Federated Hermes, Inc. Reports Second Quarter 2020 Earnings
- Q2 2020 earnings per diluted share of $0.80 compared to $0.62 for Q2 2019
- Managed assets reach a record $628.8 billion
- Board declares $0.27 per share quarterly dividend
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 | Quarter Ended | % Change | |||||||||||
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 | Multi-asset | Total | ||||||||||||||||||||||||||
Funds | Separate | Funds | Separate | Funds | Separate | Funds | Separate | Funds. | Separate | |||||||||||||||||||||
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 | Multi-asset | Total | ||||||||||||||||||||||||||
Funds | Separate | Funds | Separate | Funds2 | Separate | Funds | Separate | Funds2 | Separate | |||||||||||||||||||||
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 | 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. |
SOURCE Federated Hermes, Inc.
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