Federated AUM jumps 3.6% in the quarter

Federated Investors reported $502.2 billion in assets under management as of June 30, up 3.6% from three months earlier and up 32.3% from a year earlier, the company said in its second-quarter earnings statement released Thursday.

The firm’s increase to a record AUM was driven by an uptick in interest in the firm’s equity products, fundamental products and a range of products from Hermes Investment Management, said J. Christopher Donahue, president and CEO, in the earnings release.

“Investors also continued to choose money market strategies for liquidity solutions, especially our prime money market products,” Mr. Donahue said.

Money market assets totaled $333.1 billion as of June 30, up 4.6% from March 31 and up 30.5% from June 30, 2018.

By asset class, Federated equity strategies had $82 billion in assets, up 2.2% from three months earlier and up 41.4% from a year earlier. Equity products experienced net inflows of $408 million during the second quarter, compared with net outflows of $790 million in the first quarter and net outflows of $2.3 billion during the second quarter of 2018.

Fixed-income assets rose to $65.1 billion, representing a 1.5% increase over March 31, and a 5.9% increase over June 30, 2018. Fixed-income net inflows were $12 million during the quarter, compared with net outflows of $925 million in the previous quarter. In the year-earlier quarter, the manager experienced fixed-income net outflows of $179 million.

Assets under management in alternative/private markets strategies totaled $17.9 billion as of June 30, up 0.4% from March 31 and up from $292 million on June 30, 2018. Federated began reporting assets and flows for alternative/private markets and multiasset strategies in the third quarter of 2018 after it completed its acquisition of a 60% interest in Hermes Investment Management in July 2018.

Across its alternative/private markets strategies, Federated experienced $18 million in net inflows compared with net outflows of $545 million during the previous quarter and net outflows of $29 million in the year-earlier quarter.

Multiasset AUM was $4.2 billion as of June 30, down 1.1% from March 31 and down 10.9% year-over-year. Multiasset net outflows were $150 million during the second quarter, compared with $137 million in net outflows in the first quarter. In the second quarter of 2018, multiasset net outflows were $103 million.

During the second quarter, Federated announced it had agreed to buy parts of PNC Financial Services Group’s asset management business, PNC Capital Advisors, for $52 million.

Under the deal, expected to close in the fourth quarter, Federated will acquire nearly $14 billion in assets from PNC: about $9 billion in money market assets, $4.2 billion in equity assets and $700 million in fixed-income assets, a news release said in May.

Total revenue for the second quarter was $321.5 million, up 4.7% from the prior quarter and up 25.6% from the year-earlier quarter. Net income for the second quarter was $62.7 million, up 15% from the first quarter and up 61.6% from the second quarter of 2018.