite our efforts to implement succession plans, the loss of any of these key professionals could limit our ability to successfully execute our business strategy or adversely affect our ability to retain existing and attract new client assets and related revenues.
Competition for highly-skilled and motivated portfolio managers and other key investment professionals is intense, and such professionals have an increasing number of employment options beyond traditional asset management firms, including multi-manager platforms, alternative investment firms, family offices and insurance companies.
Changes to our investment environment or compensation structures, or decisions related to resource allocation, could cause instability within our investment teams and/or have an adverse effect on the performance of our investment strategies, our financial results and our ability to grow.
To do so, it is critical that we continue to foster an environment and provide opportunities, compensation and benefits that are attractive for existing and prospective investment professionals within an increasingly complex platform.
If we are unsuccessful in maintaining such an environment or compensation levels or structures, for example if the activities we undertake in pursuit of growing new areas of our business impact our ability to simultaneously maintain our traditional equity-focused investment teams and strategies, our existing investment professionals may leave our firm or fail to produce their best work on a consistent, long-term basis and/or we may be unsuccessful in attracting talented new investment professionals, any of which could negatively impact the performance of our investment strategies, our financial results and our ability to grow.
With respect to asset-based revenues, each of our investment teams shares a bonus pool consisting of a percentage of the asset-based revenues earned by the strategies managed by the respective team, which is generally set at 25% depending on strategy type.
Prior to vesting, the franchise capital awards will generally be invested in one or more of the investment strategies managed by the award recipient’s investment team.
Our financial results are impacted by changes in the total level of our AUM.
Poor performance, as compared to third-party benchmarks or competitive products, causes financial intermediaries, advisors and consultants to remove our investment products from recommended lists and can result in lower Morningstar and Lipper ratings and rankings.
Poor performance also reduces revenues attributed to performance-based fees.
Our investment strategies can perform poorly for a number of reasons, including general market conditions; investor sentiment about market and economic conditions, as well as investment styles and philosophies; investment decisions; the performance of the companies in which our investment strategies invest and the currencies in which those investments are made; the liquidity of securities or instruments in which our investment strategies invest; our inability to identify sufficient appropriate investment opportunities for existing and new client assets on a timely basis; and our inability to retain key investment professionals and other personnel.
Moreover, even when our strategies experience strong results relative to the market, client allocations to our strategies typically increase relative to their other investments, often resulting in subsequent withdrawals as our clients rebalance their investments to meet their asset allocation preferences despite our strong results.
In addition, to the extent clients are successful in claiming that their losses resulted from fraud, negligence, willful misconduct, breach of contract, breach of fiduciary duty or similar misconduct, these clients may have remedies against us, the mutual funds and other funds we advise and/or our investment professionals under various U.S. and non-U.S. laws.
Financial markets have experienced, and may continue to experience, volatility and disruption amid continued concerns about elevated inflation, uncertainty around the timing and extent of changes in interest rates, economic and trade policy, effects of geopolitical tensions, conflicts and wars, and other global economic conditions.
Our separate account clients have in the past and may in the future reduce the aggregate amount of AUM with us with minimal or no notice for any reason, including due to deteriorating financial market conditions.
In addition, the prices of the securities held in the portfolios we manage have in the past and may in the future decline for any number of reasons beyond our control, including, among others, a declining market, general economic downturn or recession, political uncertainty, inflation rates, interest rates, natural disasters, war, acts of terrorism, social, civil or political unrest, public health crises, changes in trade policies, including the imposition of new or increased tariffs and the economic impact, volatility and uncertainty resulting therefrom, the imposition of economic sanctions or other unpredictable events.
Several of our investment strategies invest principally in the securities of non-U.S. companies, which involve foreign currency exchange risks and may face heightened tax, political, social, economic and legal risks.
As of December 31, 2025, approximately 48% of our AUM were invested in strategies that primarily invest in securities of non-U.S. companies.
Approximately 50% of our AUM were invested in securities denominated in currencies other than the U.S. dollar at December 31, 2025.
Investments in non-U.S. issuers face heightened tax, political, social, economic and legal risks.
Non-U.S. issuers are affected by tax positions taken in countries or regions in which we are invested.
The price and liquidity of securities traded in non-U.S. markets may be adversely affected by political or economic events, government policies and social or civil unrest within a particular country.
For example, in response to Russia’s invasion of Ukraine, the U.S. and other countries imposed broad-ranging economic sanctions on Russia and certain Russian individuals, banking entities and corporations, which has impacted the value and liquidity of Russian holdings.
These risks could adversely affect the performance of our strategies that are invested in securities of non-U.S. issuers and may be particularly acute in the emerging or less developed markets in which we invest where markets are often smaller, less liquid, less regulated and significantly more volatile than those in the U.S.
We gain access to investors primarily through consultants and other third parties that advise institutional clients, as well as through 401(k) and mutual fund platforms, brokerage firms, private banks, trust companies, financial advisors and other financial intermediaries through which shares of our funds are sold or that offer our investment products to their clients.
Our two largest intermediary relationships across multiple distribution channels each represented approximately 9% of our total AUM as of December 31, 2025.
As of December 31, 2025, the investment consultant advising the largest portion of our AUM represented approximately 4% of our total AUM.
In addition, the investment management industry is facing transformative pressures and trends from a variety of different sources including continued fee pressure; a continued shift away from actively managed equity strategies towards alternative, passive and smart beta strategies; increased demands from clients and distributors for client engagement and services; a trend towards intermediaries developing fewer relationships and partners and reducing the number of investment managers they work with; and advances in technology and digital wealth and distribution tools.
A number of factors, including the following, serve to increase our competitive risks: • Unlike some of our competitors, we do not currently engage in impact investing, offer passive investment strategies or “solutions” products like target-date funds. • A number of our competitors have greater financial, technical, marketing and other resources, more comprehensive name recognition and more personnel than we do. • Potential competitors have a relatively low cost of entering the investment management industry. • Some investors may prefer to invest with an investment manager that is not publicly traded based on the perception that a publicly-traded asset manager may focus on the manager’s own growth to the detriment of investment performance. • Other industry participants may seek to recruit our investment professionals. • Many competitors charge lower fees for their investment management services than we do. • The majority of our investment strategies are traditional active equity products, compared to alternative products where investor allocations continue to grow.
We seek to recruit new investment teams that manage high value-added investment strategies and allow us to grow strategically.
We also look to develop new, differentiated strategies or vehicles managed by our existing teams.
We expect the costs associated with establishing a new investment team, strategy or vehicle to initially exceed the revenues generated, which negatively impacts our results of operations.
The incorporation of new teams, strategies, vehicles and types of investments could strain our resources and increase the likelihood of an error or failure, a risk which is exacerbated by the increasingly complex and specialized nature of newer investment teams and strategies.
The establishment of new teams or strategies, in particular, alternative-focused investment teams or strategies, may also cause us to make changes to our traditional compensation and economic model, which could reduce our profitability and harm our firm’s culture.
In January 2026, we completed our first acquisition with the purchase of Grandview Property Partners and began a phased integration designed to minimize disruption to operations and stakeholders.
We cannot be certain that we will be able to identify and successfully complete such transactions in the future, and no assurance can be given with respect to the timing, likelihood or business effect of any possible transaction.
These initiatives, including the acquisition of Grandview, typically involve a number of risks and present financial, managerial and operational challenges to ongoing business operations.
Our investment management agreements with U.S. registered mutual funds, as required by law, are generally terminable by the funds’ boards or a vote of a majority of the funds’ outstanding voting securities on not more than 60 days’ written notice.

and 31 more.

Gone since FY2024

In addition to our key investment professionals, we also depend on the contributions of our senior management team led by Eric R.
Gottlieb, and certain marketing and client service personnel who have direct contact with our institutional clients, consultants, intermediaries and other key individuals within each of our distribution channels.
Despite our efforts to implement succession plans with respect to these key professionals, the loss of any of these key professionals could limit our ability to successfully execute our business strategy or adversely affect our ability to retain existing and attract new client assets and related revenues.
Competition for highly-skilled and motivated portfolio managers and other key professionals in the investment management industry is intense, and the market for qualified professionals in our industry is characterized by the frequent movement of professionals among different firms.
Further, portfolio managers and other key professionals have an increasing number of employment options other than traditional asset management firms, including multi-manager platforms, alternative investment firms, family offices and insurance companies.
Changes to our investment environment or compensation structures could cause instability within our investment teams and/or have an adverse effect on the performance of our investment strategies, our financial results and our ability to grow.
To do so, it is critical that we continue to foster an environment and provide opportunities, compensation and benefits that are attractive for existing and prospective investment professionals.
If we are unsuccessful in maintaining such an environment or compensation levels or structures, for example if the activities we undertake in pursuit of growing our alternatives-focused business impacts our ability to simultaneously maintain our traditional equity-focused investment teams and strategies, our existing investment professionals may leave our firm or fail to produce their best work on a consistent, long-term basis and/or we may be unsuccessful in attracting talented new investment professionals, any of which could negatively impact the performance of our investment strategies, our financial results and our ability to grow.
With respect to asset-based revenues, each of our investment teams shares a bonus pool consisting of 25% of the asset-based revenues earned by the strategies managed by the respective team.
Prior to vesting, though, the franchise capital awards will generally be invested in one or more of the investment strategies managed by the award recipient’s investment team.
Poor performance causes financial intermediaries, advisors and consultants to remove our investment products from recommended lists and can result in lower Morningstar and Lipper ratings and rankings.
Poor performance also adversely affects the portion of our revenues attributed to performance-based fees.
Our investment strategies can perform poorly for a number of reasons, including general market conditions; investor sentiment about market and economic conditions; investment styles and philosophies; investment decisions; the performance of the companies in which our investment strategies invest and the currencies in which those investments are made; the liquidity of securities or instruments in which our investment strategies invest; our inability to identify sufficient appropriate investment opportunities for existing and new client assets on a timely basis; and our inability to retain key investment professionals and other personnel.
Moreover, when our strategies experience strong results relative to the market, clients’ allocations to our strategies typically increase relative to their other investments and we sometimes experience withdrawals as our clients rebalance their investments to fit their asset allocation preferences despite our strong results.
In addition, to the extent clients are successful in claiming that their losses resulted from fraud, negligence, willful misconduct, breach of contract or similar misconduct, these clients may have remedies against us, the mutual funds and other funds we advise and/or our investment professionals under various U.S. and non-U.S. laws.
Financial markets have experienced, and may continue to experience, volatility and disruption amid continued concerns about elevated inflation, uncertainty around the timing and extent of changes in interest rates, effects of geopolitical tensions, conflicts and wars, and other global economic conditions.
Our separate account clients have in the past and may in the future reduce the aggregate amount of AUM with us with minimal or no notice for any reason, including due to declining financial market conditions.
In addition, the prices of the securities held in the portfolios we manage have in the past and may in the future decline for any number of reasons beyond our control, including, among others, a declining market, general economic downturn or recession, political uncertainty, inflation rates, natural disasters, war, acts of terrorism, or other unpredictable events.
Several of our investment strategies invest principally in the securities of non-U.S. companies, which involve foreign currency exchange, tax, political, social and economic uncertainties and risks.
As of December 31, 2024, approximately 54% of our AUM were invested in strategies that primarily invest in securities of non-U.S. companies.
Approximately 45% of our AUM were invested in securities denominated in currencies other than the U.S. dollar at December 31, 2024.
Investments in non-U.S. issuers are affected by tax positions taken in countries or regions in which we are invested as well as political, social and economic uncertainty.
Many financial markets are not as developed or as efficient as the U.S. financial markets and in some cases lack established regulations.
As a result, those markets typically have limited liquidity and higher price volatility.
Liquidity may also be adversely affected by political or economic events, government policies, and social or civil unrest within a particular country.
For example, in response to Russia’s invasion of Ukraine, the U.S. and other countries imposed broad-ranging economic sanctions on Russia and certain Russian individuals, banking entities and corporations, which has impacted liquidity of Russian holdings.
Our ability to dispose of an investment may be adversely affected if we increase the size of our holdings in smaller non-U.S. issuers.
Non-U.S. legal and regulatory environments, including financial accounting standards and practices, may also be different, and there may be less publicly available information about such companies.
These risks could adversely affect the performance of our strategies that are invested in securities of non-U.S. issuers and may be particularly acute in the emerging or less developed markets in which we invest.
We gain access to investors primarily through consultants, 401(k) platforms, mutual fund platforms, broker-dealers and financial advisors through which shares of the funds are sold.
Our two largest intermediary relationships across multiple distribution channels represented approximately 9% and 8% of our total AUM as of December 31, 2024.
As of December 31, 2024, the investment consultant advising the largest portion of our AUM represented approximately 4% of our total AUM.
In addition, the investment management industry is facing transformative pressures and trends from a variety of different sources including increased fee pressure; a continued shift away from actively managed equity and fixed income strategies towards alternative, passive and smart beta strategies; increased demands from clients and distributors for client engagement and services; a trend towards institutions developing fewer relationships and partners and reducing the number of investment managers they work with; increased regulatory activity and scrutiny of many aspects of the investment management industry; and advances in technology and digital wealth and distribution tools.
A number of factors, including the following, serve to increase our competitive risks: • Unlike some of our competitors, we do not currently engage in impact investing, offer passive investment strategies, exchange-traded funds or “solutions” products like target-date funds. • A number of our competitors have greater financial, technical, marketing and other resources, more comprehensive name recognition and more personnel than we do. • Potential competitors have a relatively low cost of entering the investment management industry. • Some investors may prefer to invest with an investment manager that is not publicly traded based on the perception that a publicly-traded asset manager may focus on the manager’s own growth to the detriment of investment performance. • Other industry participants may seek to recruit our investment professionals. • Many competitors charge lower fees for their investment management services than we do. • We have less experience in the management and distribution of alternative products, toward which investor allocations are growing, as compared to active equity products.
We seek to recruit new investment teams that manage high value-added investment strategies and would allow us to grow strategically.
We also look to develop new, differentiated strategies managed by our existing teams.
We expect the costs associated with establishing a new investment team, strategy or vehicle to initially exceed the revenues generated, which will negatively impact our results of operations.
The incorporation of new teams, strategies, vehicles and types of investments could strain our resources and increase the likelihood of an error or failure, a risk which is exacerbated by the increasingly specialized nature of newer investment teams and strategies.
The establishment of new teams or strategies (in particular, alternative investment teams or strategies) may also cause us to depart from our traditional compensation and economic model, which could reduce our profitability and harm our firm’s culture.
We cannot be certain that we will be able to identify, consummate and successfully complete such transactions, and no assurance can be given with respect to the timing, likelihood or business effect of any possible transaction.

and 39 more.

Sentence-level comparison of Item 1A in the two most recent 10-Ks (FY2024 ↗, FY2025 ↗). A reworded sentence counts as one dropped and one added, so heavy edits read as low “kept”. Headings and page furniture are stripped; nothing is summarised by a model.

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