PR Newswire | Jan 27, 2022 04:18PM EST

01/27 15:17 CST

Federated Hermes, Inc. reports fourth quarter and full-year 2021 earnings- Q4 2021 earnings per diluted share of $0.71; full-year 2021 EPS of $2.75- Total assets under management reach a record $668.9 billion- Long-term assets reach a record $221.0 billion- Board declares $0.27 per share quarterly dividend PITTSBURGH, Jan. 27, 2022

PITTSBURGH, Jan. 27, 2022 /PRNewswire/ -- Federated Hermes, Inc. (NYSE: FHI), a global leader in active, responsible investing, today reported earnings per diluted share (EPS) for Q4 2021 of $0.71, compared to $0.93 for the same quarter last year, on net income of $68.6 million for Q4 2021, compared to $95.2 million for Q4 2020. Full-year 2021 EPS was $2.75, compared to $3.23 for 2020 on net income of $270.3 million for 2021, compared to $326.4 million for 2020. As reported for Q2 2021, Federated Hermes' results include a $14.5 million noncash U.K. tax expense, which had an $0.11 per diluted share impact for 2021.

Federated Hermes' total managed assets were a record $668.9 billion at Dec. 31, 2021, up $49.5 billion or 8% from $619.4 billion at Dec. 31, 2020 and up $34.8 billion or 5% from $634.1 billion at Sept. 30, 2021. Average managed assets for Q4 2021 were $640.4 billion, up $29.9 billion or 5% from $610.5 billion reported for Q4 2020 and up $7.3 billion or 1% from $633.1 billion reported for Q3 2021.

"Federated Hermes' record assets at year-end 2021 were driven by fourth-quarter money market asset increases, market gains in long-term assets and our highest-ever annual net sales of $9 billion in long-term products," said J. Christopher Donahue, president and chief executive officer. "As a result of the historical low interest rates during the year, we derived 80% of our 2021 revenue from the diverse range of our actively managed strategies that comprise long-term categories-equity, fixed income, alternative/private markets and multi-asset."

Federated Hermes' board of directors declared a quarterly dividend of $0.27 per share. The dividend is payable on Feb. 15, 2022 to shareholders of record as of Feb. 8, 2022. During Q4 2021, Federated Hermes purchased 4,054,119 shares of Federated Hermes class B common stock for $145.2 million, bringing the total shares of Class B common stock purchased in 2021 to 7,145,838 shares for $239.7 million.

Federated Hermes' equity assets were $96.7 billion at Dec. 31, 2021, up $4.9 billion or 5% from $91.8 billion at Dec. 31, 2020 and down $0.7 billion or 1% from $97.4 billion at Sept. 30, 2021. Top-selling equity funds on a net basis during Q4 2021 were Federated Hermes Global Emerging Markets SMID Equity Fund, Federated Hermes U.S. SMID Equity Fund, Federated Hermes Global Equity ESG Fund, Federated Hermes Impact Opportunities Equity Fund and Federated Hermes MDT All Cap Core Fund.

Federated Hermes' fixed-income assets were a record $97.6 billion at Dec. 31, 2021, up $13.3 billion or 16% from $84.3 billion at Dec. 31, 2020 and up $0.4 billion from $97.2 billion at Sept. 30, 2021. Top-selling fixed-income funds on a net basis during Q4 2021 were Federated Hermes SDG Engagement High Yield Credit Fund (UCITS), Federated Hermes Strategic Income Fund, Federated Hermes Municipal Ultrashort Fund, Federated Hermes Government Ultrashort Fund and Federated Hermes Inflation Protected Securities Fund.

Federated Hermes' alternative/private markets assets were a record $22.9 billion at Dec. 31, 2021, up $3.8 billion or 20% from $19.1 billion at Dec. 31, 2020 and up $0.8 billion or 4% from $22.1 billion at Sept. 30, 2021.

Federated Hermes' money market assets were $447.9 billion at Dec. 31, 2021, up $27.6 billion or 7% from $420.3 billion at Dec. 31, 2020 and up $34.2 billion or 8% from $413.7 billion at Sept. 30, 2021. Money market mutual fund assets were $312.8 billion at Dec. 31, 2021, up $10.9 billion or 4% from $301.9 billion at Dec. 31, 2020 and up $20.5 billion or 7% from $292.3 billion at Sept. 30, 2021. Federated Hermes' money market separate account assets were a record $135.1 billion at Dec. 31, 2021, up $16.6 billion or 14% from $118.5 billion at Dec. 31, 2020 and up $13.7 billion or 11% from $121.4 billion at Sept. 30, 2021.

Financial Summary

Q4 2021 vs. Q4 2020

Revenue decreased $42.3 million or 12% 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), a decrease in performance fees and lower average money market assets. These decreases were partially offset by an increase in revenue due to higher average long-term assets. For further information on fee waivers, see "Impact of voluntary yield-related fee waivers," below.

During Q4 2021, Federated Hermes derived 81% of its revenue from long-term assets (52% from equity assets, 19% from fixed-income assets and 10% from alternative/private markets and multi-asset), 17% from money market assets, and 2% from sources other than managed assets.

Operating expenses decreased $16.1 million or 6% primarily due to decreased distribution expenses predominantly resulting from higher voluntary yield-related fee waivers and lower incentive compensation and related expenses.

Nonoperating income (expenses), net decreased $11.6 million or 79% primarily due to a larger increase in the market value of investments in Q4 2020 compared to Q4 2021.

Q4 2021 vs. Q3 2021

Revenue decreased $4.9 million or 2% primarily due to lower average equity assets.

Operating expenses increased by $4.9 million or 2% primarily due to an increase in advertising and promotional expenses and other expenses, partially offset by lower incentive compensation and related expenses.

Nonoperating income (expenses), net increased $4.8 million or 274% primarily due to a larger increase in the market value of investments in Q4 2021 compared to Q3 2021.

2021 vs. 2020

Revenue decreased $147.8 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 by an increase in revenue due to higher average long-term assets.

During 2021, Federated Hermes derived 80% of its revenue from long-term assets (52% from equity assets, 18% from fixed-income assets 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 by $95.9 million or 9% primarily due to decreased distribution expenses predominantly resulting from higher voluntary yield-related fee waivers.

Nonoperating income (expenses), net decreased $17.9 million or 64% primarily due to a larger increase in the market value of investments in 2020 compared to 2021 and a gain recorded in 2020 from a fair value adjustment to the equity investment of a previously nonconsolidated entity.

Impact of voluntary yield-related fee waivers

For Q4 2021 and full-year 2021, voluntary yield-related fee waivers totaled $110.1 million and $420.3 million, respectively. These fee waivers were largely offset by related reductions in distribution expenses of $72.3 million and $277.2 million, respectively, such that the net negative pre-tax impact to Federated Hermes was $37.8 million and $143.2 million, respectively. During the three and 12 months ended Dec. 31, 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 for the three and 12 months ended Dec. 31, 2020, respectively.

Short-term interest rates remained near historic lows during Q4 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. Market expectations are that the central bank will raise interest rates multiple times in 2022, starting in March. Higher yields in 2022 will lower the impact of voluntary yield-related fee waivers. 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 $22 million during Q1 2022. Assuming an increase in interest rates of 25 basis points by the Federal Reserve in March 2022, the Q1 estimated $22 million of net negative impact on pre-tax income from voluntary yield-related waivers is expected to be reduced by approximately 90% for Q2. 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 Jan. 28, 2022. 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 Jan. 28, 2022. To access the telephone replay, dial 877-481-4010 (domestic) or 919-882-2331 (international) and enter access code 44043. The online replay will be available via FederatedHermes.com for one year.

Federated Hermes, Inc. is a global leader in active, responsible investment management, with $668.9 billion in assets under management1. We deliver investment solutions that help investors target a broad range of outcomes and provide equity, fixed-income, alternative/private markets, multi-asset and liquidity management strategies to more than 11,000 institutions and intermediaries worldwide. Our clients include corporations, government entities, insurance companies, foundations and endowments, banks and broker/dealers. At Federated Hermes, responsibility is central to our client relationships, our long-term perspective and our fiduciary mindset. It's part of our heritage and the foundation of our future.

Headquartered in Pittsburgh, Federated Hermes has nearly 2,000 employees in London, New York, Boston and offices worldwide. Federated Hermes ranks in the top 7% of equity fund managers in the industry, the top 10% of money market fund managers and the top 10% of fixed-income fund managers2. Federated Hermes also ranks as the 10th-largest manager of model-delivered SMAs3. For more information, including an analyst presentation, visit FederatedHermes.com.

###

1) As of Dec. 31, 20212) ISS Market Intelligence (SIMFUND), Dec. 31, 2021. Based on assets under management in U.S. open-end funds.3) Money Management Institute/Cerulli Associates, Q3 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 (HGPE), 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 Q4 2020 toQ3 2021 to Dec. 31, 2021 Dec. 31, 2020 Q4 2021 Sept. 30, 2021 Q4 2021

Revenue

Investment advisory fees, net $ 223,796 $ 265,593 (16)% $ 230,210 (3)%

Administrative service fees, net 77,734 79,192 (2) 76,853 1

Other service fees, net 20,115 19,133 5 19,526 3

Total Revenue 321,645 363,918 (12) 326,589 (2)



Operating Expenses

Compensation and related 124,107 138,296 (10) 131,996 (6)

Distribution 39,894 59,419 (33) 38,486 4

Systems and communications 19,343 18,518 4 18,537 4

Professional service fees 16,279 13,961 17 14,294 14

Office and occupancy 11,215 6,436 74 11,036 2

Advertising and promotional 9,493 4,853 96 4,660 104

Travel and related 2,499 540 363 1,643 52

Other 10,232 7,120 44 7,535 36

Total Operating Expenses 233,062 249,143 (6) 228,187 2

Operating Income 88,583 114,775 (23) 98,402 (10)



Nonoperating Income (Expenses)

Investment income (loss), net 3,257 15,175 (79) 42 NM

Debt expense (472) (468) 1 (476) (1)

Other, net 258 (27) NM (1,319) 120

Total Nonoperating Income (Expenses), net 3,043 14,680 (79) (1,753) 274

Income before income taxes 91,626 129,455 (29) 96,649 (5)

Income tax provision 20,629 28,183 (27) 23,163 (11)

Net income including the noncontrolling interests in subsidiaries 70,997 101,272 (30) 73,486 (3)

Less: Net income attributable to the noncontrolling interests in subsidiaries2,434 6,104 (60) 2,124 15

Net Income $ 68,563 $ 95,168 (28)% $ 71,362 (4)%



Amounts Attributable to Federated Hermes, Inc.

Earnings Per Share^1

Basic $ 0.71$ 0.94(24)% $ 0.73(3)%

Diluted $ 0.71$ 0.93(24)% $ 0.73(3)%

Weighted-Average Shares Outstanding

Basic and diluted 91,924 95,504 93,320

Dividends Declared Per Share $ 0.27$ 1.27 $ 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 $2.9 million, $5.0 million and $3.0 million available to1) unvested restricted Federated Hermes shareholders for the quarterly periods ended Dec. 31, 2021, Dec. 31, 2020 and Sept. 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)

Year Ended

Dec. 31, 2021 Dec. 31, 2020 % Change

Revenue

Investment advisory fees, net $ 915,984 $ 1,011,467 (9)%

Administrative service fees, net-affiliates 306,639 318,152 (4)

Other service fees, net 77,824 118,649 (34)

Total Revenue 1,300,447 1,448,268 (10)



Operating Expenses

Compensation and related 532,492 503,400 6

Distribution 160,884 318,343 (49)

Systems and communications 75,429 64,698 17

Professional service fees 60,331 55,123 9

Office and occupancy 44,573 38,975 14

Advertising and promotional 21,600 15,834 36

Travel and related 5,337 4,566 17

Other 33,529 29,178 15

Total Operating Expenses 934,175 1,030,117 (9)

Operating Income 366,272 418,151 (12)



Nonoperating Income (Expenses)

Investment income (loss), net 12,703 22,186 (43)

Debt expense (1,785) (2,678) (33)

Other, net (900) 8,398 (111)

Total Nonoperating Income (Expenses), net 10,018 27,906 (64)

Income before income taxes 376,290 446,057 (16)

Income tax provision 103,982 110,035 (6)

Net income including the noncontrolling interests in subsidiaries272,308 336,022 (19)

Less: Net income attributable to the noncontrolling 2,015 9,658 (79) interests in subsidiaries

Net Income $ 270,293 $ 326,364 (17)%



Amounts Attributable to Federated Hermes, Inc.

Earnings Per Share^1

Basic $ 2.77$ 3.25(15)%

Diluted $ 2.75$ 3.23(15)%

Weighted-Average Shares Outstanding

Basic and diluted 93,597 96,419

Dividends Declared Per Share $ 1.08$ 2.08

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 $11.3 million and $12.8 million available to unvested1) restricted Federated Hermes shareholders for the years ended Dec. 31, 2021 and Dec. 31, 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) Dec. 31, 2021 Dec. 31, 2020

Assets

Cash and other investments $ 426,674$ 438,771

Other current assets 132,773 136,572

Intangible assets, net, including goodwill 1,270,080 1,282,020

Other long-term assets 188,660 203,476

Total Assets $ 2,018,187 $ 2,060,839



Liabilities, Redeemable Noncontrolling Interests and Equity

Current liabilities $ 270,707$ 265,446

Long-term debt 223,350 75,000

Other long-term liabilities 346,911 346,409

Redeemable noncontrolling interests 63,202 236,987

Equity excluding treasury stock 1,652,481 1,461,728

Treasury stock (538,464) (324,731)

Total Liabilities, Redeemable Noncontrolling Interests and Equity$ 2,018,187 $ 2,060,839

Unaudited Changes in Long-Term Assets - By Asset Class

(in millions) Quarter Ended Year Ended

Dec. 31, 2021 Sept. 30, 2021 Dec. 31, 2020 Dec. 31, 2021 Dec. 31, 2020

Equity

Beginning assets $ 97,425 $ 100,506 $ 80,405 $ 91,788 $ 89,011

Sales^1 4,371 4,332 5,618 21,829 20,463

Redemptions^1 (7,106) (5,707) (6,047) (26,761) (26,721)

Net sales (redemptions)^1 (2,735) (1,375) (429) (4,932) (6,258)

Net exchanges (2) 3 (8) 41 (70)

Acquisitions/(dispositions) 0 408 0 408 (71)

Impact of foreign exchange^2 (162) (510) 946 (1,096) 1,195

Market gains and (losses)^3 2,190 (1,607) 10,874 10,507 7,981

Ending assets $ 96,716 $ 97,425 $ 91,788 $ 96,716 $ 91,788



Fixed Income

Beginning assets $ 97,226 $ 90,801 $ 79,546 $ 84,277 $ 69,023

Sales^1 7,920 12,935 9,046 42,626 37,283

Redemptions^1 (7,438) (6,604) (6,046) (29,744) (26,138)

Net sales (redemptions)^1 482 6,331 3,000 12,882 11,145

Net exchanges (23) (7) (10) (81) (15)

Acquisitions/(dispositions) 0 17 0 17 (1)

Impact of foreign exchange^2 (9) (89) 181 (133) 190

Market gains and (losses)^3 (126) 173 1,560 588 3,935

Ending assets $ 97,550 $ 97,226 $ 84,277 $ 97,550 $ 84,277



Alternative / Private Markets

Beginning assets^4 $ 22,064 $ 20,962 $ 18,146 $ 19,084 $ 18,102

Sales^1 1,696 1,319 574 4,823 2,840

Redemptions^1 (1,460) (533) (661) (3,170) (2,615)

Net sales (redemptions)^1 236 786 (87) 1,653 225

Net exchanges 0 0 (3) (2) (4)

Acquisitions/(dispositions) 0 81 0 81 452

Impact of foreign exchange^2 107 (554) 1,061 (254) 615

Market gains and (losses)^3 513 789 (33) 2,358 (306)

Ending assets $ 22,920 $ 22,064 $ 19,084 $ 22,920 $ 19,084



Multi-asset

Beginning assets $ 3,692$ 3,699$ 3,737$ 3,948$ 4,199

Sales^1 75 71 50 301 241

Redemptions^1 (119) (103) (166) (936) (724)

Net sales (redemptions)^1 (44) (32) (116) (635) (483)

Net exchanges 14 9 3 42 (20)

Acquisitions/(dispositions) 0 54 0 54 0

Impact of foreign exchange^2 0 0 0 (1) 1

Market gains and (losses)^3 118 (38) 324 372 251

Ending assets $ 3,780$ 3,692$ 3,948$ 3,780$ 3,948



Total Long-term Assets

Beginning assets^4 $ 220,407 $ 215,968 $ 181,834 $ 199,097 $ 180,335

Sales^1 14,062 18,657 15,288 69,579 60,827

Redemptions^1 (16,123) (12,947) (12,920) (60,611) (56,198)

Net sales (redemptions)^1 (2,061) 5,710 2,368 8,968 4,629

Net exchanges (11) 5 (18) 0 (109)

Acquisitions/(dispositions) 0 560 0 560 380

Impact of foreign exchange^2 (64) (1,153) 2,188 (1,484) 2,001

Market gains and (losses)^3 2,695 (683) 12,725 13,825 11,861

Ending assets $ 220,966 $ 220,407 $ 199,097 $ 220,966 $ 199,097

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 year ended December 31, 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

Dec. 31, 2021

Equity Fixed Income Alternative / Private Multi-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 $ 58,218$ 39,207$ 60,262$ 36,964$ 14,299$ 7,765$ 3,518$ 174$ 136,297$ 84,110

Sales 2,507 1,864 6,138 1,782 1,374 322 75 0 10,094 3,968

Redemptions (4,198) (2,908) (6,468) (970) (1,174) (286) (115) (4) (11,955) (4,168)

Net sales (redemptions) (1,691) (1,044) (330) 812 200 36 (40) (4) (1,861) (200)

Net exchanges (2) 0 (23) 0 0 0 14 0 (11) 0

Impact of foreign exchange^2(59) (103) 0 (9) 63 44 0 0 4 (68)

Market gains and (losses)^3 570 1,620 (47) (79) 226 287 116 2 865 1,830

Ending assets $ 57,036$ 39,680$ 59,862$ 37,688$ 14,788$ 8,132$ 3,608$ 172$ 135,294$ 85,672



Year Ended

Dec. 31, 2021

Equity Fixed Income Alternative / Private Multi-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 14,265 7,564 30,862 11,764 3,699 1,124 299 2 49,125 20,454

Redemptions (15,915) (10,846) (24,902) (4,842) (2,657) (513) (894) (42) (44,368) (16,243)

Net sales (redemptions) (1,650) (3,282) 5,960 6,922 1,042 611 (595) (40) 4,757 4,211

Net exchanges (362) 403 (33) (48) (2) 0 41 1 (356) 356

Acquisitions/(dispositions) 408 0 17 0 81 0 54 0 560 0

Impact of foreign exchange^2(522) (574) (90) (43) (162) (92) 0 (1) (774) (710)

Market gains and (losses)^3 4,850 5,657 451 137 1,729 629 364 8 7,394 6,431

Ending assets $ 57,036$ 39,680$ 59,862$ 37,688$ 14,788$ 8,132$ 3,608$ 172$ 135,294$ 85,672

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.

Reflects the impact of translating non-U.S. dollar denominated AUM into U.S.2) dollars for reporting purposes.3) Reflects the approximate changes in the fair value of the securities held by the portfolios and, to a lesser extent, reinvested dividends, distributions and net investment income.

Unaudited Changes in Long-Term Assets - By Product Type

(in millions)

Quarter Ended Year Ended

Dec. 31, 2021 Sept. 30, 2021 Dec. 31, 2020 Dec. 31, 2021 Dec. 31, 2020



Total Fund Assets

Beginning assets^5 $ 136,297 $ 135,161 $ 110,811 $ 123,713 $ 107,724

Sales 10,094 11,139 12,204 49,125 46,401

Redemptions (11,955) (9,702) (9,020) (44,368) (40,974)

Net sales (redemptions) (1,861) 1,437 3,184 4,757 5,427

Net exchanges (11) 55 (18) (356) (103)

Acquisitions/(dispositions) 0 560 0 560 0

Impact of foreign exchange^1 4 (699) 1,258 (774) 1,038

Market gains and (losses)^2 865 (217) 8,478 7,394 9,627

Ending assets $ 135,294 $ 136,297 $ 123,713 $ 135,294 $ 123,713



Total Separate Accounts Assets^3

Beginning assets $ 84,110$ 80,807$ 71,023$ 75,384$ 72,611

Sales^4 3,968 7,518 3,084 20,454 14,426

Redemptions^4 (4,168) (3,245) (3,900) (16,243) (15,224)

Net sales (redemptions)^4 (200) 4,273 (816) 4,211 (798)

Net exchanges 0 (50) 0 356 (6)

Acquisitions/(dispositions) 0 0 0 0 380

Impact of foreign exchange^1 (68) (454) 930 (710) 963

Market gains and (losses)^2 1,830 (466) 4,247 6,431 2,234

Ending assets $ 85,672$ 84,110$ 75,384$ 85,672$ 75,384



Total Long-term Assets^3

Beginning assets^5 $ 220,407 $ 215,968 $ 181,834 $ 199,097 $ 180,335

Sales^4 14,062 18,657 15,288 69,579 60,827

Redemptions^4 (16,123) (12,947) (12,920) (60,611) (56,198)

Net sales (redemptions)^4 (2,061) 5,710 2,368 8,968 4,629

Net exchanges (11) 5 (18) 0 (109)

Acquisitions/(dispositions) 0 560 0 560 380

Impact of foreign exchange^1 (64) (1,153) 2,188 (1,484) 2,001

Market gains and (losses)^2 2,695 (683) 12,725 13,825 11,861

Ending assets $ 220,966 $ 220,407 $ 199,097 $ 220,966 $ 199,097

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

By Asset Class

Equity $ 96,716$ 97,425$ 100,506 $ 96,170$ 91,788

Fixed-income 97,550 97,226 90,801 86,464 84,277

Alternative / private markets22,920 22,064 20,962 19,301 19,084

Multi-asset 3,780 3,692 3,699 3,981 3,948

Total long-term assets 220,966 220,407 215,968 205,916 199,097

Money market 447,907 413,713 429,804 419,080 420,333

Total Managed Assets $ 668,873 $ 634,120 $ 645,772 $ 624,996 $ 619,430



By Product Type

Funds:

Equity $ 57,036$ 58,218$ 59,933$ 56,767$ 54,312

Fixed-income 59,862 60,262 58,486 55,581 53,557

Alternative / private markets14,788 14,299 13,225 12,231 12,100

Multi-asset 3,608 3,518 3,517 3,797 3,744

Total long-term assets 135,294 136,297 135,161 128,376 123,713

Money market 312,834 292,311 301,971 297,182 301,855

Total Fund Assets $ 448,128 $ 428,608 $ 437,132 $ 425,558 $ 425,568

Separate Accounts:

Equity $ 39,680$ 39,207$ 40,573$ 39,403$ 37,476

Fixed-income 37,688 36,964 32,315 30,883 30,720

Alternative / private markets8,132 7,765 7,737 7,070 6,984

Multi-asset 172 174 182 184 204

Total long-term assets 85,672 84,110 80,807 77,540 75,384

Money market 135,073 121,402 127,833 121,898 118,478

Total Separate Account Assets$ 220,745 $ 205,512 $ 208,640 $ 199,438 $ 193,862

Total Managed Assets $ 668,873 $ 634,120 $ 645,772 $ 624,996 $ 619,430

Unaudited Average Managed Assets Quarter Ended

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

By Asset Class

Equity $ 97,751$ 100,076 $ 99,165$ 95,167$ 85,572

Fixed-income 97,229 93,685 88,405 86,939 82,144

Alternative / private markets 22,243 21,446 20,047 19,278 18,549

Multi-asset 3,763 3,713 4,067 3,974 3,831

Total long-term assets 220,986 218,920 211,684 205,358 190,096

Money market 419,392 414,141 427,993 412,720 420,436

Total Avg. Managed Assets $ 640,378 $ 633,061 $ 639,677 $ 618,078 $ 610,532

By Product Type

Funds:

Equity $ 58,290$ 59,918$ 58,662$ 56,832$ 50,022

Fixed-income 60,339 59,618 57,006 55,416 51,934

Alternative / private markets 14,419 13,704 12,703 12,239 11,670

Multi-asset 3,590 3,533 3,880 3,783 3,634

Total long-term assets 136,638 136,773 132,251 128,270 117,260

Money market 294,618 289,566 301,990 288,403 311,769

Total Avg. Fund Assets $ 431,256 $ 426,339 $ 434,241 $ 416,673 $ 429,029

Separate Accounts:

Equity $ 39,461$ 40,158$ 40,503$ 38,335$ 35,550

Fixed-income 36,890 34,067 31,399 31,523 30,210

Alternative / private markets 7,824 7,742 7,344 7,039 6,879

Multi-asset 173 180 187 191 197

Total long-term assets 84,348 82,147 79,433 77,088 72,836

Money market 124,774 124,575 126,003 124,317 108,667

Total Avg. Separate Account Assets$ 209,122 $ 206,722 $ 205,436 $ 201,405 $ 181,503

Total Avg. Managed Assets $ 640,378 $ 633,061 $ 639,677 $ 618,078 $ 610,532

Unaudited Average Managed Assets Year Ended

(in millions) Dec. 31, 2021 Dec. 31, 2020

By Asset Class

Equity $ 98,040$ 80,591

Fixed-income 91,564 74,403

Alternative / private markets^1 20,754 18,206

Multi-asset 3,879 3,813

Total long-term assets 214,237 177,013

Money market 418,562 436,895

Total Avg. Managed Assets $ 632,799 $ 613,908

By Product Type

Funds:

Equity $ 58,426$ 45,585

Fixed-income 58,095 46,899

Alternative / private markets^1 13,266 11,424

Multi-asset 3,696 3,622

Total long-term assets 133,483 107,530

Money market 293,644 324,490

Total Avg. Fund Assets $ 427,127 $ 432,020

Separate Accounts:

Equity $ 39,614$ 35,006

Fixed-income 33,469 27,504

Alternative / private markets 7,488 6,782

Multi-asset 183 191

Total long-term assets 80,754 69,483

Money market 124,918 112,405

Total Avg. Separate Account Assets $ 205,672 $ 181,888

Total Avg. Managed Assets $ 632,799 $ 613,908

The average balance at Dec. 31, 2020 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: https://www.prnewswire.com/news-releases/federated-hermes-inc-reports-fourth-quarter-and-full-year-2021-earnings-301470189.html

SOURCE Federated Hermes, Inc.