PR Newswire | Jan 28, 2021 04:18PM EST

01/28 15:17 CST

Federated Hermes, Inc. reports fourth quarter and full-year 2020 earnings- Q4 2020 earnings per diluted share of $0.93; full-year 2020 EPS of $3.23- Total long-term assets under management reach record $199.1 billion- Board declares $0.27 per share quarterly dividend PITTSBURGH, Jan. 28, 2021

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.

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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 Q4Quarter Ended % Change Q32019 to Q4 2020 to Q4 Dec. 31, 2020Dec. 31, 20192020 Sept. 30, 20202020

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 subsidiaries101,272 85,089 19 86,684 17

Less: Net income attributable to the noncontrolling interests in 6,104 2,982 105 862 NM subsidiaries

Net Income $95,168 $82,107 16 % $85,822 11 %



Amounts Attributable to Federated Hermes, Inc.

Earnings Per Share^1

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

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 to1) 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, 2020Dec. 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 subsidiaries336,022 277,125 21

Less: Net income attributable to the noncontrolling 9,658 4,786 102 interests in subsidiaries

Net Income $326,364 $272,339 20 %



Amounts Attributable to Federated Hermes, Inc.

Earnings Per Share^1

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

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 unvested1) 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, 2020Dec. 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, 2020Sept. 30, 2020Dec. 31, 2019Dec. 31, 2020Dec. 31, 2019

Equity

Beginning assets $80,405 $ 76,859 $80,750 $89,011 $72,497

Sales^1 5,618 4,186 5,092 20,463 20,222

Redemptions^1 (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 exchange^2 946 578 667 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 Income^5

Beginning assets $79,546 $ 73,143 $65,824 $69,023 $63,158

Sales^1 9,046 9,859 6,010 37,283 21,424

Redemptions^1 (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 exchange^2 181 135 184 190 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 Markets^4

Beginning assets $18,146 $ 17,485 $17,156 $18,102 $18,318

Sales^1 574 586 426 2,840 1,443

Redemptions^1 (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 exchange^2 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

Sales^1 50 45 85 241 332

Redemptions^1 (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 exchange^2 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 Assets^4,5

Beginning assets $181,834 $ 171,192 $167,870 $180,335 $158,066

Sales^1,5 15,288 14,676 11,613 60,827 43,421

Redemptions^1,5 (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 exchange^2 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

For certain accounts, Sales and Redemptions are calculated as the remaining1) 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.

Reflects the approximate changes in the fair value of the securities held by3) the portfolios and, to a lesser extent, reinvested dividends, distributions and net investment income.

The balance at Dec. 31, 2019 includes $8.2 billion of assets managed by a previously nonconsolidated entity, Hermes GPE LLP, in which Federated Hermes4) 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.

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. Total5) 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 / PrivateMulti-asset Total Markets

Funds Separate Funds Separate Funds Separate Funds Separate Funds Separate Accounts^1 Accounts^1 Accounts^1 Accounts^1 Accounts^1

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 exchange^2 448 498 152 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 / PrivateMulti-asset Total Markets

Funds Separate Funds Separate Funds Separate Funds Separate Funds Separate Accounts^1 Accounts^1,4 Accounts^1 Accounts^1 Accounts^1,4

Beginning assets $48,112$40,899 $44,223$24,800 $ 11,389$6,713 $4,000$199 $107,724$72,611

Sales^4 14,457 6,006 29,453 7,830 2,277 563 214 27 46,401 14,426

Redemptions^4 (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 exchange^2 509 686 129 61 400 215 0 1 1,038 963

Market gains and (losses)^3 ,46,973 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

Includes separately managed accounts, institutional accounts, sub-advised1) 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.

Reflects the approximate changes in the fair value of the securities held by3) the portfolios and, to a lesser extent, reinvested dividends, distributions and net investment income.

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. Total4) 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, 2020Sept. 30, 2020Dec. 31, 2019Dec. 31, 2020Dec. 31, 2019



Total Fund Assets^1

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 exchange^2 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 Assets^4,6

Beginning assets $ 71,023 $ 66,870 $ 68,188 $ 72,611 $ 65,707

Sales^5,6 3,084 4,041 3,448 14,426 12,932

Redemptions^5,6 (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 exchange^2 930 571 789 963 170

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 Assets^1,4, 6

Beginning assets $ 181,834 $ 171,192 $ 167,870 $ 180,335 $ 158,066

Sales^5,6 15,288 14,676 11,613 60,827 43,421

Redemptions^5, 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 exchange^2 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

The balance at Dec. 31, 2019 includes $8.2 billion of assets managed by a previously nonconsolidated entity, Hermes GPE LLP, in which Federated Hermes1) 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.

Reflects the approximate changes in the fair value of the securities held by3) 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.

For certain accounts, Sales and Redemptions are calculated as the remaining5) difference between beginning and ending assets after the calculation of total investment return.

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. Total6) 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 Dec. 31, 2020Sept. 30, 2020June 30, 2020March 31, 2020Dec. 31, 2019(in millions)

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 markets^119,084 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 markets^112,100 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

The balance at Dec. 31, 2019 includes $8.2 billion of assets managed by a previously nonconsolidated entity, Hermes GPE LLP, in which Federated Hermes1) 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, 2020Sept. 30, 2020June 30, 2020March 31, 2020Dec. 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 markets^1 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 markets^1 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

The average balance at Dec. 31, 2019 includes $8.3 billion of assets managed by a previously nonconsolidated entity, Hermes GPE LLP, in which Federated1) 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, 2020Dec. 31, 2019

By Asset Class

Equity $ 80,591 $ 81,212

Fixed-income 74,403 65,375

Alternative / private markets^1 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 markets^1 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

The average balance at Dec. 31, 2019 includes $8.2 billion of assets managed by a previously nonconsolidated entity, Hermes GPE LLP, in which Federated1) 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.