Federated Hermes reported record assets under management of $800.5 billion at the Sept. 30 close of the latest quarter, buoyed by inflows for the firm’s money market and fixed income products, and market gains on its equity and bond holdings.
Those flows, which left Federated with record money market assets of $593 billion and fixed income AUM of $100.2 billion, have remained solid following the U.S. Federal Reserves’ mid-September rate cut, its first in four years, reflecting the fact that money market products typically maintain a yield advantage over bank deposits, noted J. Christopher Donahue, Federated’s president and CEO, in an Oct. 24 earnings release.
Federated’s $593 billion in money market assets were up 13% from the year-earlier quarter, with $440.4 billion in mutual fund vehicles and $152.6 billion in separate accounts, and up just over 1% from the prior quarter.
The Pittsburgh-based firm’s fixed income strategies, meanwhile, reported net inflows of $1.4 billion for the quarter, adding to market gains of roughly $3.4 billion to lift Federated’s AUM for that asset class to a record $100.2 billion.
Equity strategies, by contrast, saw continued outflows of $1.4 billion in the latest quarter, down from $3.3 billion for the prior period and $2.4 billion for the year-earlier quarter.
Assets in alternative strategies rose by roughly $400 million from the year before, or 2%, to $20.7 billion, with a gain of 3% from the prior quarter.
On an Oct. 25 earnings call, Deborah A. Cunningham, executive vice president, senior portfolio manager and CIO Global Liquidity Markets, said while some of the 20% of Federated’s money market assets accounted for by institutional investors began shifting into long-term fixed income and equity products over the latest quarter, retail inflows are likely to remain healthy as the Fed continues easing toward a terminal rate of around 3%. And that, she said, could see industry assets edging high by the end of the year to $7 trillion from an estimated $6.8 trillion at present.
The firm's money market strategies accounted for just more than half of the firm’s revenues. Federated’s combined $207.4 billion in long-term assets accounted for the remainder, with 29% of revenues coming from the firm’s equity products, 12% from fixed income, and 7% from alternatives and multiasset strategies.
