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Concentration Risk | 9 Months Ended
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Sep. 30, 2022
Risks and Uncertainties [Abstract] |
Concentration Risk | Concentration Risk (a) Revenue Concentration by Asset Class The following table presents Federated Hermes’ significant revenue concentration by asset class:
|  | Nine Months Ended
|  | September 30,
|  | 2022 |  | 2021
Equity Assets |  | 38 | % |  | 52 | %
Money Market Assets |  | 37 | % |  | 19 | %
Fixed-Income Assets |  | 15 | % |  | 18 | %
The change in the relative proportion of Federated Hermes’ revenue attributable to money market assets for the nine months ended September 30, 2022 as compared to the same period in 2021, was primarily the result of an increase in money market revenue due to a decrease in fee waivers in order for certain money market funds to maintain positive or zero net yields (Voluntary Yield-related Fee Waivers). See section below entitled Low Short-Term Interest Rates. The change in the relative proportion of Federated Hermes’ revenue attributable to equity and fixed-income assets for the nine months ended September 30, 2022 as compared to the same period in 2021, was primarily the result of increased money market revenue due to the decrease in Voluntary Yield-related Fee Waivers and decreased equity and fixed-income revenue from lower average equity assets and fixed-income asset mix in 2022. Low Short-Term Interest Rates In March 2020, in response to disrupted economic activity as a result of the outbreak of a novel coronavirus (the Pandemic), the Federal Open Market Committee of the Federal Reserve Board (FOMC) decreased the federal funds target rate range to 0% - 0.25%. The federal funds target rate drives short-term interest rates. As a result of the near-zero interest-rate environment, the gross yield earned by certain money market funds was not sufficient to cover all of the fund’s operating expenses. Beginning in the first quarter 2020, Federated Hermes began to implement Voluntary Yield-related Fee Waivers. These Voluntary Yield-related Fee Waivers have been partially offset by related reductions in distribution expense as a result of Federated Hermes’ mutual understanding and agreement with third-party intermediaries to share the impact of the Voluntary Yield-related Fee Waivers. In response to global economic activity and elevated inflation levels, the FOMC has raised the federal funds target rate multiple times in 2022. The range is currently 3.00% - 3.25% as of the September 2022 FOMC meeting. These rate increases have eliminated the net negative pre-tax impact of the Voluntary Yield-related Fee Waivers. There were no material Voluntary Yield-related Fee Waivers during the quarter ended September 30, 2022. During the nine months ended September 30, 2022, Voluntary Yield-related Fee Waivers totaled $85.3 million. These fee waivers were partially offset by related reductions in distribution expenses of $66.5 million, such that the net negative pre-tax impact to Federated Hermes was $18.8 million for the nine months ended September 30, 2022. During the three and nine months ended September 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 September 30, 2021, respectively. (b) Revenue Concentration by Investment Fund Strategy The following table presents Federated Hermes’ revenue concentration by investment fund strategy:
| Three Months Ended |  | Nine Months Ended
| September 30, |  | September 30,
| 2022 |  | 2021 |  | 2022 |  | 2021
Federated Hermes Government Obligations Fund | 14 | % |  | 5 | % |  | 11 | % |  | 5 | %
Federated Hermes Kaufmann Fund and Federated Hermes Kaufmann Fund II | 6 | % |  | 12 | % |  | 7 | % |  | 11 | %
A significant and prolonged decline in the AUM in these funds could have a material adverse effect on Federated Hermes’ future revenues and, to a lesser extent, net income, due to a related reduction in distribution expenses associated with these funds. (c) Revenue Concentration by Intermediary Approximately 14% and 11% of Federated Hermes’ total revenue for the three- and nine-month periods ended September 30, 2022, respectively, and 3% for both the three- and nine-month periods ended September 30, 2021 was derived from services provided to one intermediary, The Bank of New York Mellon Corporation, including its Pershing subsidiary. The increase in 2022 was primarily due to the decrease in Voluntary Yield-related Fee Waivers. An increase in Voluntary Yield-related Fee Waivers or a negative change in Federated Hermes’ relationship with this intermediary may have a material adverse effect on Federated Hermes’ future revenues and, to a lesser extent, net income due to a related reduction in distribution expenses associated with this intermediary.

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- Definition The entire disclosure for any concentrations existing at the date of the financial statements that make an entity vulnerable to a reasonably possible, near-term, severe impact. This disclosure informs financial statement users about the general nature of the risk associated with the concentration, and may indicate the percentage of concentration risk as of the balance sheet date. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 275 -URI https://asc.fasb.org/topic&trid=2134479 + Details
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