Federated Hermes, Inc. reports third quarter 2021 earnings
•Fixed-income assets reach a record $97 billion
•Long-term assets reach a record $220 billion
•Board declares $0.27 per share quarterly dividend
(PITTSBURGH, Pa., Oct. 28, 2021) — Federated Hermes, Inc. (NYSE: FHI), a global leader in active, responsible investing, today reported earnings per diluted share (EPS) of $0.73 for Q3 2021, compared to $0.85 for the same quarter last year, on net income of $71.4 million for Q3 2021, compared to $85.8 million for Q3 2020. Federated Hermes reported YTD 2021 EPS of $2.04, compared to $2.29 for the same period in 2020, on YTD 2021 net income of $201.7 million, compared to $231.2 million for the same period in 2020. As reported for Q2 2021, Federated Hermes' YTD 2021 results include a $14.5 million, or $0.10 per diluted share, noncash U.K. tax expense.
Federated Hermes' total managed assets were $634.1 billion at Sept. 30, 2021, up $19.3 billion or 3% from $614.8 billion at Sept. 30, 2020 and down $11.7 billion or 2% from $645.8 billion at June 30, 2021. Total average managed assets for Q3 2021 were $633.1 billion, up $5.0 billion or less than 1% from $628.1 billion reported for Q3 2020 and down $6.6 billion or 1% from $639.7 billion for Q2 2021.
"As clients continued to rely on our diversified investment options, Federated Hermes' fixed-income assets reached a record high in the third quarter, which marked our sixth consecutive quarter with positive net flows in fixed-income assets," said J. Christopher Donahue, president and chief executive officer. "Investors sought a range of Federated Hermes' fixed-income strategies, including multisector, high-yield and low-duration offerings, which have offered a yield advantage in this low-rate environment."
Federated Hermes' board of directors declared a dividend of $0.27 per share. The dividend is payable on Nov.15, 2021 to shareholders of record as of Nov. 8, 2021. During Q3 2021, Federated Hermes purchased 593,619 shares of Federated Hermes class B common stock for $17.7 million.
Equity assets were $97.4 billion at Sept. 30, 2021, up $17.0 billion or 21% from $80.4 billion at Sept. 30, 2020 and down $3.1 billion or 3% from $100.5 billion at June 30, 2021. Top-selling equity funds during Q3 2021 on a net basis were Federated Hermes Global Equity ESG Fund, Federated Hermes International Equity Fund, Federated Hermes MDT Small Cap Core Fund, Federated Hermes Global Small Cap Equity Fund and Federated Hermes Global Equity Fund (UCITS).
Fixed-income assets were a record $97.2 billion at Sept. 30, 2021, up $17.7 billion or 22% from $79.5 billion at Sept. 30, 2020 and up $6.4 billion or 7% from $90.8 billion at June 30, 2021. Top-selling fixed-income funds during Q3 2021 on a net basis were Federated Hermes Ultrashort Bond Fund, Federated Hermes Total Return Bond Fund, Federated Hermes Institutional High Yield Bond Fund, Federated Hermes Short-Term Income Fund and Federated Hermes Short-Intermediate Municipal Fund.
Alternative/private market assets were a record $22.1 billion at Sept. 30, 2021, up $4.0 billion or 22% from $18.1 billion at Sept. 30, 2020 and up $1.1 billion or 5% from $21.0 billion at June 30, 2021.
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| MEDIA: | MEDIA: | ANALYSTS: |
| Ed Costello 412-288-7538 | Meghan McAndrew 412-288-8103 | Ray Hanley 412-288-1920 |
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Federated Hermes reports Q3 2021 earnings | Page 2 of 13 |
Money market assets were $413.7 billion at Sept. 30, 2021, down $19.3 billion or 4% from $433.0 billion at Sept. 30, 2020 and down $16.1 billion or 4% from $429.8 billion at June 30, 2021. Money market fund assets were $292.3 billion at Sept. 30, 2021, down $33.6 billion or 10% from $325.9 billion at Sept. 30, 2020 and down $9.7 billion or 3% from $302.0 billion at June 30, 2021.
Financial Summary
As reported for Q2 2021, the U.K. enacted legislation that increased its corporate income tax rate from 19% to 25% effective April 1, 2023. As a result, Federated Hermes' YTD 2021 income tax provision includes a $14.5 million noncash U.K. tax expense (recorded in Q2) to revalue certain deferred tax assets and liabilities.
Q3 2021 vs. Q3 2020
Revenue decreased $37.9 million or 10% 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 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 Q3 2021, Federated Hermes derived 82% of its revenue from long-term assets (53% from equity, 19% from fixed-income and 10% from alternative/private markets and multi-asset), 17% from money market assets, and 1% from sources other than managed assets.
Operating expenses decreased $22.9 million or 9% primarily due to decreased distribution expenses predominantly resulting from higher voluntary yield-related fee waivers.
Nonoperating income (expenses), net decreased $8.0 million or 128% primarily due to an increase in the market value of investments in Q3 2020 compared to a slight decrease in Q3 2021.
Q3 2021 vs. Q2 2021
Revenue increased $15.5 million or 5% primarily due to a decrease in voluntary yield-related fee waivers, an extra day of revenue in Q3 2021 and an increase in revenue due to higher average fixed-income and equity assets. These increases were partially offset by a decrease in revenue due to lower average money market assets.
Operating expenses decreased $1.0 million.
Nonoperating income (expenses), net decreased $8.6 million or 126% primarily due to an increase in the market value of investments in Q2 2021 compared to a slight decrease in Q3 2021.
YTD 2021 vs. YTD 2020
Revenue decreased $105.5 million or 10% 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 primarily by an increase in revenue due to higher average long-term assets.
For the nine months ended Sept. 30, 2021, Federated Hermes derived 80% of its revenue from long-term assets (52% from equity, 18% from fixed-income and 10% from alternative/private markets and multi-asset), 19% from money market assets, and 1% from sources other than managed assets.
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Federated Hermes reports Q3 2021 earnings | Page 3 of 13 |
Operating expenses decreased $79.9 million or 10% primarily due to decreased distribution expenses predominantly resulting from higher voluntary yield-related fee waivers.
Nonoperating income (expense), net decreased $6.3 million or 47% primarily due to a gain recorded in 2020 from a fair value adjustment to the equity investment of a previously nonconsolidated entity. This decrease was partially offset by higher gains recorded from the increase in market value of investments in 2021 when compared to the prior year.
Impact of voluntary yield-related fee waivers
During the three and nine months ended Sept. 30, 2021, voluntary yield-related fee waivers totaled $109.2 million and $310.2 million, respectively. These fee waivers were partially offset by related reductions in distribution expenses of $72.3 million and $204.9 million, respectively, such that the net negative pre-tax impact to Federated Hermes was $36.9 million and $105.3 million for the three and nine months ended Sept. 30, 2021, respectively. During the three and nine months ended Sept. 30, 2020, voluntary yield-related fee waivers totaled $36.8 million and $56.9 million, respectively. These fee waivers were largely offset by related reductions in distribution expenses of $33.0 million and $51.0 million, respectively, such that the net negative pre-tax impact to Federated Hermes was $3.8 million and $5.9 million for the three and nine months ended Sept. 30, 2020, respectively.
Short-term interest rates remained near historic lows during Q3 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. As a result, the net negative impact on pre-tax income from voluntary yield-related fee waivers on money market mutual funds and certain separate accounts may be approximately $39 million during Q4 2021. The amount of voluntary yield-related fee 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 voluntary yield-related fee 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 Oct. 29, 2021. Investors are invited to listen to the earnings teleconference by calling 888-506-0062 (domestic) or 973-528-0011 (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 Oct. 29, 2021. To access the telephone replay, dial 877-481-4010 (domestic) or 919-882-2331 (international) and enter access code 43175. The online replay will be available via FederatedHermes.com for one year.
Federated Hermes, Inc. is a leading global investment manager with $634.1 billion in assets under management as of Sept. 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.
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Federated Hermes reports Q3 2021 earnings | Page 4 of 13 |
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 10% of fixed-income fund managers and the top 11% of money market 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.
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1) ISS Market Intelligence (SIMFUND), Sept. 30, 2021. Based on assets under management in open-end funds.
2) Money Management Institute/Cerulli, Q2 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, 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.
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Federated Hermes reports Q3 2021 earnings | Page 5 of 13 |
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| Unaudited Condensed Consolidated Statements of Income |
| (in thousands, except per share data) | | | | | | |
| Quarter Ended | % Change Q3 2020 to Q3 2021 | | Quarter Ended | % Change Q2 2021 to Q3 2021 |
| Sept. 30, 2021 | Sept. 30, 2020 | | June 30, 2021 |
| Revenue | | | | | | |
| Investment advisory fees, net | $ | 230,210 | | $ | 260,089 | | (11) | % | | $ | 214,289 | | 7 | % |
| Administrative service fees, net—affiliates | 76,853 | | 83,028 | | (7) | | | 77,750 | | (1) | |
| Other service fees, net | 19,526 | | 21,338 | | (8) | | | 19,001 | | 3 | |
| Total Revenue | 326,589 | | 364,455 | | (10) | | | 311,040 | | 5 | |
| | | | | | |
| Operating Expenses | | | | | | |
| Compensation and related | 131,996 | | 126,186 | | 5 | | | 132,769 | | (1) | |
| Distribution | 38,486 | | 73,726 | | (48) | | | 38,115 | | 1 | |
| Systems and communications | 18,537 | | 16,193 | | 14 | | | 18,954 | | (2) | |
| Professional service fees | 14,294 | | 14,006 | | 2 | | | 15,122 | | (5) | |
| Office and occupancy | 11,036 | | 10,578 | | 4 | | | 11,082 | | 0 | |
| Advertising and promotional | 4,660 | | 2,921 | | 60 | | | 4,623 | | 1 | |
| Travel and related | 1,643 | | 542 | | 203 | | | 898 | | 83 | |
| Other | 7,535 | | 6,922 | | 9 | | | 7,668 | | (2) | |
| Total Operating Expenses | 228,187 | | 251,074 | | (9) | | | 229,231 | | 0 | |
| Operating Income | 98,402 | | 113,381 | | (13) | | | 81,809 | | 20 | |
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| Nonoperating Income (Expenses) | | | | | | |
| Investment income (loss), net | 42 | | 6,622 | | (99) | | | 7,393 | | (99) | |
| Debt expense | (476) | | (494) | | (4) | | | (346) | | 38 | |
| Other, net | (1,319) | | 103 | | NM | | (184) | | NM |
| Total Nonoperating Income (Expenses), net | (1,753) | | 6,231 | | (128) | | | 6,863 | | (126) | |
| Income before income taxes | 96,649 | | 119,612 | | (19) | | | 88,672 | | 9 | |
| Income tax provision | 23,163 | | 32,928 | | (30) | | | 35,193 | | (34) | |
| Net income including the noncontrolling interests in subsidiaries | 73,486 | | 86,684 | | (15) | | | 53,479 | | 37 | |
| Less: Net income (loss) attributable to the noncontrolling interests in subsidiaries | 2,124 | | 862 | | 146 | | | (2,405) | | 188 | |
| Net Income | $ | 71,362 | | $ | 85,822 | | (17) | % | | $ | 55,884 | | 28 | % |
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| Amounts Attributable to Federated Hermes, Inc. | | | | | | |
Earnings Per Share1 | | | | | | |
| Basic | $ | 0.73 | | $ | 0.86 | | (15) | % | | $ | 0.57 | | 28 | % |
| Diluted | $ | 0.73 | | $ | 0.85 | | (14) | % | | $ | 0.56 | | 30 | % |
| Weighted-Average Shares Outstanding | | | | | | |
| Basic and Diluted | 93,320 | | 96,039 | | | | 93,964 | | |
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| 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 $3.0 million, $3.4 million and $2.4 million available to unvested restricted Federated Hermes shareholders for the quarterly periods ended Sept. 30, 2021, Sept. 30, 2020 and June 30, 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.
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Federated Hermes reports Q3 2021 earnings | Page 6 of 13 |
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| Unaudited Condensed Consolidated Statements of Income | | | | | | |
| (in thousands, except per share data) | | | | | | |
| Nine Months Ended | | | |
| Sept. 30, 2021 | Sept. 30, 2020 | % Change | | | |
| Revenue | | | | | | |
| Investment advisory fees, net | $ | 692,188 | | $ | 745,875 | | (7) | % | | | |
| Administrative service fees, net—affiliates | 228,904 | | 238,960 | | (4) | | | | |
| Other service fees, net | 57,710 | | 99,515 | | (42) | | | | |
| Total Revenue | 978,802 | | 1,084,350 | | (10) | | | | |
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| Operating Expenses | | | | | | |
| Compensation and related | 408,385 | | 365,104 | | 12 | | | | |
| Distribution | 120,990 | | 258,925 | | (53) | | | | |
| Systems and communications | 56,086 | | 46,179 | | 21 | | | | |
| Professional service fees | 44,052 | | 41,162 | | 7 | | | | |
| Office and occupancy | 33,358 | | 32,539 | | 3 | | | | |
| Advertising and promotional | 12,107 | | 10,981 | | 10 | | | | |
| Travel and related | 2,838 | | 4,026 | | (30) | | | | |
| Other | 23,297 | | 22,058 | | 6 | | | | |
| Total Operating Expenses | 701,113 | | 780,974 | | (10) | | | | |
| Operating Income | 277,689 | | 303,376 | | (8) | | | | |
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| Nonoperating Income (Expenses) | | | | | | |
| Investment income (loss), net | 9,446 | | 7,011 | | 35 | | | | |
| Debt expense | (1,313) | | (2,211) | | (41) | | | | |
| Other, net | (1,158) | | 8,426 | | (114) | | | | |
| Total Nonoperating Income (Expenses), net | 6,975 | | 13,226 | | (47) | | | | |
| Income before income taxes | 284,664 | | 316,602 | | (10) | | | | |
| Income tax provision | 83,353 | | 81,852 | | 2 | | | | |
| Net income including the noncontrolling interests in subsidiaries | 201,311 | | 234,750 | | (14) | | | | |
| Less: Net income (loss) attributable to the noncontrolling interests in subsidiaries | (419) | | 3,554 | | (112) | | | | |
| Net Income | $ | 201,730 | | $ | 231,196 | | (13) | % | | | |
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| Amounts Attributable to Federated Hermes, Inc. | | | | | | |
Earnings Per Share1 | | | | | | |
| Basic | $ | 2.05 | | $ | 2.30 | | (11) | % | | | |
| Diluted | $ | 2.04 | | $ | 2.29 | | (11) | % | | | |
| | | | | | |
| Weighted-Average Shares Outstanding | | | | | | |
| Basic and Diluted | 94,160 | | 96,726 | | | | | |
| | | | | | |
| Dividends Declared Per Share | $ | 0.81 | | $ | 0.81 | | | | | |
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 $8.4 million and $8.9 million available to unvested restricted Federated Hermes shareholders for the nine months ended Sept. 30, 2021 and Sept. 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.
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Federated Hermes reports Q3 2021 earnings | Page 7 of 13 |
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| Unaudited Condensed Consolidated Balance Sheets | | |
| (in thousands) | Sept. 30, 2021 | Dec. 31, 2020 |
| Assets | | |
| Cash and other investments | $ | 345,085 | | $ | 438,771 | |
| Other current assets | 132,957 | | 136,572 | |
| Intangible assets, net, including goodwill | 1,271,178 | | 1,282,020 | |
| Other long-term assets | 197,189 | | 203,476 | |
| Total Assets | $ | 1,946,409 | | $ | 2,060,839 | |
| | |
| Liabilities, Redeemable Noncontrolling Interests and Equity | | |
| Current liabilities | $ | 234,712 | | $ | 265,446 | |
| Long-term debt | 102,150 | | 75,000 | |
| Other long-term liabilities | 349,224 | | 346,409 | |
| Redeemable noncontrolling interests | 55,472 | | 236,987 | |
| Equity excluding treasury stock | 1,608,658 | | 1,461,728 | |
| Treasury stock | (403,807) | | (324,731) | |
| Total Liabilities, Redeemable Noncontrolling Interests and Equity | $ | 1,946,409 | | $ | 2,060,839 | |
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Federated Hermes reports Q3 2021 earnings | Page 8 of 13 |
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| Unaudited Changes in Long-Term Assets - By Asset Class | | | |
| (in millions) | Quarter Ended | | Nine Months Ended |
| Sept. 30, 2021 | June 30, 2021 | Sept. 30, 2020 | | Sept. 30, 2021 | Sept. 30, 2020 |
| Equity | | | | | | |
| Beginning assets | $ | 100,506 | | $ | 96,170 | | $ | 76,859 | | | $ | 91,788 | | $ | 89,011 | |
Sales1 | 4,332 | | 5,366 | | 4,186 | | | 17,458 | | 14,845 | |
Redemptions1 | (5,707) | | (6,784) | | (5,552) | | | (19,655) | | (20,674) | |
Net sales (redemptions)1 | (1,375) | | (1,418) | | (1,366) | | | (2,197) | | (5,829) | |
| Net exchanges | 3 | | 8 | | 31 | | | 43 | | (62) | |
| Acquisitions/(dispositions) | 408 | | 0 | | 0 | | | 408 | | (71) | |
Impact of foreign exchange2 | (510) | | 171 | | 578 | | | (934) | | 249 | |
Market gains and (losses)3 | (1,607) | | 5,575 | | 4,303 | | | 8,317 | | (2,893) | |
| Ending assets | $ | 97,425 | | $ | 100,506 | | $ | 80,405 | | | $ | 97,425 | | $ | 80,405 | |
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| Fixed Income | | | | | | |
| Beginning assets | $ | 90,801 | | $ | 86,464 | | $ | 73,143 | | | $ | 84,277 | | $ | 69,023 | |
Sales1 | 12,935 | | 10,584 | | 9,859 | | | 34,706 | | 28,237 | |
Redemptions1 | (6,604) | | (7,418) | | (4,897) | | | (22,306) | | (20,092) | |
Net sales (redemptions)1 | 6,331 | | 3,166 | | 4,962 | | | 12,400 | | 8,145 | |
| Net exchanges | (7) | | (7) | | (36) | | | (58) | | (5) | |
| Acquisitions/(dispositions) | 17 | | 0 | | 0 | | | 17 | | (1) | |
Impact of foreign exchange2 | (89) | | 25 | | 135 | | | (124) | | 9 | |
Market gains and (losses)3 | 173 | | 1,153 | | 1,342 | | | 714 | | 2,375 | |
| Ending assets | $ | 97,226 | | $ | 90,801 | | $ | 79,546 | | | $ | 97,226 | | $ | 79,546 | |
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| Alternative/Private Markets | | | | | | |
Beginning assets4 | $ | 20,962 | | $ | 19,301 | | $ | 17,485 | | | $ | 19,084 | | $ | 18,102 | |
Sales1 | 1,319 | | 1,330 | | 586 | | | 3,127 | | 2,266 | |
Redemptions1 | (533) | | (546) | | (411) | | | (1,710) | | (1,954) | |
Net sales (redemptions)1 | 786 | | 784 | | 175 | | | 1,417 | | 312 | |
| Net exchanges | 0 | | (1) | | 0 | | | (2) | | (1) | |
| Acquisitions/(dispositions) | 81 | | 0 | | 0 | | | 81 | | 452 | |
Impact of foreign exchange2 | (554) | | 54 | | 708 | | | (361) | | (446) | |
Market gains and (losses)3 | 789 | | 824 | | (222) | | | 1,845 | | (273) | |
| Ending assets | $ | 22,064 | | $ | 20,962 | | $ | 18,146 | | | $ | 22,064 | | $ | 18,146 | |
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| Multi-asset | | | | | | |
| Beginning assets | $ | 3,699 | | $ | 3,981 | | $ | 3,705 | | | $ | 3,948 | | $ | 4,199 | |
Sales1 | 71 | | 88 | | 45 | | | 226 | | 191 | |
Redemptions1 | (103) | | (544) | | (155) | | | (817) | | (558) | |
Net sales (redemptions)1 | (32) | | (456) | | (110) | | | (591) | | (367) | |
| Net exchanges | 9 | | 14 | | (4) | | | 28 | | (23) | |
| Acquisitions/(dispositions) | 54 | | 0 | | 0 | | | 54 | | 0 | |
Impact of foreign exchange2 | 0 | | 0 | | 1 | | | (1) | | 1 | |
Market gains and (losses)3 | (38) | | 160 | | 145 | | | 254 | | (73) | |
| Ending assets | $ | 3,692 | | $ | 3,699 | | $ | 3,737 | | | $ | 3,692 | | $ | 3,737 | |
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| Total Long-term Assets | | | | | | |
Beginning assets4 | $ | 215,968 | | $ | 205,916 | | $ | 171,192 | | | $ | 199,097 | | $ | 180,335 | |
Sales1 | 18,657 | | 17,368 | | 14,676 | | | 55,517 | | 45,539 | |
Redemptions1 | (12,947) | | (15,292) | | (11,015) | | | (44,488) | | (43,278) | |
Net sales (redemptions)1 | 5,710 | | 2,076 | | 3,661 | | | 11,029 | | 2,261 | |
| Net exchanges | 5 | | 14 | | (9) | | | 11 | | (91) | |
| Acquisitions/(dispositions) | 560 | | 0 | | 0 | | | 560 | | 380 | |
Impact of foreign exchange2 | (1,153) | | 250 | | 1,422 | | | (1,420) | | (187) | |
Market gains and (losses)3 | (683) | | 7,712 | | 5,568 | | | 11,130 | | (864) | |
| Ending assets | $ | 220,407 | | $ | 215,968 | | $ | 181,834 | | | $ | 220,407 | | $ | 181,834 | |
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 nine months ended September 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.
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Federated Hermes reports Q3 2021 earnings | Page 9 of 13 |
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Unaudited Changes in Long-Term Assets - By Asset Class and Product Type |
(in millions) | |
| Quarter Ended |
| Sept. 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 | $ | 59,933 | | $ | 40,573 | | $ | 58,486 | | $ | 32,315 | | $ | 13,225 | | $ | 7,737 | | $ | 3,517 | | $ | 182 | | $ | 135,161 | | $ | 80,807 | |
| Sales | 2,655 | | 1,677 | | 7,273 | | 5,662 | | 1,140 | | 179 | | 71 | | 0 | | 11,139 | | 7,518 | |
| Redemptions | (3,522) | | (2,185) | | (5,587) | | (1,017) | | (494) | | (39) | | (99) | | (4) | | (9,702) | | (3,245) | |
| Net sales (redemptions) | (867) | | (508) | | 1,686 | | 4,645 | | 646 | | 140 | | (28) | | (4) | | 1,437 | | 4,273 | |
| Net exchanges | 3 | | 0 | | 43 | | (50) | | 0 | | 0 | | 9 | | 0 | | 55 | | (50) | |
| Acquisitions/(dispositions) | 408 | | 0 | | 17 | | 0 | | 81 | | 0 | | 54 | | 0 | | 560 | | 0 | |
Impact of foreign exchange2 | (283) | | (227) | | (71) | | (18) | | (345) | | (209) | | 0 | | 0 | | (699) | | (454) | |
Market gains and (losses)3 | (976) | | (631) | | 101 | | 72 | | 692 | | 97 | | (34) | | (4) | | (217) | | (466) | |
| Ending assets | $ | 58,218 | | $ | 39,207 | | $ | 60,262 | | $ | 36,964 | | $ | 14,299 | | $ | 7,765 | | $ | 3,518 | | $ | 174 | | $ | 136,297 | | $ | 84,110 | |
| | | | | | | | | | |
| Nine Months Ended |
| Sept. 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 | 11,758 | | 5,700 | | 24,724 | | 9,982 | | 2,325 | | 802 | | 224 | | 2 | | 39,031 | | 16,486 | |
| Redemptions | (11,717) | | (7,938) | | (18,434) | | (3,872) | | (1,483) | | (227) | | (779) | | (38) | | (32,413) | | (12,075) | |
| Net sales (redemptions) | 41 | | (2,238) | | 6,290 | | 6,110 | | 842 | | 575 | | (555) | | (36) | | 6,618 | | 4,411 | |
| Net exchanges | (360) | | 403 | | (10) | | (48) | | (2) | | 0 | | 27 | | 1 | | (345) | | 356 | |
| Acquisition-related | 408 | | 0 | | 17 | | 0 | | 81 | | 0 | | 54 | | 0 | | 560 | | 0 | |
Impact of foreign exchange2 | (463) | | (471) | | (90) | | (34) | | (225) | | (136) | | 0 | | (1) | | (778) | | (642) | |
Market gains and (losses)3 | 4,280 | | 4,037 | | 498 | | 216 | | 1,503 | | 342 | | 248 | | 6 | | 6,529 | | 4,601 | |
| Ending assets | $ | 58,218 | | $ | 39,207 | | $ | 60,262 | | $ | 36,964 | | $ | 14,299 | | $ | 7,765 | | $ | 3,518 | | $ | 174 | | $ | 136,297 | | $ | 84,110 | |
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.
| | | | | | | | |
Federated Hermes reports Q3 2021 earnings | Page 10 of 13 |
| | | | | | | | | | | | | | | | | | | | |
Unaudited Changes in Long-Term Assets - By Product Type | | | |
(in millions) | Quarter Ended | | Nine Months Ended |
| Sept. 30, 2021 | June 30, 2021 | Sept. 30, 2020 | | Sept. 30, 2021 | Sept. 30, 2020 |
| Total Fund Assets | | | | | | |
| Beginning assets | $ | 135,161 | | $ | 128,376 | | $ | 104,322 | | | $ | 123,713 | | $ | 107,724 | |
| Sales | 11,139 | | 12,639 | | 10,635 | | | 39,031 | | 34,197 | |
| Redemptions | (9,702) | | (10,936) | | (8,328) | | | (32,413) | | (31,954) | |
| Net sales (redemptions) | 1,437 | | 1,703 | | 2,307 | | | 6,618 | | 2,243 | |
| Net exchanges | 55 | | 12 | | (9) | | | (345) | | (85) | |
| Acquisitions/(dispositions) | 560 | | 0 | | 0 | | | 560 | | 0 | |
Impact of foreign exchange1 | (699) | | 138 | | 851 | | | (778) | | (220) | |
Market gains and (losses)2 | (217) | | 4,932 | | 3,340 | | | 6,529 | | 1,149 | |
| Ending assets | $ | 136,297 | | $ | 135,161 | | $ | 110,811 | | | $ | 136,297 | | $ | 110,811 | |
| | | | | | |
Total Separate Account Assets3 | | | | | | |
Beginning assets5 | $ | 80,807 | | $ | 77,540 | | $ | 66,870 | | | $ | 75,384 | | $ | 72,611 | |
Sales4 | 7,518 | | 4,729 | | 4,041 | | | 16,486 | | 11,342 | |
Redemptions4 | (3,245) | | (4,356) | | (2,687) | | | (12,075) | | (11,324) | |
Net sales (redemptions)4 | 4,273 | | 373 | | 1,354 | | | 4,411 | | 18 | |
| Net exchanges | (50) | | 2 | | 0 | | | 356 | | (6) | |
| Acquisitions/(dispositions) | 0 | | 0 | | 0 | | | 0 | | 380 | |
Impact of foreign exchange1 | (454) | | 112 | | 571 | | | (642) | | 33 | |
Market gains and (losses)2 | (466) | | 2,780 | | 2,228 | | | 4,601 | | (2,013) | |
| Ending assets | $ | 84,110 | | $ | 80,807 | | $ | 71,023 | | | $ | 84,110 | | $ | 71,023 | |
| | | | | | |
Total Long-term Assets3 | | | | | | |
Beginning assets5 | $ | 215,968 | | $ | 205,916 | | $ | 171,192 | | | $ | 199,097 | | $ | 180,335 | |
Sales4 | 18,657 | | 17,368 | | 14,676 | | | 55,517 | | 45,539 | |
Redemptions4 | (12,947) | | (15,292) | | (11,015) | | | (44,488) | | (43,278) | |
Net sales (redemptions)4 | 5,710 | | 2,076 | | 3,661 | | | 11,029 | | 2,261 | |
| Net exchanges | 5 | | 14 | | (9) | | | 11 | | (91) | |
| Acquisitions/(dispositions) | 560 | | 0 | | 0 | | | 560 | | 380 | |
Impact of foreign exchange1 | (1,153) | | 250 | | 1,422 | | | (1,420) | | (187) | |
Market gains and (losses)2 | (683) | | 7,712 | | 5,568 | | | 11,130 | | (864) | |
| Ending assets | $ | 220,407 | | $ | 215,968 | | $ | 181,834 | | | $ | 220,407 | | $ | 181,834 | |
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 nine months ended September 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.
| | | | | | | | |
Federated Hermes reports Q3 2021 earnings | Page 11 of 13 |
| | | | | | | | | | | | | | | | | |
| Unaudited Managed Assets | |
(in millions) | Sept. 30, 2021 | June 30, 2021 | March 31, 2021 | Dec. 31, 2020 | Sept. 30, 2020 |
| By Asset Class | | | | | |
| Equity | $ | 97,425 | | $ | 100,506 | | $ | 96,170 | | $ | 91,788 | | $ | 80,405 | |
| Fixed-income | 97,226 | | 90,801 | | 86,464 | | 84,277 | | 79,546 | |
| Alternative / private markets | 22,064 | | 20,962 | | 19,301 | | 19,084 | | 18,146 | |
| Multi-asset | 3,692 | | 3,699 | | 3,981 | | 3,948 | | 3,737 | |
| Total long-term assets | 220,407 | | 215,968 | | 205,916 | | 199,097 | | 181,834 | |
| Money market | 413,713 | | 429,804 | | 419,080 | | 420,333 | | 432,952 | |
| Total Managed Assets | $ | 634,120 | | $ | 645,772 | | $ | 624,996 | | $ | 619,430 | | $ | 614,786 | |
| | | | | |
| By Product Type | | | | | |
| Funds: | | | | | |
| Equity | $ | 58,218 | | $ | 59,933 | | $ | 56,767 | | $ | 54,312 | | $ | 46,093 | |
| Fixed-income | 60,262 | | 58,486 | | 55,581 | | 53,557 | | 49,779 | |
| Alternative / private markets | 14,299 | | 13,225 | | 12,231 | | 12,100 | | 11,393 | |
| Multi-asset | 3,518 | | 3,517 | | 3,797 | | 3,744 | | 3,546 | |
| Total long-term assets | 136,297 | | 135,161 | | 128,376 | | 123,713 | | 110,811 | |
| Money market | 292,311 | | 301,971 | | 297,182 | | 301,855 | | 325,940 | |
| Total Fund Assets | $ | 428,608 | | $ | 437,132 | | $ | 425,558 | | $ | 425,568 | | $ | 436,751 | |
| Separate Accounts: | | | | | |
| Equity | $ | 39,207 | | $ | 40,573 | | $ | 39,403 | | $ | 37,476 | | $ | 34,312 | |
| Fixed-income | 36,964 | | 32,315 | | 30,883 | | 30,720 | | 29,767 | |
| Alternative / private markets | 7,765 | | 7,737 | | 7,070 | | 6,984 | | 6,753 | |
| Multi-asset | 174 | | 182 | | 184 | | 204 | | 191 | |
| Total long-term assets | 84,110 | | 80,807 | | 77,540 | | 75,384 | | 71,023 | |
| Money market | 121,402 | | 127,833 | | 121,898 | | 118,478 | | 107,012 | |
| Total Separate Account Assets | $ | 205,512 | | $ | 208,640 | | $ | 199,438 | | $ | 193,862 | | $ | 178,035 | |
| Total Managed Assets | $ | 634,120 | | $ | 645,772 | | $ | 624,996 | | $ | 619,430 | | $ | 614,786 | |
| | | | | | | | |
Federated Hermes reports Q3 2021 earnings | Page 12 of 13 |
| | | | | | | | | | | | | | | | | |
| Unaudited Average Managed Assets | Quarter Ended |
(in millions) | Sept. 30, 2021 | June 30, 2021 | March 31, 2021 | Dec. 31, 2020 | Sept. 30, 2020 |
| By Asset Class | | | | | |
| Equity | $ | 100,076 | | $ | 99,165 | | $ | 95,167 | | $ | 85,572 | | $ | 80,403 | |
| Fixed-income | 93,685 | | 88,405 | | 86,939 | | 82,144 | | 76,798 | |
| Alternative / private markets | 21,446 | | 20,047 | | 19,278 | | 18,549 | | 18,270 | |
| Multi-asset | 3,713 | | 4,067 | | 3,974 | | 3,831 | | 3,786 | |
| Total long-term assets | 218,920 | | 211,684 | | 205,358 | | 190,096 | | 179,257 | |
| Money market | 414,141 | | 427,993 | | 412,720 | | 420,436 | | 448,795 | |
| Total Avg. Managed Assets | $ | 633,061 | | $ | 639,677 | | $ | 618,078 | | $ | 610,532 | | $ | 628,052 | |
| | | | | |
| By Product Type | | | | | |
| Funds: | | | | | |
| Equity | $ | 59,918 | | $ | 58,662 | | $ | 56,832 | | $ | 50,022 | | $ | 46,020 | |
| Fixed-income | 59,618 | | 57,006 | | 55,416 | | 51,934 | | 48,418 | |
| Alternative / private markets | 13,704 | | 12,703 | | 12,239 | | 11,670 | | 11,539 | |
| Multi-asset | 3,533 | | 3,880 | | 3,783 | | 3,634 | | 3,590 | |
| Total long-term assets | 136,773 | | 132,251 | | 128,270 | | 117,260 | | 109,567 | |
| Money market | 289,566 | | 301,990 | | 288,403 | | 311,769 | | 338,814 | |
| Total Avg. Fund Assets | $ | 426,339 | | $ | 434,241 | | $ | 416,673 | | $ | 429,029 | | $ | 448,381 | |
| Separate Accounts: | | | | | |
| Equity | $ | 40,158 | | $ | 40,503 | | $ | 38,335 | | $ | 35,550 | | $ | 34,383 | |
| Fixed-income | 34,067 | | 31,399 | | 31,523 | | 30,210 | | 28,380 | |
| Alternative / private markets | 7,742 | | 7,344 | | 7,039 | | 6,879 | | 6,731 | |
| Multi-asset | 180 | | 187 | | 191 | | 197 | | 196 | |
| Total long-term assets | 82,147 | | 79,433 | | 77,088 | | 72,836 | | 69,690 | |
| Money market | 124,575 | | 126,003 | | 124,317 | | 108,667 | | 109,981 | |
| Total Avg. Separate Account Assets | $ | 206,722 | | $ | 205,436 | | $ | 201,405 | | $ | 181,503 | | $ | 179,671 | |
| Total Avg. Managed Assets | $ | 633,061 | | $ | 639,677 | | $ | 618,078 | | $ | 610,532 | | $ | 628,052 | |
| | | | | | | | |
Federated Hermes reports Q3 2021 earnings | Page 13 of 13 |
| | | | | | | | | | | | | | |
| Unaudited Average Managed Assets | | Nine Months Ended |
| (in millions) | | Sept. 30, 2021 | | Sept. 30, 2020 |
| By Asset Class | | | | |
| Equity | | $ | 98,136 | | | $ | 78,930 | |
| Fixed-income | | 89,676 | | | 71,823 | |
Alternative / private markets1 | | 20,257 | | | 18,091 | |
| Multi-asset | | 3,918 | | | 3,808 | |
| Total long-term assets | | 211,987 | | | 172,652 | |
| Money market | | 418,285 | | | 442,381 | |
| Total Avg. Managed Assets | | $ | 630,272 | | | $ | 615,033 | |
| | | | |
| By Product Type | | | | |
| Funds: | | | | |
| Equity | | $ | 58,471 | | | $ | 44,106 | |
| Fixed-income | | 57,346 | | | 45,221 | |
Alternative / private markets1 | | 12,882 | | | 11,342 | |
| Multi-asset | | 3,732 | | | 3,619 | |
| Total long-term assets | | 132,431 | | | 104,288 | |
| Money market | | 293,320 | | | 328,730 | |
| Total Avg. Fund Assets | | $ | 425,751 | | | $ | 433,018 | |
| Separate Accounts: | | | | |
| Equity | | $ | 39,665 | | | $ | 34,824 | |
| Fixed-income | | 32,330 | | | 26,602 | |
| Alternative / private markets | | 7,375 | | | 6,749 | |
| Multi-asset | | 186 | | | 189 | |
| Total long-term assets | | 79,556 | | | 68,364 | |
| Money market | | 124,965 | | | 113,651 | |
| Total Avg. Separate Account Assets | | $ | 204,521 | | | $ | 182,015 | |
| Total Avg. Managed Assets | | $ | 630,272 | | | $ | 615,033 | |
1) The average balance for the nine months ended September 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.
