PR Newswire | Oct 28, 2021 04:17PM EDT

10/28 15:17 CDT

Federated Hermes, Inc. reports third quarter 2021 earnings- Fixed-income assets reach a record $97 billion- Long-term assets reach a record $220 billion- Board declares $0.27 per share quarterly dividend PITTSBURGH, Oct. 28, 2021

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, visitFederatedHermes.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 Quarter Ended% Change Q3 2020 toQ2 2021 to Sept. 30, 2021Sept. 30, 2020Q3 2021 June 30, 2021Q3 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 2,124 862 146 (2,405) 188 subsidiaries

Net Income $71,362 $85,822 (17) % $55,884 28 %



Amounts Attributable to Federated Hermes, Inc.

Earnings Per Share^1

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

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 the1) 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, 2021Sept. 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 (419) 3,554 (112) subsidiaries

Net Income $201,730 $231,196 (13) %



Amounts Attributable to Federated Hermes, Inc.

Earnings Per Share^1

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

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 to1) 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, 2021Dec. 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, 2021June 30, 2021Sept. 30, 2020Sept. 30, 2021Sept. 30, 2020

Equity

Beginning assets $100,506 $96,170 $76,859 $91,788 $89,011

Sales^1 4,332 5,366 4,186 17,458 14,845

Redemptions^1 (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 exchange^2(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

Sales^1 12,935 10,584 9,859 34,706 28,237

Redemptions^1 (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 exchange^2(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 assets^4 $20,962 $19,301 $17,485 $19,084 $18,102

Sales^1 1,319 1,330 586 3,127 2,266

Redemptions^1 (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 exchange^2(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

Sales^1 71 88 45 226 191

Redemptions^1 (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 exchange^20 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 assets^4 $215,968 $205,916 $171,192 $199,097 $180,335

Sales^1 18,657 17,368 14,676 55,517 45,539

Redemptions^1 (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 exchange^2(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

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 nine months ended September 30, 2020 include4) $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 MarketsMulti-asset Total

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

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 exchange^2(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 MarketsMulti-asset Total

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

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 exchange^2(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

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 Nine Months Ended

Sept. 30, 2021June 30, 2021Sept. 30, 2020Sept. 30, 2021Sept. 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 exchange^1 (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 Assets^3

Beginning assets^5 $80,807 $77,540 $66,870 $75,384 $72,611

Sales^4 7,518 4,729 4,041 16,486 11,342

Redemptions^4 (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 exchange^1 (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 Assets^3

Beginning assets^5 $215,968 $205,916 $171,192 $199,097 $180,335

Sales^4 18,657 17,368 14,676 55,517 45,539

Redemptions^4 (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 exchange^1 (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.

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 nine months ended September 30, 2020 includes5) $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, 2021June 30, 2021March 31, 2021Dec. 31, 2020Sept. 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 markets22,064 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 markets14,299 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 markets7,765 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, 2021June 30, 2021March 31, 2021Dec. 31, 2020Sept. 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, 2021Sept. 30, 2020

By Asset Class

Equity $ 98,136 $ 78,930

Fixed-income 89,676 71,823

Alternative / private markets^1 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 markets^1 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

The average balance for the nine months ended September 30, 2020 includes1) $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.