Federated Hermes' AUM hits record high on money market growth

Federated Hermes reported a record $757.6 billion in assets under management as of Dec. 31, up 6% from three month earlier and up 13% from a year earlier.

The Pittsburgh-based asset manager's revenue increased 5% in the fourth quarter, which the firm primarily attributed to an increase in revenue from higher average money market assets.

"Federated Hermes' record assets at year-end were driven by another quarter of money market asset increases, as our liquidity products continued to provide a vital cash management resource for clients," said J. Christopher Donahue, president and chief executive officer, in a statement.

The firm's money market AUM hit a record $560 billion as of Dec. 31, up 7% from Sept. 30 and up 17% from Dec. 31, 2022.

In an earnings call Jan. 26, Donahue said the firm's money market funds will "continue to serve as ballast for the ship of FHI."

Though Federated Hermes' money market assets are its bread and butter as an asset management firm, Donahue said he sees the firm's private markets offerings as an area for growth potential.

"The private markets (strategy) has the potential to be bigger than the fixed income and equity enterprise that we already manage here. And we have a lot of good things going on on that side of the business," Donahue said.

"They all have good records — the real estate is excellent, the private equity is excellent, the private credit is excellent, and we're working on the infrastructure field."

The firm's private markets AUM totaled $20.6 billion as of Dec. 31, up 1% from three months earlier but down 1% from a year earlier.