Federated Hermes, Inc. reports fourth quarter and full-year 2020 earnings

Rhea-AI Summary

Federated Hermes (NYSE: FHI) reported Q4 2020 earnings per diluted share (EPS) of $0.93, up from $0.81 in Q4 2019, with net income rising to $95.2 million from $82.1 million. For full-year 2020, EPS increased to $3.23 from $2.69, and net income climbed to $326.4 million versus $272.3 million in 2019. Total managed assets reached a record $619.4 billion, growing by 8% year-over-year. The board declared a quarterly dividend of $0.27 per share. Fixed-income assets surged by 22%, while equity and alternative market assets also hit records. Voluntary yield-related fee waivers amounted to $56.1 million in Q4.

Positive

• EPS for Q4 2020 increased to $0.93, a 15% rise from $0.81 in Q4 2019.
• Full-year 2020 net income rose to $326.4 million, up 20% from the previous year.
• Total managed assets reached $619.4 billion, an 8% increase year-over-year.
• Fixed-income assets surged 22% in 2020, indicating strong sales.
• Quarterly dividend of $0.27 per share declared, enhancing shareholder returns.

Negative

• Voluntary yield-related fee waivers amounted to $56.1 million in Q4 2020, impacting revenue.
• Operating expenses increased by $51.2 million or 5% for the full year, primarily due to higher compensation expenses.

PITTSBURGH, Jan. 28, 2021 /PRNewswire/ -- Federated Hermes, Inc. (NYSE: FHI), a global leader in active, responsible investing, today reported earnings per diluted share (EPS) for Q4 2020 of $0.93, compared to $0.81 for the same quarter last year, on net income of $95.2 million for Q4 2020, compared to $82.1 million for Q4 2019. Full-year 2020 EPS was $3.23, compared to $2.69 for 2019 on net income of $326.4 million for 2020, compared to $272.3 million for 2019.

Federated Hermes' total managed assets were $619.4 billion at Dec. 31, 2020, up $43.5 billion or 8% from $575.9 billion at Dec. 31, 2019 and up $4.6 billion or 1% from $614.8 billion at Sept. 30, 2020. Average managed assets for Q4 2020 were $610.5 billion, up $60.4 billion or 11% from $550.1 billion reported for Q4 2019 and down $17.6 billion or 3% from $628.1 billion reported for Q3 2020.

"Federated Hermes reached record assets in equity, fixed income and alternative/private markets. Fixed-income assets increased by 22 percent in 2020 on strong net sales for short-duration, high-yield and total return strategies," said J. Christopher Donahue, president and chief executive officer. "Federated Hermes also saw record gross sales for the year in equity funds, which earned strong performance across growth, value, dividend income and international strategies."

Federated Hermes' board of directors declared a quarterly dividend of $0.27 per share. The dividend is payable on Feb. 12, 2021 to shareholders of record as of Feb. 5, 2021. During Q4 2020, Federated Hermes purchased 515,700 shares of Federated Hermes class B common stock for $13.8 million, bringing the total shares of Class B common stock purchased in 2020 to 2,940,267 shares for $67.9 million.

Federated Hermes' equity assets were a record $91.8 billion at Dec. 31, 2020, up $2.8 billion or 3% from $89.0 billion at Dec. 31, 2019 and up $11.4 billion or 14% from $80.4 billion at Sept. 30, 2020. Top-selling equity funds on a net basis during Q4 2020 were Federated Hermes Kaufmann Small Cap Fund, Federated Hermes Global Emerging Markets Equity Fund, Federated Hermes SDG Engagement Equity Fund (UCITS), Federated Hermes Global Equity ESG Fund and Federated Hermes Impact Opportunities Equity Fund.

Federated Hermes' fixed-income assets were a record $84.3 billion at Dec. 31, 2020, up $15.3 billion or 22% from $69.0 billion at Dec. 31, 2019 and up $4.8 billion or 6% from $79.5 billion at Sept. 30, 2020. Top-selling fixed-income funds on a net basis during Q4 2020 were Federated Hermes Ultrashort Bond Fund, Federated Hermes Institutional High Yield Bond Fund, Federated Hermes Short-Intermediate Total Return Bond Fund, Federated Hermes Total Return Bond Fund and Federated Hermes Short-Term Income Fund.

Federated Hermes' alternative/private markets assets were a record $19.1 billion at Dec. 31, 2020, up $1.0 billion or 5% from $18.1 billion at both Dec. 31, 2019 and Sept. 30, 2020.

Federated Hermes' money market assets were $420.3 billion at Dec. 31, 2020, up $24.8 billion or 6% from $395.5 billion at Dec. 31, 2019 and down $12.7 billion or 3% from $433.0 billion at Sept. 30, 2020. Money market mutual fund assets were $301.9 billion at Dec. 31, 2020, up $15.3 billion or 5% from $286.6 billion at Dec. 31, 2019 and down $24.0 billion or 7% from $325.9 billion at Sept. 30, 2020.  Federated Hermes' money market separate account assets were $118.5 billion at Dec. 31, 2020, up $9.6 billion or 9% from $108.9 billion at Dec. 31, 2019 and up $11.5 billion or 11% from $107.0 billion at Sept. 30, 2020.

Financial Summary

Q4 2020 vs. Q4 2019

Revenue increased $5.9 million or 2% primarily due to higher average money market, equity and fixed-income assets. Revenue also increased as a result of revenue from a previously nonconsolidated entity being recorded in operating income beginning March 2020 and an increase in performance fees. These increases in revenue were partially offset by 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).  See "Impact of voluntary yield-related fee waivers."

During Q4 2020, Federated Hermes derived 67% of its revenue from long-term assets (42% from equity assets, 15% from fixed-income assets and 10% from alternative/private markets and multi-asset), 32% from money market assets, and 1% from sources other than managed assets.

Operating expenses decreased $6.1 million or 2% primarily due to decreased distribution expenses primarily resulting from voluntary yield-related fee waivers, partially offset by increases in compensation expense.

Nonoperating income (expenses), net increased $5.8 million or 65% primarily due to an increase in the market value of investments, partially offset by revenue of a previously nonconsolidated entity being recorded in operating revenue beginning March 2020.

Q4 2020 vs. Q3 2020

Revenue decreased slightly due to an increase in voluntary yield-related fee waivers and lower average money market assets, partially offset by higher average long-term assets, led by equity and fixed-income assets, and an increase in performance fees.

Operating expenses decreased by $1.9 million or 1% primarily due to decreased distribution expenses resulting from higher voluntary yield-related fee waivers, partially offset by increases in compensation expense.

Nonoperating income (expenses), net increased $8.4 million or 136% primarily due to an increase in the market value of investments.

2020 vs. 2019

Revenue increased $121.4 million or 9% primarily due to higher average money market and fixed-income assets, a change in the mix of equity assets, revenue of a previously nonconsolidated entity being recorded in operating revenue beginning March 2020 and an increase in performance fees. These increases were partially offset by voluntary yield-related fee waivers.

During 2020, Federated Hermes derived 59% of its revenue from long-term assets (38% from equity assets, 13% from fixed-income assets and 8% from alternative/private markets and multi-asset), 40% from money market assets, and 1% from sources other than managed assets.   

Operating expenses increased by $51.2 million or 5% primarily due to increased incentive compensation expense and an increase due to expenses of a previously nonconsolidated entity being recorded in expenses beginning March 2020. These increases were partially offset by a decrease in distribution expenses as a result of voluntary yield-related fee waivers.

Nonoperating income (expenses), net increased $10.6 million or 61% primarily due to an increase in the market value of investments and a gain from a fair value adjustment to the equity investment of a previously nonconsolidated entity. These increases were partially offset by revenue of this previously nonconsolidated entity being recorded in operating revenue beginning March 2020.

Impact of voluntary yield-related fee waivers

For Q4 2020 and full-year 2020, voluntary yield-related fee waivers totaled $56.1 million and $113.0 million, respectively. These fee waivers were largely offset by related reductions in distribution expenses of $47.4 million and $98.4 million, respectively, such that the net negative pre-tax impact to Federated Hermes was $8.7 million and $14.6 million, respectively.

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 Jan. 29, 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 Jan. 29, 2021. To access the telephone replay, dial 877-481-4010 (domestic) or 919-882-2331 (international) and enter access code 39442. The online replay will be available via FederatedHermes.com for one year.

Federated Hermes, Inc. is a leading global investment manager with $619.4 billion in assets under management as of Dec. 31, 2020. Our investment solutions span 163 equity, fixed-income, alternative/private markets, multi-asset and money market funds and a range of separately managed account strategies. Providing comprehensive investment management 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' more than 1,900 employees include those in London, New York, Boston and several other offices worldwide.

Federated Hermes ranks in the top 6% of equity fund managers in the industry, the top 9% of money market fund managers and the top 11% of fixed-income fund managers¹. Federated Hermes also ranks as the 6th-largest manager of model-delivered SMAs². For more information, including an analyst presentation, visit FederatedHermes.com.

###

1)  ISS Market Intelligence (SIMFUND), Dec. 31, 2020. Based on assets under management in U.S. open-end funds.
2) Money Management Institute/Cerulli Associates, Q3 2020.
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 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 of such statements in the future.

 

Unaudited Condensed Consolidated Statements of Income
(in thousands, except per share data)
	Quarter Ended						% Change Q4 2019 to Q4 2020		Quarter Ended			% Change Q3 2020 to Q4 2020
	Dec. 31, 2020			Dec. 31, 2019					Sept. 30, 2020
Revenue
Investment advisory fees, net	$	265,593		$	243,631		9	%	$	260,089		2	%
Administrative service fees, net	79,192			69,568			14		83,028			(5)
Other service fees, net	19,133			44,826			(57)		21,338			(10)
Total Revenue	363,918			358,025			2		364,455			0
Operating Expenses
Compensation and related	138,296			111,436			24		126,186			10
Distribution	59,419			92,950			(36)		73,726			(19)
Systems and communications	18,518			14,731			26		16,193			14
Professional service fees	13,961			12,269			14		14,006			0
Office and occupancy	6,436			11,643			(45)		10,578			(39)
Advertising and promotional	4,853			4,785			1		2,921			66
Travel and related	540			4,180			(87)		542			0
Other	7,120			3,240			120		6,922			3
Total Operating Expenses	249,143			255,234			(2)		251,074			(1)
Operating Income	114,775			102,791			12		113,381			1
Nonoperating Income (Expenses)
Investment income (loss), net	15,175			4,737			220		6,622			129
Debt expense	(468)			(1,066)			(56)		(494)			(5)
Other, net	(27)			5,209			(101)		103			(126)
Total Nonoperating Income (Expenses), net	14,680			8,880			65		6,231			136
Income before income taxes	129,455			111,671			16		119,612			8
Income tax provision	28,183			26,582			6		32,928			(14)
Net income including the noncontrolling interests in subsidiaries	101,272			85,089			19		86,684			17
Less: Net income attributable to the noncontrolling interests in subsidiaries	6,104			2,982			105		862			NM
Net Income	$	95,168		$	82,107		16	%	$	85,822		11	%
Amounts Attributable to Federated Hermes, Inc.
Earnings Per Share1
Basic	$	0.94		$	0.81		16	%	$	0.86		9	%
Diluted	$	0.93		$	0.81		15	%	$	0.85		9	%
Weighted-Average Shares Outstanding
Basic and diluted	95,504			97,403					96,039
Dividends Declared Per Share	$	1.27		$	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 earnings per share under the "two-class method." As such, total net income of $5.0 million, $2.9 million and $3.4 million available to unvested restricted Federated Hermes shareholders for the quarterly periods ended Dec. 31, 2020, Dec. 31, 2019 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.

 

Unaudited Condensed Consolidated Statements of Income
(in thousands, except per share data)
		Year Ended
		Dec. 31, 2020				Dec. 31, 2019				% Change
Revenue
Investment advisory fees, net		$	1,011,467			$	907,605			11	%
Administrative service fees, net—affiliates		318,152				245,887				29
Other service fees, net		118,649				173,402				(32)
Total Revenue		1,448,268				1,326,894				9
Operating Expenses
Compensation and related		503,400				442,147				14
Distribution		318,343				340,663				(7)
Systems and communications		64,698				52,988				22
Professional service fees		55,123				43,714				26
Office and occupancy		38,975				44,926				(13)
Advertising and promotional		15,834				17,774				(11)
Travel and related		4,566				16,645				(73)
Other		29,178				20,110				45
Total Operating Expenses		1,030,117				978,967				5
Operating Income		418,151				347,927				20
Nonoperating Income (Expenses)
Investment income (loss), net		22,186				9,416				136
Debt expense		(2,678)				(5,037)				(47)
Other, net		8,398				12,965				(35)
Total Nonoperating Income (Expenses), net		27,906				17,344				61
Income before income taxes		446,057				365,271				22
Income tax provision		110,035				88,146				25
Net income including the noncontrolling interests in subsidiaries		336,022				277,125				21
Less: Net income attributable to the noncontrolling interests in subsidiaries		9,658				4,786				102
Net Income		$	326,364			$	272,339			20	%
Amounts Attributable to Federated Hermes, Inc.
Earnings Per Share1
Basic		$	3.25			$	2.69			21	%
Diluted		$	3.23			$	2.69			20	%
Weighted-Average Shares Outstanding
Basic and diluted		96,419				97,259
Dividends Declared Per Share		$	2.08			$	1.08

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 earnings per share under the "two-class method." As such, total net income of $12.8 million and $10.2 million available to unvested restricted Federated Hermes shareholders for the years ended Dec. 31, 2020 and Dec. 31, 2019, 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)	Dec. 31, 2020			Dec. 31, 2019
Assets
Cash and other investments	$	438,771		$	340,635
Other current assets	136,572			120,649
Intangible assets, net, including goodwill	1,282,020			1,220,762
Other long-term assets	203,476			198,085
Total Assets	$	2,060,839		$	1,880,131
Liabilities, Redeemable Noncontrolling Interests and Equity
Current liabilities	$	265,446		$	230,713
Long-term debt	75,000			100,000
Other long-term liabilities	346,409			296,052
Redeemable noncontrolling interests	236,987			212,086
Equity excluding treasury stock	1,461,728			1,322,312
Treasury stock	(324,731)			(281,032)
Total Liabilities, Redeemable Noncontrolling Interests and Equity	$	2,060,839		$	1,880,131

 

Unaudited Changes in Long-Term Assets - By Asset Class
(in millions)	Quarter Ended										Year Ended
	Dec. 31, 2020			Sept. 30, 2020			Dec. 31, 2019				Dec. 31, 2020			Dec. 31, 2019
Equity
Beginning assets	$	80,405		$	76,859		$	80,750			$	89,011		$	72,497
Sales1	5,618			4,186			5,092				20,463			20,222
Redemptions1	(6,047)			(5,552)			(5,080)				(26,721)			(21,794)
Net sales (redemptions)1	(429)			(1,366)			12				(6,258)			(1,572)
Net exchanges	(8)			31			(12)				(70)			181
Acquisitions/(dispositions)	0			0			2,244				(71)			2,244
Impact of foreign exchange2	946			578			667				1,195			(28)
Market gains and (losses)3	10,874			4,303			5,350				7,981			15,689
Ending assets	$	91,788		$	80,405		$	89,011			$	91,788		$	89,011
Fixed Income5
Beginning assets	$	79,546		$	73,143		$	65,824			$	69,023		$	63,158
Sales1	9,046			9,859			6,010				37,283			21,424
Redemptions1	(6,046)			(4,897)			(4,603)				(26,138)			(21,543)
Net sales (redemptions)1	3,000			4,962			1,407				11,145			(119)
Net exchanges	(10)			(36)			6				(15)			(208)
Acquisitions/(dispositions)	0			0			450				(1)			450
Impact of foreign exchange2	181			135			184				190			60
Market gains and (losses)3	1,560			1,342			1,152				3,935			5,682
Ending assets	$	84,277		$	79,546		$	69,023			$	84,277		$	69,023
Alternative / Private Markets4
Beginning assets	$	18,146		$	17,485		$	17,156			$	18,102		$	18,318
Sales1	574			586			426				2,840			1,443
Redemptions1	(661)			(411)			(486)				(2,615)			(2,459)
Net sales (redemptions)1	(87)			175			(60)				225			(1,016)
Net exchanges	(3)			0			(1)				(4)			(65)
Acquisitions/(dispositions)	0			0			0				452			0
Impact of foreign exchange2	1,061			708			1,302				615			694
Market gains and (losses)3	(33)			(222)			(295)				(306)			171
Ending assets	$	19,084		$	18,146		$	18,102			$	19,084		$	18,102
Multi-asset
Beginning assets	$	3,737		$	3,705		$	4,140			$	4,199		$	4,093
Sales1	50			45			85				241			332
Redemptions1	(166)			(155)			(206)				(724)			(893)
Net sales (redemptions)1	(116)			(110)			(121)				(483)			(561)
Net exchanges	3			(4)			(4)				(20)			55
Acquisitions/(dispositions)	0			0			11				0			11
Impact of foreign exchange2	0			1			0				1			0
Market gains and (losses)3	324			145			173				251			601
Ending assets	$	3,948		$	3,737		$	4,199			$	3,948		$	4,199
Total Long-term Assets4,5
Beginning assets	$	181,834		$	171,192		$	167,870			$	180,335		$	158,066
Sales1,5	15,288			14,676			11,613				60,827			43,421
Redemptions1,5	(12,920)			(11,015)			(10,375)				(56,198)			(46,689)
Net sales (redemptions)1,5	2,368			3,661			1,238				4,629			(3,268)
Net exchanges	(18)			(9)			(11)				(109)			(37)
Acquisitions/(dispositions)	0			0			2,705				380			2,705
Impact of foreign exchange2	2,188			1,422			2,153				2,001			726
Market gains and (losses)3,5	12,725			5,568			$	6,380			11,861			22,143
Ending assets	$	199,097		$	181,834		$	180,335			$	199,097		$	180,335

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 balance at Dec. 31, 2019 includes $8.2 billion of assets managed by a previously nonconsolidated entity, Hermes GPE LLP, in which Federated Hermes held an equity method investment. As of March 1, 2020, Hermes GPE LLP is a consolidated subsidiary as a result of Federated Hermes' acquisition of the remaining equity interests in Hermes GPE LLP.
5)	For one fixed-income separate account, sales, redemptions, net sales (redemptions) and market gains and (losses) were previously incorrectly reported for the quarters ended March 31, 2020 and June 30, 2020. Total assets were reported correctly and were not impacted. The year ended Dec. 31, 2020, includes corrections that increased redemptions by $390 million and decreased sales by $1.1 billion, with the offset increasing market gains and losses by $1.5 billion.

 

Unaudited Changes in Long-Term Assets - By Asset Class and Product Type
(in millions)
	Quarter Ended
	Dec. 31, 2020
	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	$	46,093		$	34,312		$	49,779		$	29,767		$	11,393		$	6,753		$	3,546		$	191		$	110,811		$	71,023
Sales	4,034			1,584			7,642			1,404			478			96			50			0			12,204			3,084
Redemptions	(3,244)			(2,803)			(5,090)			(956)			(536)			(125)			(150)			(16)			(9,020)			(3,900)
Net sales (redemptions)	790			(1,219)			2,552			448			(58)			(29)			(100)			(16)			3,184			(816)
Net exchanges	(8)			0			(11)			1			(3)			0			4			(1)			(18)			0
Impact of foreign exchange2	448			498			152			29			658			403			0			0			1,258			930
Market gains and (losses)3	6,989			3,885			1,085			475			110			(143)			294			30			8,478			4,247
Ending assets	$	54,312		$	37,476		$	53,557		$	30,720		$	12,100		$	6,984		$	3,744		$	204		$	123,713		$	75,384
	Year Ended
	Dec. 31, 2020
	Equity						Fixed Income						Alternative / Private Markets						Multi-asset						Total
	Funds			Separate Accounts1			Funds			Separate Accounts1,4			Funds			Separate Accounts1			Funds			Separate Accounts1			Funds			Separate Accounts1,4
Beginning assets	$	48,112		$	40,899		$	44,223		$	24,800		$	11,389		$	6,713		$	4,000		$	199		$	107,724		$	72,611
Sales4	14,457			6,006			29,453			7,830			2,277			563			214			27			46,401			14,426
Redemptions4	(15,675)			(11,046)			(22,564)			(3,574)			(2,047)			(568)			(688)			(36)			(40,974)			(15,224)
Net sales (redemptions)4	(1,218)			(5,040)			6,889			4,256			230			(5)			(474)			(9)			5,427			(798)
Net exchanges	(64)			(6)			(16)			1			(4)			0			(19)			(1)			(103)			(6)
Acquisitions/(dispositions)	0			(71)			0			(1)			0			452			0			0			0			380
Impact of foreign exchange2	509			686			129			61			400			215			0			1			1,038			963
Market gains and (losses)3 ,4	6,973			1,008			2,332			1,603			85			(391)			237			14			9,627			2,234
Ending assets	$	54,312		$	37,476		$	53,557		$	30,720		$	12,100		$	6,984		$	3,744		$	204		$	123,713		$	75,384

1)	Includes separately managed accounts, institutional accounts, 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.
4)	For one fixed-income separate account, sales, redemptions, net sales (redemptions) and market gains and (losses) were previously incorrectly reported for the quarters ended March 31, 2020 and June 30, 2020. Total assets were reported correctly and were not impacted. The year ended Dec. 31, 2020, includes corrections that increased redemptions by $390 million and decreased sales by $1.1 billion, with the offset increasing market gains and losses by $1.5 billion.

 

Unaudited Changes in Long-Term Assets - By Product Type
(in millions)
	Quarter Ended										Year Ended
	Dec. 31, 2020			Sept. 30, 2020			Dec. 31, 2019				Dec. 31, 2020			Dec. 31, 2019
Total Fund Assets1
Beginning assets	$	110,811		$	104,322		$	99,682			$	107,724		$	92,359
Sales	12,204			10,635			8,165				46,401			30,489
Redemptions	(9,020)			(8,328)			(7,296)				(40,974)			(30,653)
Net sales (redemptions)	3,184			2,307			869				5,427			(164)
Net exchanges	(18)			(9)			69				(103)			73
Acquisitions/(dispositions)	0			0			2,652				0			2,652
Impact of foreign exchange2	1,258			851			1,364				1,038			556
Market gains and (losses)3	8,478			3,340			3,088				9,627			12,248
Ending assets	$	123,713		$	110,811		$	107,724			$	123,713		$	107,724
Total Separate Accounts Assets4,6
Beginning assets	$	71,023		$	66,870		$	68,188			$	72,611		$	65,707
Sales5,6	3,084			4,041			3,448				14,426			12,932
Redemptions5,6	(3,900)			(2,687)			(3,079)				(15,224)			(16,036)
Net sales (redemptions)5, 6	(816)			1,354			369				(798)			(3,104)
Net exchanges	0			0			(80)				(6)			(110)
Acquisitions/(dispositions)	0			0			53				380			53
Impact of foreign exchange2	930			571			789				963			170
Market gains and (losses)3,6	4,247			2,228			3,292				2,234			9,895
Ending assets	$	75,384		$	71,023		$	72,611			$	75,384		$	72,611
Total Long-term Assets1,4, 6
Beginning assets	$	181,834		$	171,192		$	167,870			$	180,335		$	158,066
Sales5,6	15,288			14,676			11,613				60,827			43,421
Redemptions5, 6	(12,920)			(11,015)			(10,375)				(56,198)			(46,689)
Net sales (redemptions)5,6	2,368			3,661			1,238				4,629			(3,268)
Net exchanges	(18)			(9)			(11)				(109)			(37)
Acquisitions/(dispositions)	0			0			2,705				380			2,705
Impact of foreign exchange2	2,188			1,422			2,153				2,001			726
Market gains and (losses)3,6	12,725			5,568			6,380				11,861			22,143
Ending assets	$	199,097		$	181,834		$	180,335			$	199,097		$	180,335

1)	The balance at Dec. 31, 2019 includes $8.2 billion of assets managed by a previously nonconsolidated entity, Hermes GPE LLP, in which Federated Hermes held an equity method investment. As of March 1, 2020, Hermes GPE LLP is a consolidated subsidiary as a result of Federated Hermes' acquisition of the remaining equity interests in Hermes GPE LLP.
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)	Includes separately managed accounts, institutional accounts, sub-advised funds and other managed products.
5)	For certain accounts, Sales and Redemptions are calculated as the remaining difference between beginning and ending assets after the calculation of total investment return.
6)	For one fixed-income separate account, sales, redemptions, net sales (redemptions) and market gains and (losses) were previously incorrectly reported for the quarters ended March 31, 2020 and June 30, 2020. Total assets were reported correctly and were not impacted. The year ended Dec. 31, 2020, includes corrections that increased redemptions by $390 million and decreased sales by $1.1 billion, with the offset increasing market gains and losses by $1.5 billion.

 

Unaudited Managed Assets (in millions)	Dec. 31, 2020			Sept. 30, 2020			June 30, 2020			March 31, 2020			Dec. 31, 2019
By Asset Class
Equity	$	91,788		$	80,405		$	76,859		$	68,239		$	89,011
Fixed-income	84,277			79,546			73,143			64,715			69,023
Alternative / private markets1	19,084			18,146			17,485			18,061			18,102
Multi-asset	3,948			3,737			3,705			3,494			4,199
Total long-term assets	199,097			181,834			171,192			154,509			180,335
Money market	420,333			432,952			457,624			451,330			395,539
Total Managed Assets	$	619,430		$	614,786		$	628,816		$	605,839		$	575,874
By Product Type
Funds:
Equity	$	54,312		$	46,093		$	43,723		$	36,955		$	48,112
Fixed-income	53,557			49,779			46,046			40,601			44,223
Alternative / private markets1	12,100			11,393			11,037			11,365			11,389
Multi-asset	3,744			3,546			3,516			3,330			4,000
Total long-term assets	123,713			110,811			104,322			92,251			107,724
Money market	301,855			325,940			344,846			336,133			286,612
Total Fund Assets	$	425,568		$	436,751		$	449,168		$	428,384		$	394,336
Separate Accounts:
Equity	$	37,476		$	34,312		$	33,136		$	31,284		$	40,899
Fixed-income	30,720			29,767			27,097			24,114			24,800
Alternative / private markets	6,984			6,753			6,448			6,696			6,713
Multi-asset	204			191			189			164			199
Total long-term assets	75,384			71,023			66,870			62,258			72,611
Money market	118,478			107,012			112,778			115,197			108,927
Total Separate Account Assets	$	193,862		$	178,035		$	179,648		$	177,455		$	181,538
Total Managed Assets	$	619,430		$	614,786		$	628,816		$	605,839		$	575,874

1)	The balance at Dec. 31, 2019 includes $8.2 billion of assets managed by a previously nonconsolidated entity, Hermes GPE LLP, in which Federated Hermes held an equity method investment. As of March 1, 2020, Hermes GPE LLP is a consolidated subsidiary as a result of Federated Hermes' acquisition of the remaining equity interests in Hermes GPE LLP.

 

Unaudited Average Managed Assets	Quarter Ended
(in millions)	Dec. 31, 2020			Sept. 30, 2020			June 30, 2020			March 31, 2020			Dec. 31, 2019
By Asset Class
Equity	$	85,572		$	80,403		$	73,620		$	82,767		$	84,448
Fixed-income	82,144			76,798			69,603			69,068			67,602
Alternative / private markets1	18,549			18,270			18,022			17,983			17,838
Multi-asset	3,831			3,786			3,630			4,006			4,149
Total long-term assets	190,096			179,257			164,875			173,824			174,037
Money market	420,436			448,795			471,984			406,365			376,029
Total Avg. Managed Assets	$	610,532		$	628,052		$	636,859		$	580,189		$	550,066
By Product Type
Funds:
Equity	$	50,022		$	46,020		$	41,301		$	44,996		$	44,984
Fixed-income	51,934			48,418			43,229			44,017			43,304
Alternative / private markets1	11,670			11,539			11,345			11,143			11,283
Multi-asset	3,634			3,590			3,453			3,814			3,956
Total long-term assets	117,260			109,567			99,328			103,970			103,527
Money market	311,769			338,814			356,736			290,641			274,116
Total Avg. Fund Assets	$	429,029		$	448,381		$	456,064		$	394,611		$	377,643
Separate Accounts:
Equity	$	35,550		$	34,383		$	32,319		$	37,771		$	39,464
Fixed-income	30,210			28,380			26,374			25,051			24,298
Alternative / private markets	6,879			6,731			6,677			6,840			6,555
Multi-asset	197			196			177			192			193
Total long-term assets	72,836			69,690			65,547			69,854			70,510
Money market	108,667			109,981			115,248			115,724			101,913
Total Avg. Separate Account Assets	$	181,503		$	179,671		$	180,795		$	185,578		$	172,423
Total Avg. Managed Assets	$	610,532		$	628,052		$	636,859		$	580,189		$	550,066

1)	The average balance at Dec. 31, 2019 includes $8.3 billion of assets managed by a previously nonconsolidated entity, Hermes GPE LLP, in which Federated Hermes held an equity method investment. As of March 1, 2020, Hermes GPE LLP is a consolidated subsidiary as a result of Federated Hermes' acquisition of the remaining equity interests in Hermes GPE LLP.

 

Unaudited Average Managed Assets		Year Ended
(in millions)		Dec. 31, 2020				Dec. 31, 2019
By Asset Class
Equity		$	80,591			$	81,212
Fixed-income		74,403				65,375
Alternative / private markets1		18,206				17,896
Multi-asset		3,813				4,192
Total long-term assets		177,013				168,675
Money market		436,895				340,505
Total Avg. Managed Assets		$	613,908			$	509,180
By Product Type
Funds:
Equity		$	45,585			$	42,712
Fixed-income		46,899				41,938
Alternative / private markets1		11,424				11,317
Multi-asset		3,622				4,003
Total long-term assets		107,530				99,970
Money market		324,490				238,876
Total Avg. Fund Assets		$	432,020			$	338,846
Separate Accounts:
Equity		$	35,006			$	38,500
Fixed-income		27,504				23,437
Alternative / private markets		6,782				6,579
Multi-asset		191				189
Total long-term assets		69,483				68,705
Money market		112,405				101,629
Total Avg. Separate Account Assets		$	181,888			$	170,334
Total Avg. Managed Assets		$	613,908			$	509,180

1)	The average balance at Dec. 31, 2019 includes $8.2 billion of assets managed by a previously nonconsolidated entity, Hermes GPE LLP, in which Federated Hermes held an equity method investment. As of March 1, 2020, Hermes GPE LLP is a consolidated subsidiary as a result of Federated Hermes' acquisition of the remaining equity interests in Hermes GPE LLP.

 

View original content:http://www.prnewswire.com/news-releases/federated-hermes-inc-reports-fourth-quarter-and-full-year-2020-earnings-301217693.html

SOURCE Federated Hermes, Inc.

FAQ

What were the earnings per share (EPS) for Federated Hermes in Q4 2020?

The EPS for Federated Hermes in Q4 2020 was $0.93.

How did Federated Hermes' net income perform in 2020 compared to 2019?

Net income for Federated Hermes in 2020 was $326.4 million, up from $272.3 million in 2019.

What is the total managed assets of Federated Hermes as of December 31, 2020?

Total managed assets reached $619.4 billion as of December 31, 2020.

What dividend did Federated Hermes declare for Q4 2020?

Federated Hermes declared a quarterly dividend of $0.27 per share.

How much did Federated Hermes report in voluntary fee waivers for Q4 2020?

The voluntary yield-related fee waivers for Q4 2020 amounted to $56.1 million.