Federated Hermes, Inc. reports second quarter 2021 earnings

PITTSBURGH, July 29, 2021 /PRNewswire/ — Federated Hermes, Inc. (NYSE: FHI), a global leader in active, responsible investing, today reported earnings per diluted share (EPS) of $0.56 for Q2 2021, compared to $0.80 for the same quarter last year, on net income of $55.9 million for Q2 2021, compared to $81.2 million for Q2 2020. Federated Hermes reported YTD 2021 earnings per diluted share of $1.31, compared to $1.44 for the same period in 2020, on YTD 2021 net income of $130.4 million, compared to $145.4 million for the same period in 2020. As a result of legislation enacted in the U.K. that increases the U.K. corporate income tax rate from 19% to 25% effective April 1, 2023, Federated Hermes’ Q2 2021 results include a $14.5 million noncash tax expense, or $0.11 per diluted share.

Federated Hermes’ total managed assets were a record $645.8 billion at June 30, 2021, up $17.0 billion or 3% from $628.8 billion at June 30, 2020 and up $20.8 billion or 3% from $625.0 billion at March 31, 2021. Total average managed assets for Q2 2021 were $639.7 billion, up $2.8 billion or less than 1% from $636.9 billion reported for Q2 2020 and up $21.6 billion or 3% from $618.1 billion reported for Q1 2021.

“As the economy continued to reopen in the second quarter, Federated Hermes offered our global clients a range of strong-performing active, responsible investment strategies. We reached record long-term assets on new highs in equity, fixed-income and alternative/private markets,” said J. Christopher Donahue, president and chief executive officer. “Fixed-income investors also positioned themselves for what may be the first sustained rising-rate environment in decades, and ultrashort and multisector products were among those that led net sales.”

Federated Hermes’ board of directors declared a dividend of $0.27 per share. The dividend is payable on Aug. 13, 2021 to shareholders of record as of Aug. 6, 2021. During Q2 2021, Federated Hermes purchased 993,100 shares of Federated Hermes class B common stock for $31.8 million.

Equity assets were a record $100.5 billion at June 30, 2021, up $23.6 billion or 31% from $76.9 billion at June 30, 2020 and up $4.3 billion or 4% from $96.2 billion at March 31, 2021. Top-selling equity funds during Q2 2021 on a net basis were Federated Hermes SDG Engagement Equity Fund (UCITS), Federated Hermes Asia ex-Japan Equity Fund, Federated Hermes Global Equity ESG Fund, Federated Hermes Global Emerging Markets Equity Fund and Federated Hermes Global Emerging Markets SMID Equity Fund.

Fixed-income assets were a record $90.8 billion at June 30, 2021, up $17.7 billion or 24% from $73.1 billion at June 30, 2020 and up $4.3 billion or 5% from $86.5 billion at March 31, 2021. Top-selling fixed-income funds during Q2 2021 on a net basis were Federated Hermes Ultrashort Bond Fund, Federated Hermes Institutional Fixed Income Fund, Federated Hermes Total Return Bond Fund, Federated Hermes SDG Engagement High Yield Credit Fund (UCITS) and Federated Hermes Strategic Income Fund.

Alternative/private market assets were a record $21.0 billion at June 30, 2021, up $3.5 billion or 20% from $17.5 billion at June 30, 2020 and up $1.7 billion or 9% from $19.3 billion at March 31, 2021.

Money market assets were $429.8 billion at June 30, 2021, down $27.8 billion or 6% from $457.6 billion at June 30, 2020 and up $10.7 billion or 3% from $419.1 billion at March 31, 2021. Money market fund assets were $302.0 billion at June 30, 2021, down $42.8 billion or 12% from $344.8 billion at June 30, 2020 and up $4.8 billion or 2% from $297.2 billion at March 31, 2021.

Financial Summary

In Q2 2021, the U.K. enacted legislation that increased their corporate income tax rate from 19% to 25% effective April 1, 2023. As a result, Federated Hermes’ income tax provision includes a $14.5 million noncash tax expense, or $0.11 per diluted share, to revalue certain deferred tax assets and liabilities.

Q2 2021 vs. Q2 2020

Revenue decreased $49.7 million or 14% primarily due to an increase in voluntary fee waivers related to certain money market funds in order for those funds to maintain positive or zero net yields (voluntary yield-related fee waivers) and a decrease in revenue due to lower average money market assets. For further information on the waivers, see “Impact of voluntary yield-related fee waivers” below. These decreases were partially offset by an increase in revenue due to higher average equity and fixed-income assets. 

During Q2 2021, Federated Hermes derived 83% of its revenue from long-term assets (55% from equity assets, 19% from fixed-income assets and 9% from alternative/private markets and multi-asset), 16% from money market assets, and 1% from sources other than managed assets.

Operating expenses decreased $34.2 million or 13% primarily due to decreased distribution expenses predominantly resulting from higher voluntary yield-related fee waivers.

Nonoperating income (expenses), net decreased $7.2 million or 51% primarily due to a smaller increase in the market value of investments in Q2 2021 compared to a greater increase in the market value of investments in Q2 2020 resulting from the recovery in the markets following the initial onset of the pandemic in March 2020.

Q2 2021 vs. Q1 2021

Revenue decreased $30.1 million or 9% primarily due to an increase in voluntary yield-related fee waivers and a decrease in carried interest revenue of consolidated variable interest entities. These decreases were partially offset by an increase in revenue due to higher average money market and long-term assets.

Operating expenses decreased $14.5 million or 6% primarily due to decreased compensation expense of consolidated variable interest entities and a decrease in distribution expenses predominantly resulting from higher voluntary yield-related fee waivers.

Nonoperating income (expenses), net increased $5.0 million or 268% primarily due to an increase in the market value of investments.

YTD 2021 vs. YTD 2020

Revenue decreased $67.7 million or 9% primarily due to an increase in voluntary yield-related fee waivers and a decrease in revenue from lower average money market assets. These decreases were partially offset by an increase in revenue due to higher average equity and fixed-income assets, previously nonconsolidated variable interest entities being recorded in operating revenue beginning in Q1 2021 and an increase in revenue from alternative/private markets assets, primarily due to the revenue of a previously nonconsolidated entity being recorded in operating revenue beginning in March 2020.

For the first half of 2021, Federated Hermes derived 79% of its revenue from long-term assets (52% from equity, 18% from fixed-income and 9% from alternative/private markets and multi-asset), 20% from money market assets, and 1% from sources other than managed assets.

Operating expenses decreased $57.0 million or 11% primarily due to decreased distribution expenses predominantly resulting from higher voluntary yield-related fee waivers.

Nonoperating income (expense), net increased $1.7 million or 25% primarily due to an increase in the market value of investments.  This increase was partially offset by a gain recorded in March 2020 from a fair value adjustment to the equity investment of a previously nonconsolidated entity.

Impact of voluntary yield-related fee waivers

During the three and six months ended June 30, 2021, voluntary yield-related fee waivers totaled $117.8 million and $200.9 million, respectively. These fee waivers were partially offset by related reductions in distribution expenses of $71.0 million and $132.5 million, respectively, such that the net negative pre-tax impact to Federated Hermes was $46.8 million and $68.4 million for the three and six months ended June 30, 2021, respectively. During the three and six months ended June 30, 2020, voluntary yield-related fee waivers totaled $19.7 million and $20.1 million, respectively. These fee waivers were largely offset by related reductions in distribution expenses of $17.7 million and $18.0 million, respectively, such that the net negative pre-tax impact to Federated Hermes was $2.0 million and $2.1 million for the three and six months ended June 30, 2020, respectively.

Short-term interest rates continued to hover near historic lows during Q2 2021 as technical factors at the front end of the yield curve kept yields on short-term government securities—including repurchase agreements and Treasury bills—just above zero. At their June Federal Open Market Committee meeting, the Federal Reserve increased the Reverse Repo Facility and the Interest on Excess Reserves rates by 5 basis points each, to 5 and 15 basis points, respectively.

As a result, the negative impact on pre-tax income from minimum yield waivers on money market mutual funds and certain separate accounts may be approximately $38 million during Q3 2021. The amount of minimum yield waivers can vary based on a number of factors, including, among others, interest rates, yields, asset levels, asset flows and the ability of distributors to share in waivers. Any change in these factors can impact the amount and level of minimum yield waivers, including in a material way.

Federated Hermes’ level of business activity and financial results are dependent upon many factors, including market conditions, investment performance and investor behavior. These factors and others, including asset levels and mix, product sales and redemptions, market appreciation or depreciation, revenues, fee waivers, expenses and regulatory changes, can significantly impact Federated Hermes’ business activity levels and financial results. Risk factors and uncertainties that can influence Federated Hermes’ financial results are discussed in the company’s annual and quarterly reports as filed with the Securities and Exchange Commission (SEC).

Federated Hermes will host an earnings conference call at 9 a.m. Eastern on July 30, 2021. Investors are invited to listen to the earnings teleconference by calling 877-407-0782 (domestic) or 201-689-8567 (international) prior to the 9 a.m. start time. To listen online, go to the Investor Relations section and the Analyst Information tab of FederatedHermes.com at least 15 minutes prior to register and join the call. A replay will be available at approximately 12:30 p.m. Eastern on July 30, 2021. To access the telephone replay, dial 877-481-4010 (domestic) or 919-882-2331 (international) and enter access code 42046. The online replay will be available via FederatedHermes.com for one year.

Federated Hermes, Inc. is a leading global investment manager with $645.8 billion in assets under management as of June 30, 2021. Guided by our conviction that responsible investing is the best way to create wealth over the long term, our investment solutions span equity, fixed-income, alternative/private markets, multi-asset and liquidity management strategies. Providing world-class active investment management and engagement services to more than 11,000 institutions and intermediaries, our clients include corporations, government entities, insurance companies, foundations and endowments, banks and broker/dealers. Headquartered in Pittsburgh, Federated Hermes’ nearly 2,000 employees include those in London, New York, Boston and offices worldwide. For more information, visit FederatedHermes.com.

Federated Hermes ranks in the top 7% of equity fund managers in the industry, the top 9% of money market fund managers and the top 10% of fixed-income fund managers1. Federated Hermes also ranks as the 10th-largest manager of model-delivered SMAs2. For more information, including an analyst presentation, visit FederatedHermes.com.

1) ISS Market Intelligence (SIMFUND), June 30, 2021. Based on assets under management in open-end funds.

2) Money Management Institute/Cerulli, Q1 2021.

Federated Securities Corp. is distributor of the Federated Hermes funds.

Separately managed accounts are made available through Federated Global Investment Management Corp., Federated Investment Counseling, Federated MDTA LLC, Hermes Fund Managers Ireland Limited, Hermes Investment Management Limited, and Hermes GPE LLP, each a registered investment advisor in one or more of the U.S., U.K. or Ireland.

Certain statements in this press release, such as those related to performance, investor preferences and demand, asset flows, asset mix, interest rates, gross yields and fee waivers constitute or may constitute forward-looking statements, which involve known and unknown risks, uncertainties and other factors that may cause the actual results, levels of activity, performance or achievements of the company, or industry results, to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. Other risks and uncertainties include the ability of the company to predict the level of fee waivers and expenses in future quarters, predict whether performance fees or carried interest will be earned and retained, and sustain product demand, asset flows and mix, which could vary significantly depending on various factors, such as market conditions, investment performance and investor behavior. Other risks and uncertainties include the risk factors discussed in the company’s annual and quarterly reports as filed with the SEC. As a result, no assurance can be given as to future results, levels of activity, performance or achievements, and neither the company nor any other person assumes responsibility for the accuracy and completeness, or updating, of such statements in the future.

Unaudited Condensed Consolidated Statements of Income

(in thousands, except per share data)








Quarter Ended

% Change
Q2 2020 to
Q2 2021


Quarter Ended

% Change
Q1 2021 to
Q2 2021


June 30, 2021

June 30, 2020


March 31, 2021

Revenue







Investment advisory fees, net

$

214,289


$

245,126


(13)

%


$

247,689


(13)

%

Administrative service fees, net—affiliates

77,750


83,733


(7)



74,302


5


Other service fees, net

19,001


31,853


(40)



19,182


(1)


  Total Revenue

311,040


360,712


(14)



341,173


(9)









Operating Expenses







Compensation and related

132,769


123,583


7



143,620


(8)


Distribution

38,115


89,038


(57)



44,389


(14)


Systems and communications

18,954


15,091


26



18,594


2


Professional service fees

15,122


13,888


9



14,636


3


Office and occupancy

11,082


10,190


9



11,240


(1)


Advertising and promotional

4,623


3,065


51



2,824


64


Travel and related

898


325


176



296


203


Other

7,668


8,281


(7)



8,096


(5)


  Total Operating Expenses

229,231


263,461


(13)



243,695


(6)


Operating Income

81,809


97,251


(16)



97,478


(16)









Nonoperating Income (Expenses)







Investment income (loss), net

7,393


14,841


(50)



2,011


268


Debt expense

(346)


(785)


(56)



(491)


(30)


Other, net

(184)


(24)


NM



345


(153)


  Total Nonoperating Income (Expenses), net

6,863


14,032


(51)



1,865


268


Income before income taxes

88,672


111,283


(20)



99,343


(11)


Income tax provision

35,193


26,482


33



24,997


41


Net income including the noncontrolling interests in subsidiaries

53,479


84,801


(37)



74,346


(28)


Less: Net income (loss) attributable to the noncontrolling interests in subsidiaries

(2,405)


3,605


(167)



(138)


NM


Net Income

$

55,884


$

81,196


(31)

%


$

74,484


(25)

%








Amounts Attributable to Federated Hermes, Inc.







Earnings Per Share1







Basic

$

0.57


$

0.81


(30)

%


$

0.75


(24)

%

Diluted

$

0.56


$

0.80


(30)

%


$

0.75


(25)

%

Weighted-Average Shares Outstanding







Basic and Diluted

93,964


96,800




95,218



Dividends Declared Per Share

$

0.27


$

0.27




$

0.27




1)

Unvested share-based awards that receive non-forfeitable dividend rights are deemed participating securities and are required to be considered in the computation of basic earnings per share under the “two-class method.” As such, total net income of $2.4 million, $3.2 million and $3.0 million available to unvested restricted Federated Hermes shareholders for the quarterly periods ended June 30, 2021, June 30, 2020 and March 31, 2021, respectively, was excluded from the computation of basic earnings per share. In addition to the amounts excluded from the basic earnings per share calculation, the computation of diluted earnings per share excludes net income available to unvested shareholders of a nonpublic consolidated subsidiary.

Unaudited Condensed Consolidated Statements of Income




(in thousands, except per share data)





Six Months Ended


June 30, 2021

June 30, 2020

% Change

Revenue




Investment advisory fees, net

$

461,978


$

485,787


(5)

%

Administrative service fees, net—affiliates

152,051


155,932


(2)


Other service fees, net

38,184


78,176


(51)


Total Revenue

652,213


719,895


(9)






Operating Expenses




Compensation and related

276,389


238,918


16


Distribution

82,504


185,198


(55)


Systems and communications

37,549


29,987


25


Professional service fees

29,759


27,156


10


Office and occupancy

22,322


21,961


2


Advertising and promotional

7,447


8,061


(8)


Travel and related

1,195


3,484


(66)


Other

15,761


15,135


4


Total Operating Expenses

472,926


529,900


(11)


Operating Income

179,287


189,995


(6)






Nonoperating Income (Expenses)




Investment income (loss), net

9,404


390


NM


Debt expense

(837)


(1,717)


(51)


Other, net

161


8,322


(98)


Total Nonoperating Income (Expenses), net

8,728


6,995


25


Income before income taxes

188,015


196,990


(5)


Income tax provision

60,190


48,924


23


Net income including the noncontrolling interests in subsidiaries

127,825


148,066


(14)


Less: Net income (loss) attributable to the noncontrolling interests in subsidiaries

(2,543)


2,692


(194)


Net Income

$

130,368


$

145,374


(10)

%





Amounts Attributable to Federated Hermes, Inc.




Earnings Per Share1




Basic

$

1.32


$

1.44


(8)

%

Diluted

$

1.31


$

1.44


(9)

%

Weighted-Average Shares Outstanding




Basic and Diluted

94,588


97,073



Dividends Declared Per Share

$

0.54


$

0.54





1)

Unvested share-based awards that receive non-forfeitable dividend rights are deemed participating securities and are required to be considered in the computation of basic earnings per share under the “two-class method.” As such, total net income of $5.4 million and $5.6 million available to unvested restricted Federated Hermes shareholders for the six months ended June 30, 2021 and June 30, 2020, respectively, was excluded from the computation of basic earnings per share. In addition to the amounts excluded from the basic earnings per share calculation, the computation of diluted earnings per share excludes net income available to unvested shareholders of a nonpublic consolidated subsidiary.

Unaudited Condensed Consolidated Balance Sheets



(in thousands)

June 30, 2021

Dec. 31, 2020

Assets



  Cash and other investments

$

424,201


$

438,771


  Other current assets

139,998


136,572


  Intangible assets, net, including goodwill

1,281,456


1,282,020


  Other long-term assets

199,293


203,476


  Total Assets

$

2,044,948


$

2,060,839





Liabilities, Redeemable Noncontrolling Interests and Equity



  Current liabilities

$

213,173


$

265,446


  Long-term debt

65,000


75,000


  Other long-term liabilities

353,376


346,409


  Redeemable noncontrolling interests

251,469


236,987


  Equity excluding treasury stock

1,548,034


1,461,728


  Treasury stock

(386,104)


(324,731)


  Total Liabilities, Redeemable Noncontrolling Interests and Equity

$

2,044,948


$

2,060,839


Unaudited Changes in Long-Term Assets – By Asset Class




(in millions)

Quarter Ended


Six Months Ended


June 30, 2021

March 31, 2021

June 30, 2020


June 30, 2021

June 30, 2020

Equity







Beginning assets

$

96,170


$

91,788


$

68,239



$

91,788


$

89,011


Sales1

5,366


7,760


4,579



13,126


10,659


Redemptions1

(6,784)


(7,164)


(7,280)



(13,948)


(15,122)


Net sales (redemptions)1

(1,418)


596


(2,701)



(822)


(4,463)


Net exchanges

8


32


(56)



40


(93)


Acquisitions/(dispositions)

0


0


0



0


(71)


Impact of foreign exchange2

171


(595)


439



(424)


(329)


Market gains and (losses)3

5,575


4,349


10,938



9,924


(7,196)


Ending assets

$

100,506


$

96,170


$

76,859



$

100,506


$

76,859









Fixed Income







Beginning assets

$

86,464


$

84,277


$

64,715



$

84,277


$

69,023


Sales1

10,584


11,187


10,691



21,771


18,378


Redemptions1

(7,418)


(8,284)


(5,407)



(15,702)


(15,195)


Net sales (redemptions)1

3,166


2,903


5,284



6,069


3,183


Net exchanges

(7)


(44)


146



(51)


31


Acquisitions/(dispositions)

0


0


0



0


(1)


Impact of foreign exchange2

25


(60)


29



(35)


(126)


Market gains and (losses)3

1,153


(612)


2,969



541


1,033


Ending assets

$

90,801


$

86,464


$

73,143



$

90,801


$

73,143









Alternative/Private Markets







Beginning assets4

$

19,301


$

19,084


$

18,061



$

19,084


$

18,102


Sales1

1,330


478


792



1,808


1,680


Redemptions1

(546)


(631)


(961)



(1,177)


(1,543)


Net sales (redemptions)1

784


(153)


(169)



631


137


Net exchanges

(1)


(1)


(3)



(2)


(1)


Acquisitions/(dispositions)

0


0


0



0


452


Impact of foreign exchange2

54


139


(33)



193


(1,154)


Market gains and (losses)3

824


232


(371)



1,056


(51)


Ending assets

$

20,962


$

19,301


$

17,485



$

20,962


$

17,485









Multi-asset







Beginning assets

$

3,981


$

3,948


$

3,494



$

3,948


$

4,199


Sales1

88


67


48



155


146


Redemptions1

(544)


(170)


(168)



(714)


(403)


Net sales (redemptions)1

(456)


(103)


(120)



(559)


(257)


Net exchanges

14


5


(5)



19


(19)


Impact of foreign exchange2

0


(1)


0



(1)


0


Market gains and (losses)3

160


132


336



292


(218)


Ending assets

$

3,699


$

3,981


$

3,705



$

3,699


$

3,705









Total Long-term Assets







Beginning assets4

$

205,916


$

199,097


$

154,509



$

199,097


$

180,335


Sales1

17,368


19,492


16,110



36,860


30,863


Redemptions1

(15,292)


(16,249)


(13,816)



(31,541)


(32,263)


Net sales (redemptions)1

2,076


3,243


2,294



5,319


(1,400)


Net exchanges

14


(8)


82



6


(82)


Acquisitions/(dispositions)

0


0


0



0


380


Impact of foreign exchange2

250


(517)


435



(267)


(1,609)


Market gains and (losses)3

7,712


4,101


13,872



11,813


(6,432)


Ending assets

$

215,968


$

205,916


$

171,192



$

215,968


$

171,192




1)

For certain accounts, Sales and Redemptions are calculated as the remaining difference between beginning and ending assets after the calculation of total investment return.

2)

Reflects the impact of translating non-U.S. dollar denominated AUM into U.S. dollars for reporting purposes.

3)

Reflects the approximate changes in the fair value of the securities held by the portfolios and, to a lesser extent, reinvested dividends, distributions and net investment income.

4)

The beginning assets for the six months ended June 30, 2020 include $8.2 billion of fund assets managed by a previously non-consolidated entity, HGPE, in which Federated Hermes held an equity method investment. Effective March 1, 2020, HGPE became a consolidated subsidiary.

Unaudited Changes in Long-Term Assets – By Asset Class and Product Type

(in millions) 



Quarter Ended


June 30, 2021


Equity

Fixed Income

Alternative / Private
Markets

Multi-asset

Total


Funds

Separate
Accounts1

Funds

Separate
Accounts1

Funds

Separate
Accounts1

Funds

Separate
Accounts1

Funds.

Separate
Accounts1

Beginning assets

$

56,767


$

39,403


$

55,581


$

30,883


$

12,231


$

7,070


$

3,797


$

184


$

128,376


$

77,540


Sales

3,454


1,912


8,216


2,368


881


449


88


0


12,639


4,729


Redemptions

(3,754)


(3,030)


(6,115)


(1,303)


(528)


(18)


(539)


(5)


(10,936)


(4,356)


Net sales (redemptions)

(300)


(1,118)


2,101


1,065


353


431


(451)


(5)


1,703


373


Net exchanges

9


(1)


(9)


2


(1)


0


13


1


12


2


Impact of foreign exchange2

81


90


19


6


38


16


0


0


138


112


Market gains and (losses)3

3,376


2,199


794


359


604


220


158


2


4,932


2,780


Ending assets

$

59,933


$

40,573


$

58,486


$

32,315


$

13,225


$

7,737


$

3,517


$

182


$

135,161


$

80,807














Six Months Ended


June 30, 2021


Equity

Fixed Income

Alternative / Private
Markets

Multi-asset

Total


Funds

Separate
Accounts1

Funds

Separate
Accounts1

Funds

Separate
Accounts1

Funds

Separate
Accounts1

Funds

Separate
Accounts1

Beginning assets

$

54,312


$

37,476


$

53,557


$

30,720


$

12,100


$

6,984


$

3,744


$

204


$

123,713


$

75,384


Sales

9,103


4,023


17,451


4,320


1,185


623


153


2


27,892


8,968


Redemptions

(8,195)


(5,753)


(12,847)


(2,855)


(989)


(188)


(680)


(34)


(22,711)


(8,830)


Net sales (redemptions)

908


(1,730)


4,604


1,465


196


435


(527)


(32)


5,181


138


Net exchanges

(363)


403


(53)


2


(2)


0


18


1


(400)


406


Impact of foreign exchange2

(180)


(244)


(19)


(16)


120


73


0


(1)


(79)


(188)


Market gains and (losses)3

5,256


4,668


397


144


811


245


282


10


6,746


5,067


Ending assets

$

59,933


$

40,573


$

58,486


$

32,315


$

13,225


$

7,737


$

3,517


$

182


$

135,161


$

80,807




1)

Includes separately managed accounts, institutional accounts, certain sub-advised funds and other managed products. For certain accounts, Sales and Redemptions are calculated as the remaining difference between beginning and ending assets after the calculation of total investment return.

2)

Reflects the impact of translating non-U.S. dollar denominated AUM into U.S. dollars for reporting purposes.

3)

Reflects the approximate changes in the fair value of the securities held by the portfolios and, to a lesser extent, reinvested dividends, distributions and net investment income.

Unaudited Changes in Long-Term Assets – By Product Type




(in millions) 

Quarter Ended


Six Months Ended


June 30, 2021

March 31, 2021

June 30, 2020


June 30, 2021

June 30, 2020

Total Fund Assets







Beginning assets

$

128,376


$

123,713


$

92,251



$

123,713


$

107,724


Sales

12,639


15,253


12,201



27,892


23,562


Redemptions

(10,936)


(11,775)


(10,022)



(22,711)


(23,626)


Net sales (redemptions)

1,703


3,478


2,179



5,181


(64)


Net exchanges

12


(412)


82



(400)


(76)


Impact of foreign exchange1

138


(217)


93



(79)


(1,071)


Market gains and (losses)2

4,932


1,814


9,717



6,746


(2,191)


Ending assets

$

135,161


$

128,376


$

104,322



$

135,161


$

104,322









Total Separate Account Assets3







Beginning assets5

$

77,540


$

75,384


$

62,258



$

75,384


$

72,611


Sales4

4,729


4,239


3,909



8,968


7,301


Redemptions4

(4,356)


(4,474)


(3,794)



(8,830)


(8,637)


Net sales (redemptions)4

373


(235)


115



138


(1,336)


Net exchanges

2


404


0



406


(6)


Acquisitions/(dispositions)

0


0


0



0


380


Impact of foreign exchange1

112


(300)


342



(188)


(538)


Market gains and (losses)2

2,780


2,287


4,155



5,067


(4,241)


Ending assets

$

80,807


$

77,540


$

66,870



$

80,807


$

66,870









Total Long-term Assets3







Beginning assets5

$

205,916


$

199,097


$

154,509



$

199,097


$

180,335


Sales4

17,368


19,492


16,110



36,860


30,863


Redemptions4

(15,292)


(16,249)


(13,816)



(31,541)


(32,263)


Net sales (redemptions)4

2,076


3,243


2,294



5,319


(1,400)


Net exchanges

14


(8)


82



6


(82)


Acquisitions/(dispositions)

0


0


0



0


380


Impact of foreign exchange1

250


(517)


435



(267)


(1,609)


Market gains and (losses)2

7,712


4,101


13,872



11,813


(6,432)


Ending assets

$

215,968


$

205,916


$

171,192



$

215,968


$

171,192




1)

Reflects the impact of translating non-U.S. dollar denominated AUM into U.S. dollars for reporting purposes.

2)

Reflects the approximate changes in the fair value of the securities held by the portfolios and, to a lesser extent, reinvested dividends, distributions and net investment income.

3)

Includes separately managed accounts, institutional accounts, certain sub-advised funds and other managed products.

4)

For certain accounts, Sales and Redemptions are calculated as the remaining difference between beginning and ending assets after the calculation of total investment return.

5)

The beginning assets for the six months ended June 30, 2020 includes $8.2 billion of fund assets managed by a previously non-consolidated entity, HGPE, in which Federated Hermes held an equity method investment. Effective March 1, 2020, HGPE became a consolidated subsidiary.

Unaudited Managed Assets


(in millions)

June 30, 2021

March 31, 2021

Dec. 31, 2020

Sept. 30, 2020

June 30, 2020

By Asset Class






Equity

$

100,506


$

96,170


$

91,788


$

80,405


$

76,859


Fixed-income

90,801


86,464


84,277


79,546


73,143


Alternative / private markets

20,962


19,301


19,084


18,146


17,485


Multi-asset

3,699


3,981


3,948


3,737


3,705


Total long-term assets

215,968


205,916


199,097


181,834


171,192


Money market

429,804


419,080


420,333


432,952


457,624


Total Managed Assets

$

645,772


$

624,996


$

619,430


$

614,786


$

628,816








By Product Type






Funds:






Equity

$

59,933


$

56,767


$

54,312


$

46,093


$

43,723


Fixed-income

58,486


55,581


53,557


49,779


46,046


Alternative / private markets

13,225


12,231


12,100


11,393


11,037


Multi-asset

3,517


3,797


3,744


3,546


3,516


Total long-term assets

135,161


128,376


123,713


110,811


104,322


Money market

301,971


297,182


301,855


325,940


344,846


Total Fund Assets

$

437,132


$

425,558


$

425,568


$

436,751


$

449,168


Separate Accounts:






Equity

$

40,573


$

39,403


$

37,476


$

34,312


$

33,136


Fixed-income

32,315


30,883


30,720


29,767


27,097


Alternative / private markets

7,737


7,070


6,984


6,753


6,448


Multi-asset

182


184


204


191


189


Total long-term assets

80,807


77,540


75,384


71,023


66,870


Money market

127,833


121,898


118,478


107,012


112,778


Total Separate Account Assets

$

208,640


$

199,438


$

193,862


$

178,035


$

179,648


Total Managed Assets

$

645,772


$

624,996


$

619,430


$

614,786


$

628,816


Unaudited Average Managed Assets

Quarter Ended

(in millions)

June 30, 2021

March 31, 2021

Dec. 31, 2020

Sept. 30, 2020

June 30, 2020

By Asset Class






Equity

$

99,165


$

95,167


$

85,572


$

80,403


$

73,620


Fixed-income

88,405


86,939


82,144


76,798


69,603


Alternative / private markets

20,047


19,278


18,549


18,270


18,022


Multi-asset

4,067


3,974


3,831


3,786


3,630


Total long-term assets

211,684


205,358


190,096


179,257


164,875


Money market

427,993


412,720


420,436


448,795


471,984


Total Avg. Managed Assets

$

639,677


$

618,078


$

610,532


$

628,052


$

636,859








By Product Type






Funds:






Equity

$

58,662


$

56,832


$

50,022


$

46,020


$

41,301


Fixed-income

57,006


55,416


51,934


48,418


43,229


Alternative / private markets

12,703


12,239


11,670


11,539


11,345


Multi-asset

3,880


3,783


3,634


3,590


3,453


Total long-term assets

132,251


128,270


117,260


109,567


99,328


Money market

301,990


288,403


311,769


338,814


356,736


Total Avg. Fund Assets

$

434,241


$

416,673


$

429,029


$

448,381


$

456,064


Separate Accounts:






Equity

$

40,503


$

38,335


$

35,550


$

34,383


$

32,319


Fixed-income

31,399


31,523


30,210


28,380


26,374


Alternative / private markets

7,344


7,039


6,879


6,731


6,677


Multi-asset

187


191


197


196


177


Total long-term assets

79,433


77,088


72,836


69,690


65,547


Money market

126,003


124,317


108,667


109,981


115,248


Total Avg. Separate Account Assets

$

205,436


$

201,405


$

181,503


$

179,671


$

180,795


Total Avg. Managed Assets

$

639,677


$

618,078


$

610,532


$

628,052


$

636,859


Unaudited Average Managed Assets


Six Months Ended

(in millions)


June 30, 2021


June 30, 2020

By Asset Class





Equity


$

97,166



$

78,194


Fixed-income


87,671



69,336


Alternative / private markets1


19,663



18,002


Multi-asset


4,021



3,818


Total long-term assets


208,521



169,350


Money market


420,357



439,174


Total Avg. Managed Assets


$

628,878



$

608,524







By Product Type





Funds:





Equity


$

57,747



$

43,149


Fixed-income


56,210



43,623


Alternative / private markets1


12,471



11,244


Multi-asset


3,832



3,633


Total long-term assets


130,260



101,649


Money market


295,197



323,688


Total Avg. Fund Assets


$

425,457



$

425,337


Separate Accounts:





Equity


$

39,419



$

35,045


Fixed-income


31,461



25,713


Alternative / private markets


7,192



6,758


Multi-asset


189



185


Total long-term assets


78,261



67,701


Money market


125,160



115,486


Total Avg. Separate Account Assets


$

203,421



$

183,187


Total Avg. Managed Assets


$

628,878



$

608,524




1)

The average balance for the six months ended June 30, 2020 includes $8.1 billion of fund assets managed by a previously non-consolidated entity, HGPE, in which Federated Hermes held an equity method investment. Effective March 1, 2020, HGPE became a consolidated subsidiary.

SOURCE Federated Hermes, Inc.

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