Federated Hermes, Inc. reports third quarter 2021 earnings

Rhea-AI Summary

Federated Hermes (NYSE: FHI) reported Q3 2021 earnings of $0.73 per share, down from $0.85 in Q3 2020, with net income at $71.4 million compared to $85.8 million last year. Year-to-date EPS declined to $2.04 from $2.29 in 2020. Total managed assets were $634.1 billion, up 3% year-over-year but down 2% from Q2 2021. The firm declared a dividend of $0.27 per share, payable on November 15, 2021. Notably, fixed-income assets reached a record $97.2 billion, driven by positive net flows for six consecutive quarters.

Positive

• Fixed-income assets rose to a record $97.2 billion, up 22% YoY.
• Total managed assets increased by $19.3 billion or 3% YoY.

Negative

• Q3 2021 net income decreased by 17% YoY to $71.4 million.
• Total revenue dropped by $37.9 million or 10% from Q3 2020 due to increased fee waivers.

PITTSBURGH, Oct. 28, 2021 /PRNewswire/ -- 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.

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.

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. 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.

###

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.

 

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
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	%
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
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.

 

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)
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)
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)	%
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.

 

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

 

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
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
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
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
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.

 

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.

 

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.

 

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

 

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

 

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.

 

View original content:https://www.prnewswire.com/news-releases/federated-hermes-inc-reports-third-quarter-2021-earnings-301411432.html

SOURCE Federated Hermes, Inc.

FAQ

What are Federated Hermes' earnings for Q3 2021?

Federated Hermes reported earnings per share of $0.73 for Q3 2021.

How did Federated Hermes' net income change in Q3 2021?

Net income for Q3 2021 was $71.4 million, down from $85.8 million in Q3 2020.

What was the total managed assets of Federated Hermes as of September 30, 2021?

Federated Hermes managed total assets of $634.1 billion as of September 30, 2021.

What was the impact of voluntary yield-related fee waivers on Federated Hermes' revenue?

Voluntary yield-related fee waivers caused a $37.9 million decrease in revenue for Q3 2021.

When will Federated Hermes pay its next dividend?

The next dividend of $0.27 per share will be paid on November 15, 2021.