Federated Hermes, Inc. : Reports Second Quarter 2020 Earnings

PITTSBURGH, July 30, 2020 /PRNewswire/ -- Federated Hermes, Inc. (NYSE: FHI), a leading global, active, responsible investment manager, today reported earnings per diluted share (EPS) of $0.80 for Q2 2020, compared to $0.62 for the same quarter last year, on net income of $81.2 million for Q2 2020, compared to $62.7 million for Q2 2019. Federated Hermes reported YTD 2020 EPS of $1.44, compared to $1.16 for the same period in 2019, on YTD 2020 net income of $145.4 million, compared to $117.3 million for the same period in 2019.

Federated Hermes' total managed assets were a record $628.8 billion at June 30, 2020, up $126.6 billion or 25% from $502.2 billion at June 30, 2019 and up $23.0 billion or 4% from $605.8 billion at March 31, 2020. Total average managed assets for Q2 2020 were $636.9 billion, up $143.6 billion or 29% from $493.3 billion reported for Q2 2019 and up $56.7 billion or 10% from $580.2 billion reported for Q1 2020.

"While the economy continued to be challenged by the coronavirus in the second quarter, investors sought haven in a range of Federated Hermes investment strategies that offered diversification, performance and competitive yields," said J. Christopher Donahue, president and chief executive officer. "Federated Hermes' high-yield and multi-sector fixed-income strategies saw strong sales, leading to record fixed-income assets under management of $73.1 billion at quarter end. Money market assets under management also reached an all-time high of $457.6 billion."

Federated Hermes' board of directors declared a quarterly dividend of $0.27 per share. The dividend is payable on Aug. 14, 2020 to shareholders of record as of Aug. 7, 2020. During Q2 2020, Federated Hermes purchased 843,416 shares of Federated Hermes class B common stock for $18.1 million.

Equity assets were $76.9 billion at June 30, 2020, down $5.1 billion or 6% from $82.0 billion at June 30, 2019 and up $8.7 billion or 13% from $68.2 billion at March 31, 2020. The decrease from Q2 2019 was primarily due to net redemptions and market depreciation partially offset by acquisitions, while the increase from the prior quarter largely resulted from a partial recovery in the market value of investments following the impact of the coronavirus. Top-selling equity funds during Q2 2020 on a net basis were Federated Hermes Kaufmann Small Cap Fund, Federated Hermes Global Equity ESG Fund, Federated Hermes Global Small Cap Equity Fund, Federated Hermes MDT All Cap Core Fund and Federated Hermes SDG Engagement Equity Fund (UCITS).

Fixed-income assets were a record $73.1 billion at June 30, 2020, up $8.0 billion or 12% from $65.1 billion at June 30, 2019 and up $8.4 billion or 13% from $64.7 billion at March 31, 2020. Top-selling fixed-income funds during Q2 2020 on a net basis were Federated Hermes Institutional High Yield Bond Fund, Federated Hermes Short-Intermediate Total Return Bond Fund, Federated Hermes Total Return Bond Fund, Federated Hermes Sterling Cash Plus Fund and Federated Hermes Ultrashort Bond Fund.

Money market assets were a record $457.6 billion at June 30, 2020, up $124.5 billion or 37% from $333.1 billion at June 30, 2019 and up $6.3 billion or 1% from $451.3 billion at March 31, 2020. Money market fund assets were $344.8 billion at June 30, 2020, up $113.5 billion or 49% from $231.3 billion at June 30, 2019 and up $8.7 billion or 3% from $336.1 billion at March 31, 2020.

Financial Summary

Q2 2020 vs. Q2 2019

Revenue increased $39.2 million or 12% primarily due to higher average money market assets, an increase in revenue from alternative/private markets primarily due to the revenue of a previously nonconsolidated entity being recorded in operating revenue beginning March 2020 and higher performance fees. These increases in revenue were partially offset by voluntary fee waivers related to certain money market funds in order for those funds to maintain positive or zero net yields (voluntary yield-related fee waivers) and a decrease in revenue due to lower average equity assets. See additional information about voluntary yield-related fee waivers in the paragraph at the end of this financial summary.

During Q2 2020, Federated Hermes derived 55% of its revenue from long-term assets (34% from equity assets, 12% from fixed-income assets and 9% from alternative/private markets and multi-asset), 44% from money market assets and 1% from sources other than managed assets.

Operating expenses increased $26.9 million or 11% primarily due to increased incentive compensation and increased distribution expenses associated with higher average money market fund assets. The distribution expenses include a reduction resulting from  voluntary yield–related fee waivers.

Nonoperating income (expenses), net increased $14.7 million primarily due to an increase in the market value of investments, which significantly recovered from the Q1 2020 coronavirus impact on the markets.

Q2 2020 vs. Q1 2020

Revenue increased $1.5 million primarily due to higher average money market assets, an increase in revenue from alternative/private markets primarily due to the revenue of a previously nonconsolidated entity being recorded in operating revenue beginning March 2020 and higher performance fees. These increases were partially offset by an increase in voluntary yield-related fee waivers and lower average equity assets.

Operating expenses decreased $3.0 million or 1% primarily due to decreased distribution expenses resulting from higher voluntary yield–related fee waivers on certain money market fund assets offset by increased incentive compensation.

Nonoperating income (expenses), net increased $21.1 million primarily due to an increase in the market value of investments, which significantly recovered from the Q1 2020 coronavirus impact on the markets. This increase was partially offset by a gain from a fair value adjustment to the equity investment of a previously nonconsolidated entity reported in Q1 2020.

YTD 2020 vs. YTD 2019

Revenue increased $91.4 million or 15% primarily due to higher average money market assets, revenue of a previously nonconsolidated entity being recorded in operating revenue beginning March 2020 and an increase in performance fees. These increases were partially offset by voluntary yield-related fee waivers.                                    

For the first half of 2020, Federated derived 56% of its revenue from long-term assets (36% from equity assets, 13% from fixed-income assets and 7% from alternative/private markets and multi-asset), 43% from money market assets and 1% from sources other than managed assets.

Operating expenses increased $57.2 million or 12% primarily due to increased incentive compensation and an increase in distribution expenses associated with higher average money market fund assets. These increases were partially offset by voluntary yield–related fee waivers.

Nonoperating (expenses) income, net increased $6.0 million primarily due to a gain 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, 2020, voluntary yield-related fee waivers totaled $20.0 million and $20.4 million, respectively. These fee waivers were partially offset by related reductions in distribution expenses of $18.0 million and $18.3 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.

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 31, 2020. 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 31, 2020. To access the telephone replay, dial 877-481-4010 (domestic) or 919-882-2331 (international) and enter access code 35618. The online replay will be available via FederatedHermes.com for one year.

Federated Hermes, Inc. is a leading global investment manager with $628.8 billion in assets under management as of June 30, 2020. Guided by our conviction that responsible investing is the best way to create wealth over the long term, our investment solutions span 162 equity, fixed-income, alternative/private markets, multi-asset and liquidity management strategies and a range of separately managed account 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' more than 1,900 employees include those in London, New York, Boston and several other offices worldwide. For more information, visit FederatedHermes.com.

Federated Hermes ranks in the top 6% of equity fund managers in the industry, the top 8% of money market fund managers and the top 10% of fixed-income fund managers¹. Federated Hermes also ranks as the 14th-largest SMA manager². For more information, including an analyst presentation, visit FederatedHermes.com.

1) ISS Market Intelligence (SIMFUND), June 30, 2020. Based on assets under management in open-end funds.
2) Money Management Institute/Cerulli, Q1 2020.
Federated Securities Corp. is distributor of the Federated Hermes funds.
Separately managed accounts are made available through Federated Global Investment Management Corp., Federated Investment Counseling, Federated MDTA LLC, Hermes Fund Managers Ireland Limited, Hermes Investment Management Limited, and Hermes GPE LLP, each a registered investment adviser.

Certain statements in this press release, such as those related to performance, investor preferences and demand, asset flows and mix, fee waivers, and the coronavirus and efforts to combat it, 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, sustain product demand, asset flows and mix, which could vary significantly depending on various factors, such as market conditions, investment performance and investor behavior. Other risks and uncertainties include the risk factors discussed in the company's annual and quarterly reports as filed with the SEC. As a result, no assurance can be given as to future results, levels of activity, performance or achievements, and neither the company nor any other person assumes responsibility for the accuracy and completeness of such statements in the future.

Unaudited Condensed Consolidated Statements of Income
(in thousands, except per share data)
	Quarter Ended						% Change Q2 2019 to Q2 2020			Quarter Ended			% Change Q1 2020 to Q2 2020
	June 30, 2020			June 30, 2019						March 31, 2020
Revenue
Investment advisory fees, net	$	245,126		$	220,669		11	%		$	240,660		2	%
Administrative service fees, net—affiliates	83,733			57,968			44			72,199			16
Other service fees, net	31,853			42,842			(26)			46,324			(31)
Total Revenue	360,712			321,479			12			359,183			0
Operating Expenses
Compensation and related	123,583			107,248			15			115,335			7
Distribution	89,038			82,000			9			96,160			(7)
Systems and communications	15,091			12,111			25			14,896			1
Professional service fees	13,888			10,281			35			13,268			5
Office and occupancy	10,190			11,066			(8)			11,771			(13)
Advertising and promotional	3,065			4,697			(35)			4,995			(39)
Travel and related	325			4,459			(93)			3,159			(90)
Other	8,281			4,677			77			6,855			21
Total Operating Expenses	263,461			236,539			11			266,439			(1)
Operating Income	97,251			84,940			14			92,744			5
Nonoperating Income (Expenses)
Investment income (loss), net	14,841			1,526			NM			(14,451)			203
Debt expense	(785)			(1,332)			(41)			(931)			(16)
Other, net	(24)			(832)			(97)			8,345			(100)
Total Nonoperating Income (Expenses), net	14,032			(638)			NM			(7,037)			(299)
Income before income taxes	111,283			84,302			32			85,707			30
Income tax provision	26,482			20,462			29			22,442			18
Net income including the noncontrolling interests in subsidiaries	84,801			63,840			33			63,265			34
Less: Net income (loss) attributable to the noncontrolling interests in subsidiaries	3,605			1,116			223			(913)			(495)
Net Income	$	81,196		$	62,724		29	%		$	64,178		27	%
Amounts Attributable to Federated Hermes, Inc.
Earnings Per Share1
Basic	$	0.81		$	0.62		31	%		$	0.63		29	%
Diluted	$	0.80		$	0.62		29	%		$	0.63		27	%
Weighted-Average Shares Outstanding
Basic and Diluted	96,800			97,330						97,345
Dividends Declared Per Share	$	0.27		$	0.27					$	0.27

1)

Unvested share-based awards that receive non-forfeitable dividend rights are deemed participating securities and are required to be considered in the computation of basic earnings per share under the "two-class method." As such, total net income of $3.2 million, $2.4 million and $2.4 million available to unvested restricted Federated Hermes shareholders for the quarterly periods ended June 30, 2020, June 30, 2019 and March 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 Statements of Income
(in thousands, except per share data)
	Six Months Ended
	June 30, 2020			June 30, 2019			% Change
Revenue
Investment advisory fees, net	$	485,787		$	431,868		12	%
Administrative service fees, net—affiliates	155,932			112,103			39
Other service fees, net	78,176			84,558			(8)
Total Revenue	719,895			628,529			15
Operating Expenses
Compensation and related	238,918			218,464			9
Distribution	185,198			159,632			16
Systems and communications	29,987			24,905			20
Professional service fees	27,156			20,767			31
Office and occupancy	21,961			22,428			(2)
Advertising and promotional	8,061			8,886			(9)
Travel and related	3,484			8,307			(58)
Other	15,135			9,311			63
Total Operating Expenses	529,900			472,700			12
Operating Income	189,995			155,829			22
Nonoperating Income (Expenses)
Investment income (loss), net	390			4,235			(91)
Debt expense	(1,717)			(2,732)			(37)
Other, net	8,322			(508)			NM
Total Nonoperating Income (Expenses), net	6,995			995			NM
Income before income taxes	196,990			156,824			26
Income tax provision	48,924			38,373			27
Net income including the noncontrolling interests in subsidiaries	148,066			118,451			25
Less: Net income (loss) attributable to the noncontrolling interests in subsidiaries	2,692			1,181			128
Net Income	$	145,374		$	117,270		24	%
Amounts Attributable to Federated Hermes, Inc.
Earnings Per Share1
Basic and Diluted	$	1.44		$	1.16		24	%
Weighted-Average Shares Outstanding
Basic and Diluted	97,073			97,163
Dividends Declared Per Share	$	0.54		$	0.54

1)

Unvested share-based awards that receive non-forfeitable dividend rights are deemed participating securities and are required to be considered in the computation of basic earnings per share under the "two-class method." As such, total net income of $5.6 million and $4.5 million available to unvested restricted Federated Hermes shareholders for the six months ended June 30, 2020 and June 30, 2019, respectively, was excluded from the computation of basic earnings per share. In addition to the amounts excluded from the basic earnings per share calculation, the computation of diluted earnings per share excludes net income available to unvested shareholders of a nonpublic consolidated subsidiary.

 

Unaudited Condensed Consolidated Balance Sheets
(in thousands)	June 30, 2020			Dec. 31, 2019
Assets
Cash and other investments	$	372,603		$	340,635
Other current assets	148,797			120,649
Intangible assets, net, including goodwill	1,241,808			1,220,762
Other long-term assets	170,687			198,085
Total Assets	$	1,933,895		$	1,880,131
Liabilities, Redeemable Noncontrolling Interests and Equity
Current liabilities	$	248,996		$	230,713
Long-term debt	90,000			100,000
Other long-term liabilities	303,560			296,052
Redeemable noncontrolling interests	204,672			212,086
Equity excluding treasury stock	1,384,809			1,322,312
Treasury stock	(298,142)			(281,032)
Total Liabilities, Redeemable Noncontrolling Interests and Equity	$	1,933,895		$	1,880,131

 

Unaudited Changes in Long-Term Assets - By Asset Class
(in millions)	Quarter Ended										Six Months Ended
	June 30, 2020			March 31, 2020			June 30, 2019				June 30, 2020			June 30, 2019
Equity
Beginning assets	$	68,239		$	89,011		$	80,245			$	89,011		$	72,497
Sales1	4,579			6,080			4,812				10,659			9,948
Redemptions1	(7,280)			(7,842)			(4,404)				(15,122)			(10,330)
Net sales (redemptions)1	(2,701)			(1,762)			408				(4,463)			(382)
Net exchanges	(56)			(37)			191				(93)			204
Acquisitions/(dispositions)	0			(71)			0				(71)			0
Impact of foreign exchange2	439			(768)			4				(329)			(118)
Market gains and (losses)3	10,938			(18,134)			1,151				(7,196)			9,798
Ending assets	$	76,859		$	68,239		$	81,999			$	76,859		$	81,999
Fixed Income
Beginning assets	$	64,715		$	69,023		$	64,107			$	69,023		$	63,158
Sales1	11,755			7,687			5,193				19,442			10,609
Redemptions1	(5,407)			(9,398)			(5,181)				(14,805)			(11,522)
Net sales (redemptions)1	6,348			(1,711)			12				4,637			(913)
Net exchanges	146			(115)			(191)				31			(224)
Acquisitions/(dispositions)	0			(1)			0				(1)			0
Impact of foreign exchange2	29			(155)			(25)				(126)			(17)
Market gains and (losses)3	1,905			(2,326)			1,149				(421)			3,048
Ending assets	$	73,143		$	64,715		$	65,052			$	73,143		$	65,052
Alternative/Private Markets4
Beginning assets	$	18,061		$	18,102		$	17,854			$	18,102		$	18,318
Sales1	792			888			320				1,680			633
Redemptions1	(961)			(582)			(302)				(1,543)			(1,160)
Net sales (redemptions)1	(169)			306			18				137			(527)
Net exchanges	(3)			2			(1)				(1)			(3)
Acquisitions/(dispositions)	0			452			0				452			0
Impact of foreign exchange2	(33)			(1,121)			(435)				(1,154)			(48)
Market gains and (losses)3	(371)			320			481				(51)			177
Ending assets	$	17,485		$	18,061		$	17,917			$	17,485		$	17,917
Multi-asset
Beginning assets	$	3,494		$	4,199		$	4,259			$	4,199		$	4,093
Sales1	48			98			78				146			182
Redemptions1	(168)			(235)			(228)				(403)			(469)
Net sales (redemptions)1	(120)			(137)			(150)				(257)			(287)
Net exchanges	(5)			(14)			0				(19)			2
Market gains and (losses)3	336			(554)			104				(218)			405
Ending assets	$	3,705		$	3,494		$	4,213			$	3,705		$	4,213
Total Long-term Assets4
Beginning assets	$	154,509		$	180,335		$	166,465			$	180,335		$	158,066
Sales1	17,174			14,753			10,403				31,927			21,372
Redemptions1	(13,816)			(18,057)			(10,115)				(31,873)			(23,481)
Net sales (redemptions)1	3,358			(3,304)			288				54			(2,109)
Net exchanges	82			(164)			(1)				(82)			(21)
Acquisitions/(dispositions)	0			380			0				380			0
Impact of foreign exchange2	435			(2,044)			(456)				(1,609)			(183)
Market gains and (losses)3	12,808			(20,694)			2,885				(7,886)			13,428
Ending assets	$	171,192		$	154,509		$	169,181			$	171,192		$	169,181

1)	For certain accounts, Sales and Redemptions are calculated as the remaining difference between beginning and ending assets after the calculation of total investment return.
2)	Reflects the impact of translating non-U.S. dollar denominated AUM into U.S. dollars for reporting purposes.
3)	Reflects the approximate changes in the fair value of the securities held by the portfolios and, to a lesser extent, reinvested dividends, distributions and net investment income.
4)	The balance at June 30, 2019 includes $8.4 billion of assets managed by a previously nonconsolidated entity, Hermes GPE LLP, in which Federated Hermes held an equity method investment. As of March 1, 2020, Hermes GPE LLP is a consolidated subsidiary as a result of Federated Hermes' acquisition of the remaining equity interests in Hermes GPE LLP.

 

Unaudited Changes in Long-Term Assets - By Asset Class and Product Type
(in millions)
	Quarter Ended
	June 30, 2020
	Equity						Fixed Income						Alternative / Private Markets						Multi-asset						Total
	Funds			Separate Accounts1			Funds			Separate Accounts1			Funds			Separate Accounts1			Funds			Separate Accounts1			Funds.			Separate Accounts1
Beginning assets	$	36,955		$	31,284		$	40,601		$	24,114		$	11,365		$	6,696		$	3,330		$	164		$	92,251		$	62,258
Sales	3,094			1,485			8,356			3,399			704			88			47			1			12,201			4,973
Redemptions	(4,330)			(2,950)			(4,845)			(562)			(684)			(277)			(163)			(5)			(10,022)			(3,794)
Net sales (redemptions)	(1,236)			(1,465)			3,511			2,837			20			(189)			(116)			(4)			2,179			1,179
Net exchanges	(56)			0			146			0			(3)			0			(5)			0			82			0
Impact of foreign exchange2	99			340			13			16			(19)			(14)			0			0			93			342
Market gains and (losses)3	7,961			2,977			1,775			130			(326)			(45)			307			29			9,717			3,091
Ending assets	$	43,723		$	33,136		$	46,046		$	27,097		$	11,037		$	6,448		$	3,516		$	189		$	104,322		$	66,870
	Six Months Ended
	June 30, 2020
	Equity						Fixed Income						Alternative / Private Markets						Multi-asset						Total
	Funds			Separate Accounts1			Funds			Separate Accounts1			Funds2			Separate Accounts1			Funds			Separate Accounts1			Funds2			Separate Accounts1
Beginning assets	$	48,112		$	40,899		$	44,223		$	24,800		$	11,389		$	6,713		$	4,000		$	199		$	107,724		$	72,611
Sales	7,486			3,173			14,628			4,814			1,328			352			120			26			23,562			8,365
Redemptions	(9,132)			(5,990)			(12,977)			(1,828)			(1,125)			(418)			(392)			(11)			(23,626)			(8,247)
Net sales (redemptions)	(1,646)			(2,817)			1,651			2,986			203			(66)			(272)			15			(64)			118
Net exchanges	(87)			(6)			31			0			(1)			0			(19)			0			(76)			(6)
Acquisition-related	0			(71)			0			(1)			0			452			0			0			0			380
Impact of foreign exchange2	(245)			(84)			(128)			2			(698)			(456)			0			0			(1,071)			(538)
Market gains and (losses)3	(2,411)			(4,785)			269			(690)			144			(195)			(193)			(25)			(2,191)			(5,695)
Ending assets	$	43,723		$	33,136		$	46,046		$	27,097		$	11,037		$	6,448		$	3,516		$	189		$	104,322		$	66,870

1)	Includes separately managed accounts, institutional accounts, sub-advised funds and other managed products. For certain accounts, Sales and Redemptions are calculated as the remaining difference between beginning and ending assets after the calculation of total investment return.
2)	Reflects the impact of translating non-U.S. dollar denominated AUM into U.S. dollars for reporting purposes.
3)	Reflects the approximate changes in the fair value of the securities held by the portfolios and, to a lesser extent, reinvested dividends, distributions and net investment income.

 

Unaudited Changes in Long-Term Assets - By Product Type
(in millions)	Quarter Ended										Six Months Ended
	June 30, 2020			March 31, 2020			June 30, 2019				June 30, 2020			June 30, 2019
Total Fund Assets1
Beginning assets	$	92,251		$	107,724		$	98,482			$	107,724		$	92,359
Sales	12,201			11,361			7,502				23,562			15,424
Redemptions	(10,022)			(13,604)			(7,020)				(23,626)			(15,371)
Net sales (redemptions)	2,179			(2,243)			482				(64)			53
Net exchanges	82			(158)			(1)				(76)			4
Impact of foreign exchange2	93			(1,164)			(331)				(1,071)			(83)
Market gains and (losses)3	9,717			(11,908)			2,314				(2,191)			8,613
Ending assets	$	104,322		$	92,251		$	100,946			$	104,322		$	100,946
Total Separate Account Assets4
Beginning assets	$	62,258		$	72,611		$	67,983			$	72,611		$	65,707
Sales5	4,973			3,392			2,901				8,365			5,948
Redemptions5	(3,794)			(4,453)			(3,095)				(8,247)			(8,110)
Net sales (redemptions)5	1,179			(1,061)			(194)				118			(2,162)
Net exchanges	0			(6)			0				(6)			(25)
Acquisitions/(dispositions)	0			380			0				380			0
Impact of foreign exchange2	342			(880)			(125)				(538)			(100)
Market gains and (losses)3	3,091			(8,786)			571				(5,695)			4,815
Ending assets	$	66,870		$	62,258		$	68,235			$	66,870		$	68,235
Total Long-term Assets1,4
Beginning assets	$	154,509		$	180,335		$	166,465			$	180,335		$	158,066
Sales5	17,174			14,753			10,403				31,927			21,372
Redemptions5	(13,816)			(18,057)			(10,115)				(31,873)			(23,481)
Net sales (redemptions)5	3,358			(3,304)			288				54			(2,109)
Net exchanges	82			(164)			(1)				(82)			(21)
Acquisitions/(dispositions)	0			380			0				380			0
Impact of foreign exchange2	435			(2,044)			(456)				(1,609)			(183)
Market gains and (losses)3	12,808			(20,694)			2,885				(7,886)			13,428
Ending assets	$	171,192		$	154,509		$	169,181			$	171,192		$	169,181

1)	The balance at June 30, 2019 includes $8.4 billion of assets managed by a previously nonconsolidated entity, Hermes GPE LLP, in which Federated 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.
2)	Reflects the impact of translating non-U.S. dollar denominated AUM into U.S. dollars for reporting purposes.
3)	Reflects the approximate changes in the fair value of the securities held by the portfolios and, to a lesser extent, reinvested dividends, distributions and net investment income.
4)	Includes separately managed accounts, institutional accounts, sub-advised funds and other managed products.
5)	For certain accounts, Sales and Redemptions are calculated as the remaining difference between beginning and ending assets after the calculation of total investment return.

 

Unaudited Managed Assets (in millions)	June 30, 2020			March 31, 2020			Dec. 31, 2019			Sept. 30, 2019			June 30, 2019
By Asset Class
Equity	$	76,859		$	68,239		$	89,011		$	80,750		$	81,999
Fixed-income	73,143			64,715			69,023			65,824			65,052
Alternative / private markets1	17,485			18,061			18,102			17,156			17,917
Multi-asset	3,705			3,494			4,199			4,140			4,213
Total long-term assets	171,192			154,509			180,335			167,870			169,181
Money market	457,624			451,330			395,539			359,292			333,066
Total Managed Assets	$	628,816		$	605,839		$	575,874		$	527,162		$	502,247
By Product Type
Funds:
Equity	$	43,723		$	36,955		$	48,112		$	42,575		$	43,443
Fixed-income	46,046			40,601			44,223			42,329			42,084
Alternative / private markets1	11,037			11,365			11,389			10,826			11,400
Multi-asset	3,516			3,330			4,000			3,952			4,019
Total long-term assets	104,322			92,251			107,724			99,682			100,946
Money market	344,846			336,133			286,612			261,215			231,321
Total Fund Assets	$	449,168		$	428,384		$	394,336		$	360,897		$	332,267
Separate Accounts:
Equity	$	33,136		$	31,284		$	40,899		$	38,175		$	38,556
Fixed-income	27,097			24,114			24,800			23,495			22,968
Alternative / private markets	6,448			6,696			6,713			6,330			6,517
Multi-asset	189			164			199			188			194
Total long-term assets	66,870			62,258			72,611			68,188			68,235
Money market	112,778			115,197			108,927			98,077			101,745
Total Separate Account Assets	$	179,648		$	177,455		$	181,538		$	166,265		$	169,980
Total Managed Assets	$	628,816		$	605,839		$	575,874		$	527,162		$	502,247

1)

Includes $8.2 billion, $8.0 billion and $8.4 billion at Dec. 31, 2019, Sept. 30, 2019 and June 30, 2019, respectively, of assets managed by a previously nonconsolidated entity, Hermes GPE LLP, in which Federated Hermes held an equity method investment. As of March 1, 2020, Hermes GPE LLP is a consolidated subsidiary as a result of Federated Hermes' acquisition of the remaining equity interests in Hermes GPE LLP.

 

Unaudited Average Managed Assets	Quarter Ended
(in millions)	June 30, 2020			March 31, 2020			Dec. 31, 2019			Sept. 30, 2019			June 30, 2019
By Asset Class
Equity	$	73,620		$	82,767		$	84,448		$	82,027		$	80,819
Fixed-income	69,603			69,068			67,602			65,074			64,913
Alternative / private markets1	18,022			17,983			17,838			17,407			17,772
Multi-asset	3,630			4,006			4,149			4,167			4,225
Total long-term assets	164,875			173,824			174,037			168,675			167,729
Money market	471,984			406,365			376,029			349,313			325,527
Total Avg. Managed Assets	$	636,859		$	580,189		$	550,066		$	517,988		$	493,256
By Product Type
Funds:
Equity	$	41,301		$	44,996		$	44,984		$	43,077		$	42,571
Fixed-income	43,229			44,017			43,304			41,958			41,652
Alternative / private markets1	11,345			11,143			11,283			11,035			11,146
Multi-asset	3,453			3,814			3,956			3,978			4,034
Total long-term assets	99,328			103,970			103,527			100,048			99,403
Money market	356,736			290,641			274,116			249,846			222,282
Total Avg. Fund Assets	$	456,064		$	394,611		$	377,643		$	349,894		$	321,685
Separate Accounts:
Equity	$	32,319		$	37,771		$	39,464		$	38,950		$	38,248
Fixed-income	26,374			25,051			24,298			23,116			23,261
Alternative / private markets	6,677			6,840			6,555			6,372			6,626
Multi-asset	177			192			193			189			191
Total long-term assets	65,547			69,854			70,510			68,627			68,326
Money market	115,248			115,724			101,913			99,467			103,245
Total Avg. Separate Account Assets	$	180,795		$	185,578		$	172,423		$	168,094		$	171,571
Total Avg. Managed Assets	$	636,859		$	580,189		$	550,066		$	517,988		$	493,256

1)

The average balance includes $8.3 billion, $8.1 billion and $8.1 billion for the quarters ended Dec. 31, 2019, Sept. 30, 2019 and June 30, 2019, respectively, of assets managed by a previously nonconsolidated entity, Hermes GPE LLP, in which Federated Hermes held an equity method investment.  As of March 1, 2020, Hermes GPE LLP is a consolidated subsidiary as a result of Federated Hermes' acquisition of the remaining equity interests in Hermes GPE LLP.

 

Unaudited Average Managed Assets		Six Months Ended
(in millions)		June 30, 2020				June 30, 2019
By Asset Class
Equity		$	78,194			$	79,187
Fixed-income		69,336				64,540
Alternative / private markets1		18,002				18,041
Multi-asset		3,818				4,225
Total long-term assets		169,350				165,993
Money market		439,174				318,339
Total Avg. Managed Assets		$	608,524			$	484,332
By Product Type
Funds:
Equity		$	43,149			$	41,394
Fixed-income		43,623				41,373
Alternative / private markets1		11,244				11,346
Multi-asset		3,633				4,038
Total long-term assets		101,649				98,151
Money market		323,688				215,771
Total Avg. Fund Assets		$	425,337			$	313,922
Separate Accounts:
Equity		$	35,045			$	37,793
Fixed-income		25,713				23,167
Alternative / private markets		6,758				6,695
Multi-asset		185				187
Total long-term assets		67,701				67,842
Money market		115,486				102,568
Total Avg. Separate Account Assets		$	183,187			$	170,410
Total Avg. Managed Assets		$	608,524			$	484,332

1)	The average balance for the six months ended June 30, 2019 includes $8.3 billion of assets managed by a previously nonconsolidated entity, Hermes GPE LLP, in which Federated Hermes held an equity method investment. As of March 1, 2020, Hermes GPE LLP is a consolidated subsidiary as a result of Federated Hermes' acquisition of the remaining equity interests in Hermes GPE LLP.

 

View original content:http://www.prnewswire.com/news-releases/federated-hermes-inc-reports-second-quarter-2020-earnings-301103466.html

SOURCE Federated Hermes, Inc.