PR Newswire | Jul 29, 2021 04:17PM EDT

07/29 15:17 CDT

Federated Hermes, Inc. reports second quarter 2021 earnings- Q2 2021 earnings per diluted share of $0.56- Equity assets reach record $101 billion- Long-term assets reach a record $216 billion- Board declares $0.27 per share quarterly dividend PITTSBURGH, July 29, 2021

PITTSBURGH, July 29, 2021 /PRNewswire/ -- Federated Hermes, Inc. (NYSE: FHI), a global leader in active, responsible investing, today reported earnings per diluted share (EPS) of $0.56 for Q2 2021, compared to $0.80 for the same quarter last year, on net income of $55.9 million for Q2 2021, compared to $81.2 million for Q2 2020. Federated Hermes reported YTD 2021 earnings per diluted share of $1.31, compared to $1.44 for the same period in 2020, on YTD 2021 net income of $130.4 million, compared to $145.4 million for the same period in 2020. As a result of legislation enacted in the U.K. that increases the U.K. corporate income tax rate from 19% to 25% effective April 1, 2023, Federated Hermes' Q2 2021 results include a $14.5 million noncash tax expense, or $0.11 per diluted share.

Federated Hermes' total managed assets were a record $645.8 billion at June 30, 2021, up $17.0 billion or 3% from $628.8 billion at June 30, 2020 and up $20.8 billion or 3% from $625.0 billion at March 31, 2021. Total average managed assets for Q2 2021 were $639.7 billion, up $2.8 billion or less than 1% from $636.9 billion reported for Q2 2020 and up $21.6 billion or 3% from $618.1 billion reported for Q1 2021.

"As the economy continued to reopen in the second quarter, Federated Hermes offered our global clients a range of strong-performing active, responsible investment strategies. We reached record long-term assets on new highs in equity, fixed-income and alternative/private markets," said J. Christopher Donahue, president and chief executive officer. "Fixed-income investors also positioned themselves for what may be the first sustained rising-rate environment in decades, and ultrashort and multisector products were among those that led net sales."

Federated Hermes' board of directors declared a dividend of $0.27 per share. The dividend is payable on Aug. 13, 2021 to shareholders of record as of Aug. 6, 2021. During Q2 2021, Federated Hermes purchased 993,100 shares of Federated Hermes class B common stock for $31.8 million.

Equity assets were a record $100.5 billion at June 30, 2021, up $23.6 billion or 31% from $76.9 billion at June 30, 2020 and up $4.3 billion or 4% from $96.2 billion at March 31, 2021. Top-selling equity funds during Q2 2021 on a net basis were Federated Hermes SDG Engagement Equity Fund (UCITS), Federated Hermes Asia ex-Japan Equity Fund, Federated Hermes Global Equity ESG Fund, Federated Hermes Global Emerging Markets Equity Fund and Federated Hermes Global Emerging Markets SMID Equity Fund.

Fixed-income assets were a record $90.8 billion at June 30, 2021, up $17.7 billion or 24% from $73.1 billion at June 30, 2020 and up $4.3 billion or 5% from $86.5 billion at March 31, 2021. Top-selling fixed-income funds during Q2 2021 on a net basis were Federated Hermes Ultrashort Bond Fund, Federated Hermes Institutional Fixed Income Fund, Federated Hermes Total Return Bond Fund, Federated Hermes SDG Engagement High Yield Credit Fund (UCITS) and Federated Hermes Strategic Income Fund.

Alternative/private market assets were a record $21.0 billion at June 30, 2021, up $3.5 billion or 20% from $17.5 billion at June 30, 2020 and up $1.7 billion or 9% from $19.3 billion at March 31, 2021.

Money market assets were $429.8 billion at June 30, 2021, down $27.8 billion or 6% from $457.6 billion at June 30, 2020 and up $10.7 billion or 3% from $419.1 billion at March 31, 2021. Money market fund assets were $302.0 billion at June 30, 2021, down $42.8 billion or 12% from $344.8 billion at June 30, 2020 and up $4.8 billion or 2% from $297.2 billion at March 31, 2021.

Financial Summary

In Q2 2021, the U.K. enacted legislation that increased their corporate income tax rate from 19% to 25% effective April 1, 2023. As a result, Federated Hermes' income tax provision includes a $14.5 million noncash tax expense, or $0.11 per diluted share, to revalue certain deferred tax assets and liabilities.

Q2 2021 vs. Q2 2020

Revenue decreased $49.7 million or 14% 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 a decrease in revenue due to 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 Q2 2021, Federated Hermes derived 83% of its revenue from long-term assets (55% from equity assets, 19% from fixed-income assets and 9% from alternative/private markets and multi-asset), 16% from money market assets, and 1% from sources other than managed assets.

Operating expenses decreased $34.2 million or 13% primarily due to decreased distribution expenses predominantly resulting from higher voluntary yield-related fee waivers.

Nonoperating income (expenses), net decreased $7.2 million or 51% primarily due to a smaller increase in the market value of investments in Q2 2021 compared to a greater increase in the market value of investments in Q2 2020 resulting from the recovery in the markets following the initial onset of the pandemic in March 2020.

Q2 2021 vs. Q1 2021

Revenue decreased $30.1 million or 9% primarily due to an increase in voluntary yield-related fee waivers and a decrease in carried interest revenue of consolidated variable interest entities. These decreases were partially offset by an increase in revenue due to higher average money market and long-term assets.

Operating expenses decreased $14.5 million or 6% primarily due to decreased compensation expense of consolidated variable interest entities and a decrease in distribution expenses predominantly resulting from higher voluntary yield-related fee waivers.

Nonoperating income (expenses), net increased $5.0 million or 268% primarily due to an increase in the market value of investments.

YTD 2021 vs. YTD 2020

Revenue decreased $67.7 million or 9% 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 by an increase in revenue due to higher average equity and fixed-income assets, previously nonconsolidated variable interest entities being recorded in operating revenue beginning in Q1 2021 and an increase in revenue from alternative/private markets assets, primarily due to the revenue of a previously nonconsolidated entity being recorded in operating revenue beginning in March 2020.

For the first half of 2021, Federated Hermes derived 79% of its revenue from long-term assets (52% from equity, 18% from fixed-income and 9% from alternative/private markets and multi-asset), 20% from money market assets, and 1% from sources other than managed assets.

Operating expenses decreased $57.0 million or 11% primarily due to decreased distribution expenses predominantly resulting from higher voluntary yield-related fee waivers.

Nonoperating income (expense), net increased $1.7 million or 25% primarily due to an increase in the market value of investments. This increase was partially offset by a gain recorded in March 2020 from a fair value adjustment to the equity investment of a previously nonconsolidated entity.

Impact of voluntary yield-related fee waivers

During the three and six months ended June 30, 2021, voluntary yield-related fee waivers totaled $117.8 million and $200.9 million, respectively. These fee waivers were partially offset by related reductions in distribution expenses of $71.0 million and $132.5 million, respectively, such that the net negative pre-tax impact to Federated Hermes was $46.8 million and $68.4 million for the three and six months ended June 30, 2021, respectively. During the three and six months ended June 30, 2020, voluntary yield-related fee waivers totaled $19.7 million and $20.1 million, respectively. These fee waivers were largely offset by related reductions in distribution expenses of $17.7 million and $18.0 million, respectively, such that the net negative pre-tax impact to Federated Hermes was $2.0 million and $2.1 million for the three and six months ended June 30, 2020, respectively.

Short-term interest rates continued to hover near historic lows during Q2 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. At their June Federal Open Market Committee meeting, the Federal Reserve increased the Reverse Repo Facility and the Interest on Excess Reserves rates by 5 basis points each, to 5 and 15 basis points, respectively.

As a result, the negative impact on pre-tax income from minimum yield waivers on money market mutual funds and certain separate accounts may be approximately $38 million during Q3 2021. The amount of minimum yield 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 minimum yield 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 July 30, 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 July 30, 2021. To access the telephone replay, dial 877-481-4010 (domestic) or 919-882-2331 (international) and enter access code 42046. The online replay will be available via FederatedHermes.com for one year.

Federated Hermes, Inc. is a leading global investment manager with $645.8 billion in assets under management as of June 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 9% of money market fund managers and the top 10% of fixed-income fund managers1. Federated Hermes also ranks as the 10th-largest manager of model-delivered SMAs2. For more information, including an analyst presentation, visitFederatedHermes.com.

1) ISS Market Intelligence (SIMFUND), June 30, 2021. Based on assets under management in open-end funds.

2) Money Management Institute/Cerulli, Q1 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, gross yields 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 Quarter Ended % Change Q2 2020 toQ1 2021 to June 30, 2021June 30, 2020Q2 2021 March 31, 2021Q2 2021

Revenue

Investment advisory fees, $214,289 $245,126 (13) %$247,689 (13) %net

Administrative service fees, 77,750 83,733 (7) 74,302 5 net-affiliates

Other service 19,001 31,853 (40) 19,182 (1) fees, net

Total Revenue 311,040 360,712 (14) 341,173 (9)



Operating Expenses

Compensation and132,769 123,583 7 143,620 (8) related

Distribution 38,115 89,038 (57) 44,389 (14)

Systems and 18,954 15,091 26 18,594 2 communications

Professional 15,122 13,888 9 14,636 3 service fees

Office and 11,082 10,190 9 11,240 (1) occupancy

Advertising and 4,623 3,065 51 2,824 64 promotional

Travel and 898 325 176 296 203 related

Other 7,668 8,281 (7) 8,096 (5)

Total Operating 229,231 263,461 (13) 243,695 (6) Expenses

Operating Income81,809 97,251 (16) 97,478 (16)



Nonoperating Income (Expenses)

Investment income (loss), 7,393 14,841 (50) 2,011 268 net

Debt expense (346) (785) (56) (491) (30)

Other, net (184) (24) NM 345 (153)

Total Nonoperating 6,863 14,032 (51) 1,865 268 Income (Expenses), net

Income before 88,672 111,283 (20) 99,343 (11) income taxes

Income tax 35,193 26,482 33 24,997 41 provision

Net income including the noncontrolling 53,479 84,801 (37) 74,346 (28) interests in subsidiaries

Less: Net income (loss) attributable to the (2,405) 3,605 (167) (138) NM noncontrolling interests in subsidiaries

Net Income $55,884 $81,196 (31) %$74,484 (25) %



Amounts Attributable to Federated Hermes, Inc.

Earnings Per Share^1

Basic $0.57 $0.81 (30) %$0.75 (24) %

Diluted $0.56 $0.80 (30) %$0.75 (25) %

Weighted-Average Shares Outstanding

Basic and 93,964 96,800 95,218 Diluted

Dividends Declared Per $0.27 $0.27 $0.27 Share



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 $2.4 million, $3.2 million and $3.0 million available to unvested restricted Federated Hermes shareholders for the1) quarterly periods ended June 30, 2021, June 30, 2020 and March 31, 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)

Six Months Ended

June 30, 2021June 30, 2020% Change

Revenue

Investment advisory fees, net $461,978 $485,787 (5) %

Administrative service fees, 152,051 155,932 (2) net-affiliates

Other service fees, net 38,184 78,176 (51)

Total Revenue 652,213 719,895 (9)



Operating Expenses

Compensation and related 276,389 238,918 16

Distribution 82,504 185,198 (55)

Systems and communications 37,549 29,987 25

Professional service fees 29,759 27,156 10

Office and occupancy 22,322 21,961 2

Advertising and promotional 7,447 8,061 (8)

Travel and related 1,195 3,484 (66)

Other 15,761 15,135 4

Total Operating Expenses 472,926 529,900 (11)

Operating Income 179,287 189,995 (6)



Nonoperating Income (Expenses)

Investment income (loss), net 9,404 390 NM

Debt expense (837) (1,717) (51)

Other, net 161 8,322 (98)

Total Nonoperating Income (Expenses), 8,728 6,995 25 net

Income before income taxes 188,015 196,990 (5)

Income tax provision 60,190 48,924 23

Net income including the noncontrolling 127,825 148,066 (14) interests in subsidiaries

Less: Net income (loss) attributable to the noncontrolling interests in (2,543) 2,692 (194) subsidiaries

Net Income $130,368 $145,374 (10) %



Amounts Attributable to Federated Hermes, Inc.

Earnings Per Share^1

Basic $1.32 $1.44 (8) %

Diluted $1.31 $1.44 (9) %

Weighted-Average Shares Outstanding

Basic and Diluted 94,588 97,073

Dividends Declared Per Share $0.54 $0.54

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 $5.4 million and $5.6 million available to1) unvested restricted Federated Hermes shareholders for the six months ended June 30, 2021 and June 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) June 30, 2021Dec. 31, 2020

Assets

Cash and other investments $424,201 $438,771

Other current assets 139,998 136,572

Intangible assets, net, including goodwill 1,281,456 1,282,020

Other long-term assets 199,293 203,476

Total Assets $2,044,948 $2,060,839



Liabilities, Redeemable Noncontrolling Interests and Equity

Current liabilities $213,173 $265,446

Long-term debt 65,000 75,000

Other long-term liabilities 353,376 346,409

Redeemable noncontrolling interests 251,469 236,987

Equity excluding treasury stock 1,548,034 1,461,728

Treasury stock (386,104) (324,731)

Total Liabilities, Redeemable Noncontrolling Interests and Equity$2,044,948 $2,060,839

Unaudited Changes in Long-Term Assets - By Asset Class

(in millions) Quarter Ended Six Months Ended

June 30, 2021March 31, 2021June 30, 2020June 30, 2021June 30, 2020

Equity

Beginning assets $96,170 $ 91,788 $68,239 $91,788 $89,011

Sales^1 5,366 7,760 4,579 13,126 10,659

Redemptions^1 (6,784) (7,164) (7,280) (13,948) (15,122)

Net sales (redemptions)^1 (1,418) 596 (2,701) (822) (4,463)

Net exchanges 8 32 (56) 40 (93)

Acquisitions/(dispositions) 0 0 0 0 (71)

Impact of foreign exchange^2171 (595) 439 (424) (329)

Market gains and (losses)^3 5,575 4,349 10,938 9,924 (7,196)

Ending assets $100,506 $ 96,170 $76,859 $100,506 $76,859



Fixed Income

Beginning assets $86,464 $ 84,277 $64,715 $84,277 $69,023

Sales^1 10,584 11,187 10,691 21,771 18,378

Redemptions^1 (7,418) (8,284) (5,407) (15,702) (15,195)

Net sales (redemptions)^1 3,166 2,903 5,284 6,069 3,183

Net exchanges (7) (44) 146 (51) 31

Acquisitions/(dispositions) 0 0 0 0 (1)

Impact of foreign exchange^225 (60) 29 (35) (126)

Market gains and (losses)^3 1,153 (612) 2,969 541 1,033

Ending assets $90,801 $ 86,464 $73,143 $90,801 $73,143



Alternative/Private Markets

Beginning assets^4 $19,301 $ 19,084 $18,061 $19,084 $18,102

Sales^1 1,330 478 792 1,808 1,680

Redemptions^1 (546) (631) (961) (1,177) (1,543)

Net sales (redemptions)^1 784 (153) (169) 631 137

Net exchanges (1) (1) (3) (2) (1)

Acquisitions/(dispositions) 0 0 0 0 452

Impact of foreign exchange^254 139 (33) 193 (1,154)

Market gains and (losses)^3 824 232 (371) 1,056 (51)

Ending assets $20,962 $ 19,301 $17,485 $20,962 $17,485



Multi-asset

Beginning assets $3,981 $ 3,948 $3,494 $3,948 $4,199

Sales^1 88 67 48 155 146

Redemptions^1 (544) (170) (168) (714) (403)

Net sales (redemptions)^1 (456) (103) (120) (559) (257)

Net exchanges 14 5 (5) 19 (19)

Impact of foreign exchange^20 (1) 0 (1) 0

Market gains and (losses)^3 160 132 336 292 (218)

Ending assets $3,699 $ 3,981 $3,705 $3,699 $3,705



Total Long-term Assets

Beginning assets^4 $205,916 $ 199,097 $154,509 $199,097 $180,335

Sales^1 17,368 19,492 16,110 36,860 30,863

Redemptions^1 (15,292) (16,249) (13,816) (31,541) (32,263)

Net sales (redemptions)^1 2,076 3,243 2,294 5,319 (1,400)

Net exchanges 14 (8) 82 6 (82)

Acquisitions/(dispositions) 0 0 0 0 380

Impact of foreign exchange^2250 (517) 435 (267) (1,609)

Market gains and (losses)^3 7,712 4,101 13,872 11,813 (6,432)

Ending assets $215,968 $ 205,916 $171,192 $215,968 $171,192

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 beginning assets for the six months ended June 30, 2020 include $8.24) 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

June 30, 2021

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 $56,767$39,403 $55,581$30,883 $ 12,231$7,070 $3,797$184 $128,376$77,540

Sales 3,454 1,912 8,216 2,368 881 449 88 0 12,639 4,729

Redemptions (3,754) (3,030) (6,115) (1,303) (528) (18) (539) (5) (10,936) (4,356)

Net sales (redemptions) (300) (1,118) 2,101 1,065 353 431 (451) (5) 1,703 373

Net exchanges 9 (1) (9) 2 (1) 0 13 1 12 2

Impact of foreign exchange^281 90 19 6 38 16 0 0 138 112

Market gains and (losses)^3 3,376 2,199 794 359 604 220 158 2 4,932 2,780

Ending assets $59,933$40,573 $58,486$32,315 $ 13,225$7,737 $3,517$182 $135,161$80,807



Six Months Ended

June 30, 2021

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 $54,312$37,476 $53,557$30,720 $ 12,100$6,984 $3,744$204 $123,713$75,384

Sales 9,103 4,023 17,451 4,320 1,185 623 153 2 27,892 8,968

Redemptions (8,195) (5,753) (12,847)(2,855) (989) (188) (680) (34) (22,711) (8,830)

Net sales (redemptions) 908 (1,730) 4,604 1,465 196 435 (527) (32) 5,181 138

Net exchanges (363) 403 (53) 2 (2) 0 18 1 (400) 406

Impact of foreign exchange^2(180) (244) (19) (16) 120 73 0 (1) (79) (188)

Market gains and (losses)^3 5,256 4,668 397 144 811 245 282 10 6,746 5,067

Ending assets $59,933$40,573 $58,486$32,315 $ 13,225$7,737 $3,517$182 $135,161$80,807

Includes separately managed accounts, institutional accounts, certain1) 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.

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.

Unaudited Changes in Long-Term Assets - By Product Type

(in millions) Quarter Ended Six Months Ended

June 30, 2021March 31, 2021June 30, 2020June 30, 2021June 30, 2020

Total Fund Assets

Beginning assets $128,376 $ 123,713 $92,251 $123,713 $107,724

Sales 12,639 15,253 12,201 27,892 23,562

Redemptions (10,936) (11,775) (10,022) (22,711) (23,626)

Net sales (redemptions) 1,703 3,478 2,179 5,181 (64)

Net exchanges 12 (412) 82 (400) (76)

Impact of foreign exchange^1 138 (217) 93 (79) (1,071)

Market gains and (losses)^2 4,932 1,814 9,717 6,746 (2,191)

Ending assets $135,161 $ 128,376 $104,322 $135,161 $104,322



Total Separate Account Assets^3

Beginning assets^5 $77,540 $ 75,384 $62,258 $75,384 $72,611

Sales^4 4,729 4,239 3,909 8,968 7,301

Redemptions^4 (4,356) (4,474) (3,794) (8,830) (8,637)

Net sales (redemptions)^4 373 (235) 115 138 (1,336)

Net exchanges 2 404 0 406 (6)

Acquisitions/(dispositions) 0 0 0 0 380

Impact of foreign exchange^1 112 (300) 342 (188) (538)

Market gains and (losses)^2 2,780 2,287 4,155 5,067 (4,241)

Ending assets $80,807 $ 77,540 $66,870 $80,807 $66,870



Total Long-term Assets^3

Beginning assets^5 $205,916 $ 199,097 $154,509 $199,097 $180,335

Sales^4 17,368 19,492 16,110 36,860 30,863

Redemptions^4 (15,292) (16,249) (13,816) (31,541) (32,263)

Net sales (redemptions)^4 2,076 3,243 2,294 5,319 (1,400)

Net exchanges 14 (8) 82 6 (82)

Acquisitions/(dispositions) 0 0 0 0 380

Impact of foreign exchange^1 250 (517) 435 (267) (1,609)

Market gains and (losses)^2 7,712 4,101 13,872 11,813 (6,432)

Ending assets $215,968 $ 205,916 $171,192 $215,968 $171,192

1) 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 by2) 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.

For certain accounts, Sales and Redemptions are calculated as the remaining4) difference between beginning and ending assets after the calculation of total investment return.

The beginning assets for the six months ended June 30, 2020 includes $8.25) 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) June 30, 2021March 31, 2021Dec. 31, 2020Sept. 30, 2020June 30, 2020

By Asset Class

Equity $100,506 $96,170 $91,788 $80,405 $76,859

Fixed-income 90,801 86,464 84,277 79,546 73,143

Alternative / private markets20,962 19,301 19,084 18,146 17,485

Multi-asset 3,699 3,981 3,948 3,737 3,705

Total long-term assets 215,968 205,916 199,097 181,834 171,192

Money market 429,804 419,080 420,333 432,952 457,624

Total Managed Assets $645,772 $624,996 $619,430 $614,786 $628,816



By Product Type

Funds:

Equity $59,933 $56,767 $54,312 $46,093 $43,723

Fixed-income 58,486 55,581 53,557 49,779 46,046

Alternative / private markets13,225 12,231 12,100 11,393 11,037

Multi-asset 3,517 3,797 3,744 3,546 3,516

Total long-term assets 135,161 128,376 123,713 110,811 104,322

Money market 301,971 297,182 301,855 325,940 344,846

Total Fund Assets $437,132 $425,558 $425,568 $436,751 $449,168

Separate Accounts:

Equity $40,573 $39,403 $37,476 $34,312 $33,136

Fixed-income 32,315 30,883 30,720 29,767 27,097

Alternative / private markets7,737 7,070 6,984 6,753 6,448

Multi-asset 182 184 204 191 189

Total long-term assets 80,807 77,540 75,384 71,023 66,870

Money market 127,833 121,898 118,478 107,012 112,778

Total Separate Account Assets$208,640 $199,438 $193,862 $178,035 $179,648

Total Managed Assets $645,772 $624,996 $619,430 $614,786 $628,816

Unaudited Average Managed Assets Quarter Ended

(in millions) June 30, 2021March 31, 2021Dec. 31, 2020Sept. 30, 2020June 30, 2020

By Asset Class

Equity $ 99,165 $ 95,167 $ 85,572 $ 80,403 $ 73,620

Fixed-income 88,405 86,939 82,144 76,798 69,603

Alternative / private markets 20,047 19,278 18,549 18,270 18,022

Multi-asset 4,067 3,974 3,831 3,786 3,630

Total long-term assets 211,684 205,358 190,096 179,257 164,875

Money market 427,993 412,720 420,436 448,795 471,984

Total Avg. Managed Assets $ 639,677 $ 618,078 $ 610,532 $ 628,052 $ 636,859



By Product Type

Funds:

Equity $ 58,662 $ 56,832 $ 50,022 $ 46,020 $ 41,301

Fixed-income 57,006 55,416 51,934 48,418 43,229

Alternative / private markets 12,703 12,239 11,670 11,539 11,345

Multi-asset 3,880 3,783 3,634 3,590 3,453

Total long-term assets 132,251 128,270 117,260 109,567 99,328

Money market 301,990 288,403 311,769 338,814 356,736

Total Avg. Fund Assets $ 434,241 $ 416,673 $ 429,029 $ 448,381 $ 456,064

Separate Accounts:

Equity $ 40,503 $ 38,335 $ 35,550 $ 34,383 $ 32,319

Fixed-income 31,399 31,523 30,210 28,380 26,374

Alternative / private markets 7,344 7,039 6,879 6,731 6,677

Multi-asset 187 191 197 196 177

Total long-term assets 79,433 77,088 72,836 69,690 65,547

Money market 126,003 124,317 108,667 109,981 115,248

Total Avg. Separate Account Assets$ 205,436 $ 201,405 $ 181,503 $ 179,671 $ 180,795

Total Avg. Managed Assets $ 639,677 $ 618,078 $ 610,532 $ 628,052 $ 636,859

Unaudited Average Managed Assets Six Months Ended

(in millions) June 30, 2021June 30, 2020

By Asset Class

Equity $ 97,166 $ 78,194

Fixed-income 87,671 69,336

Alternative / private markets^1 19,663 18,002

Multi-asset 4,021 3,818

Total long-term assets 208,521 169,350

Money market 420,357 439,174

Total Avg. Managed Assets $ 628,878 $ 608,524



By Product Type

Funds:

Equity $ 57,747 $ 43,149

Fixed-income 56,210 43,623

Alternative / private markets^1 12,471 11,244

Multi-asset 3,832 3,633

Total long-term assets 130,260 101,649

Money market 295,197 323,688

Total Avg. Fund Assets $ 425,457 $ 425,337

Separate Accounts:

Equity $ 39,419 $ 35,045

Fixed-income 31,461 25,713

Alternative / private markets 7,192 6,758

Multi-asset 189 185

Total long-term assets 78,261 67,701

Money market 125,160 115,486

Total Avg. Separate Account Assets$ 203,421 $ 183,187

Total Avg. Managed Assets $ 628,878 $ 608,524

The average balance for the six months ended June 30, 2020 includes $8.11) 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-second-quarter-2021-earnings-301344699.html

SOURCE Federated Hermes, Inc.