FEDERATED HERMES INC Stock Forecasts | FHI EPS & Price Predictions

EX-99.1 2 a991-2021q4earningspressre.htm EX-99.1 Document

Exhibit 99.1

Federated Hermes, Inc. reports fourth quarter and full-year 2021 earnings

•Q4 2021 earnings per diluted share of $0.71; full-year 2021 EPS of $2.75

•Total assets under management reach a record $668.9 billion

•Long-term assets reach a record $221.0 billion

•Board declares $0.27 per share quarterly dividend

(PITTSBURGH, Pa., Jan. 27, 2022) — Federated Hermes, Inc. (NYSE: FHI), a global leader in active, responsible investing, today reported earnings per diluted share (EPS) for Q4 2021 of $0.71, compared to $0.93 for the same quarter last year, on net income of $68.6 million for Q4 2021, compared to $95.2 million for Q4 2020. Full-year 2021 EPS was $2.75, compared to $3.23 for 2020 on net income of $270.3 million for 2021, compared to $326.4 million for 2020. As reported for Q2 2021, Federated Hermes' results include a $14.5 million noncash U.K. tax expense, which had an $0.11 per diluted share impact for 2021.

Federated Hermes' total managed assets were a record $668.9 billion at Dec. 31, 2021, up $49.5 billion or 8% from $619.4 billion at Dec. 31, 2020 and up $34.8 billion or 5% from $634.1 billion at Sept. 30, 2021. Average managed assets for Q4 2021 were $640.4 billion, up $29.9 billion or 5% from $610.5 billion reported for Q4 2020 and up $7.3 billion or 1% from $633.1 billion reported for Q3 2021.

"Federated Hermes' record assets at year-end 2021 were driven by fourth-quarter money market asset increases, market gains in long-term assets and our highest-ever annual net sales of $9 billion in long-term products," said J. Christopher Donahue, president and chief executive officer. "As a result of the historical low interest rates during the year, we derived 80% of our 2021 revenue from the diverse range of our actively managed strategies that comprise long-term categories—equity, fixed income, alternative/private markets and multi-asset."

Federated Hermes' board of directors declared a quarterly dividend of $0.27 per share. The dividend is payable on Feb. 15, 2022 to shareholders of record as of Feb. 8, 2022. During Q4 2021, Federated Hermes purchased 4,054,119 shares of Federated Hermes class B common stock for $145.2 million, bringing the total shares of Class B common stock purchased in 2021 to 7,145,838 shares for $239.7 million.

Federated Hermes' equity assets were $96.7 billion at Dec. 31, 2021, up $4.9 billion or 5% from $91.8 billion at Dec. 31, 2020 and down $0.7 billion or 1% from $97.4 billion at Sept. 30, 2021. Top-selling equity funds on a net basis during Q4 2021 were Federated Hermes Global Emerging Markets SMID Equity Fund, Federated Hermes U.S. SMID Equity Fund, Federated Hermes Global Equity ESG Fund, Federated Hermes Impact Opportunities Equity Fund and Federated Hermes MDT All Cap Core Fund.

Federated Hermes' fixed-income assets were a record $97.6 billion at Dec. 31, 2021, up $13.3 billion or 16% from $84.3 billion at Dec. 31, 2020 and up $0.4 billion from $97.2 billion at Sept. 30, 2021. Top-selling fixed-income funds on a net basis during Q4 2021 were Federated Hermes SDG Engagement High Yield Credit Fund (UCITS), Federated Hermes Strategic Income Fund, Federated Hermes Municipal Ultrashort Fund, Federated Hermes Government Ultrashort Fund and Federated Hermes Inflation Protected Securities Fund.


MEDIA:	MEDIA:	ANALYSTS:
Ed Costello 412-288-7538	Meghan McAndrew 412-288-8103	Ray Hanley 412-288-1920


Federated Hermes reports Q4 and full-year 2021 earnings						Page 2 of 13

Federated Hermes' alternative/private markets assets were a record $22.9 billion at Dec. 31, 2021, up $3.8 billion or 20% from $19.1 billion at Dec. 31, 2020 and up $0.8 billion or 4% from $22.1 billion at Sept. 30, 2021.

Federated Hermes' money market assets were $447.9 billion at Dec. 31, 2021, up $27.6 billion or 7% from $420.3 billion at Dec. 31, 2020 and up $34.2 billion or 8% from $413.7 billion at Sept. 30, 2021. Money market mutual fund assets were $312.8 billion at Dec. 31, 2021, up $10.9 billion or 4% from $301.9 billion at Dec. 31, 2020 and up $20.5 billion or 7% from $292.3 billion at Sept. 30, 2021. Federated Hermes' money market separate account assets were a record $135.1 billion at Dec. 31, 2021, up $16.6 billion or 14% from $118.5 billion at Dec. 31, 2020 and up $13.7 billion or 11% from $121.4 billion at Sept. 30, 2021.

Financial Summary

Q4 2021 vs. Q4 2020

Revenue decreased $42.3 million or 12% primarily due to an increase in 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), a decrease in performance fees and lower average money market assets. These decreases were partially offset by an increase in revenue due to higher average long-term assets. For further information on fee waivers, see "Impact of voluntary yield-related fee waivers," below.

During Q4 2021, Federated Hermes derived 81% of its revenue from long-term assets (52% from equity assets, 19% from fixed-income assets and 10% from alternative/private markets and multi-asset), 17% from money market assets, and 2% from sources other than managed assets.

Operating expenses decreased $16.1 million or 6% primarily due to decreased distribution expenses predominantly resulting from higher voluntary yield-related fee waivers and lower incentive compensation and related expenses.

Nonoperating income (expenses), net decreased $11.6 million or 79% primarily due to a larger increase in the market value of investments in Q4 2020 compared to Q4 2021.

Q4 2021 vs. Q3 2021

Revenue decreased $4.9 million or 2% primarily due to lower average equity assets.

Operating expenses increased by $4.9 million or 2% primarily due to an increase in advertising and promotional expenses and other expenses, partially offset by lower incentive compensation and related expenses.

Nonoperating income (expenses), net increased $4.8 million or 274% primarily due to a larger increase in the market value of investments in Q4 2021 compared to Q3 2021.

2021 vs. 2020

Revenue decreased $147.8 million or 10% primarily due to an increase in voluntary yield-related fee waivers and a decrease in revenue from lower average money market assets. These decreases were partially offset by an increase in revenue due to higher average long-term assets.

During 2021, Federated Hermes derived 80% of its revenue from long-term assets (52% from equity assets, 18% from fixed-income assets and 10% from alternative/private markets and multi-asset), 19% from money market assets, and 1% from sources other than managed assets.

Operating expenses decreased by $95.9 million or 9% primarily due to decreased distribution expenses predominantly resulting from higher voluntary yield-related fee waivers.


Federated Hermes reports Q4 and full-year 2021 earnings						Page 3 of 13

Nonoperating income (expenses), net decreased $17.9 million or 64% primarily due to a larger increase in the market value of investments in 2020 compared to 2021 and a gain recorded in 2020 from a fair value adjustment to the equity investment of a previously nonconsolidated entity.

Impact of voluntary yield-related fee waivers

For Q4 2021 and full-year 2021, voluntary yield-related fee waivers totaled $110.1 million and $420.3 million, respectively. These fee waivers were largely offset by related reductions in distribution expenses of $72.3 million and $277.2 million, respectively, such that the net negative pre-tax impact to Federated Hermes was $37.8 million and $143.2 million, respectively. During the three and 12 months ended Dec. 31, 2020, voluntary yield-related fee waivers totaled $56.1 million and $113.0 million, respectively. These fee waivers were largely offset by related reductions in distribution expenses of $47.4 million and $98.4 million, respectively, such that the net negative pre-tax impact to Federated Hermes was $8.7 million and $14.6 million for the three and 12 months ended Dec. 31, 2020, respectively.

Short-term interest rates remained near historic lows during Q4 2021 as technical factors at the front end of the yield curve kept yields on short-term government securities—including repurchase agreements and Treasury bills—just above zero. Market expectations are that the central bank will raise interest rates multiple times in 2022, starting in March. Higher yields in 2022 will lower the impact of voluntary yield-related fee waivers. The net negative impact on pre-tax income from voluntary yield-related fee waivers on money market mutual funds and certain separate accounts may be approximately $22 million during Q1 2022. Assuming an increase in interest rates of 25 basis points by the Federal Reserve in March 2022, the Q1 estimated $22 million of net negative impact on pre-tax income from voluntary yield-related waivers is expected to be reduced by approximately 90% for Q2. The amount of voluntary yield-related fee waivers can vary based on a number of factors, including, among others, interest rates, yields, asset levels, asset flows and the ability of distributors to share in waivers. Any change in these factors can impact the amount and level of voluntary yield-related fee waivers, including in a material way.

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 Jan. 28, 2022. Investors are invited to listen to the earnings teleconference by calling 888-506-0062 (domestic) or 973-528-0011 (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 Jan. 28, 2022. To access the telephone replay, dial 877-481-4010 (domestic) or 919-882-2331 (international) and enter access code 44043. The online replay will be available via FederatedHermes.com for one year.

Federated Hermes, Inc. is a global leader in active, responsible investment management, with $668.9 billion in assets under management1. We deliver investment solutions that help investors target a broad range of outcomes and provide equity, fixed-income, alternative/private markets, multi-asset and liquidity management strategies to more than 11,000 institutions and intermediaries worldwide. Our clients include corporations, government entities, insurance companies, foundations and endowments, banks and broker/dealers. At Federated Hermes, responsibility is central to our client relationships, our long-term perspective and our fiduciary mindset. It’s part of our heritage and the foundation of our future.


Federated Hermes reports Q4 and full-year 2021 earnings						Page 4 of 13

Headquartered in Pittsburgh, Federated Hermes has nearly 2,000 employees in London, New York, Boston and offices worldwide. Federated Hermes ranks in the top 7% of equity fund managers in the industry, the top 10% of money market fund managers and the top 10% of fixed-income fund managers2. Federated Hermes also ranks as the 10th-largest manager of model-delivered SMAs3. For more information, including an analyst presentation, visit FederatedHermes.com.

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1) As of Dec. 31, 2021

2) ISS Market Intelligence (SIMFUND), Dec. 31, 2021. Based on assets under management in U.S. open-end funds.

3) Money Management Institute/Cerulli Associates, Q3 2021.

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 (HGPE), each a registered investment advisor in one or more of the U.S., U.K. or Ireland.

Certain statements in this press release, such as those related to performance, investor preferences and demand, asset flows,

asset mix, interest rates, and fee waivers 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, and 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, or updating, of such statements in the future.


Federated Hermes reports Q4 and full-year 2021 earnings						Page 5 of 13


Unaudited Condensed Consolidated Statements of Income
(in thousands, except per share data)
	Quarter Ended				% Change Q4 2020 to Q4 2021		Quarter Ended		% Change Q3 2021 to Q4 2021
	Dec. 31, 2021		Dec. 31, 2020				Sept. 30, 2021
Revenue
Investment advisory fees, net	$	223,796	$	265,593	(16)	%	$	230,210	(3)	%
Administrative service fees, net	77,734		79,192		(2)		76,853		1
Other service fees, net	20,115		19,133		5		19,526		3
Total Revenue	321,645		363,918		(12)		326,589		(2)

Operating Expenses
Compensation and related	124,107		138,296		(10)		131,996		(6)
Distribution	39,894		59,419		(33)		38,486		4
Systems and communications	19,343		18,518		4		18,537		4
Professional service fees	16,279		13,961		17		14,294		14
Office and occupancy	11,215		6,436		74		11,036		2
Advertising and promotional	9,493		4,853		96		4,660		104
Travel and related	2,499		540		363		1,643		52
Other	10,232		7,120		44		7,535		36
Total Operating Expenses	233,062		249,143		(6)		228,187		2
Operating Income	88,583		114,775		(23)		98,402		(10)

Nonoperating Income (Expenses)
Investment income (loss), net	3,257		15,175		(79)		42		NM
Debt expense	(472)		(468)		1		(476)		(1)
Other, net	258		(27)		NM		(1,319)		120
Total Nonoperating Income (Expenses), net	3,043		14,680		(79)		(1,753)		274
Income before income taxes	91,626		129,455		(29)		96,649		(5)
Income tax provision	20,629		28,183		(27)		23,163		(11)
Net income including the noncontrolling interests in subsidiaries	70,997		101,272		(30)		73,486		(3)
Less: Net income attributable to the noncontrolling interests in subsidiaries	2,434		6,104		(60)		2,124		15
Net Income	$	68,563	$	95,168	(28)	%	$	71,362	(4)	%

Amounts Attributable to Federated Hermes, Inc.
Earnings Per Share1
Basic	$	0.71	$	0.94	(24)	%	$	0.73	(3)	%
Diluted	$	0.71	$	0.93	(24)	%	$	0.73	(3)	%
Weighted-Average Shares Outstanding

Basic and diluted	91,924		95,504				93,320
Dividends Declared Per Share	$	0.27	$	1.27			$	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 earnings per share under the “two-class method.” As such, total net income of $2.9 million, $5.0 million and $3.0 million available to unvested restricted Federated Hermes shareholders for the quarterly periods ended Dec. 31, 2021, Dec. 31, 2020 and Sept. 30, 2021, 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.


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Unaudited Condensed Consolidated Statements of Income
(in thousands, except per share data)
	Year Ended
	Dec. 31, 2021		Dec. 31, 2020		% Change
Revenue
Investment advisory fees, net	$	915,984	$	1,011,467	(9)	%
Administrative service fees, net—affiliates	306,639		318,152		(4)
Other service fees, net	77,824		118,649		(34)
Total Revenue	1,300,447		1,448,268		(10)

Operating Expenses
Compensation and related	532,492		503,400		6
Distribution	160,884		318,343		(49)
Systems and communications	75,429		64,698		17
Professional service fees	60,331		55,123		9
Office and occupancy	44,573		38,975		14
Advertising and promotional	21,600		15,834		36
Travel and related	5,337		4,566		17
Other	33,529		29,178		15
Total Operating Expenses	934,175		1,030,117		(9)
Operating Income	366,272		418,151		(12)

Nonoperating Income (Expenses)
Investment income (loss), net	12,703		22,186		(43)
Debt expense	(1,785)		(2,678)		(33)
Other, net	(900)		8,398		(111)
Total Nonoperating Income (Expenses), net	10,018		27,906		(64)
Income before income taxes	376,290		446,057		(16)
Income tax provision	103,982		110,035		(6)
Net income including the noncontrolling interests in subsidiaries	272,308		336,022		(19)
Less: Net income attributable to the noncontrolling interests in subsidiaries	2,015		9,658		(79)
Net Income	$	270,293	$	326,364	(17)	%

Amounts Attributable to Federated Hermes, Inc.
Earnings Per Share1
Basic	$	2.77	$	3.25	(15)	%
Diluted	$	2.75	$	3.23	(15)	%
Weighted-Average Shares Outstanding
Basic and diluted	93,597		96,419

Dividends Declared Per Share	$	1.08	$	2.08

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 earnings per share under the “two-class method.” As such, total net income of $11.3 million and $12.8 million available to unvested restricted Federated Hermes shareholders for the years ended Dec. 31, 2021 and Dec. 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.


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Unaudited Condensed Consolidated Balance Sheets
(in thousands)	Dec. 31, 2021		Dec. 31, 2020
Assets
Cash and other investments	$	426,674	$	438,771
Other current assets	132,773		136,572
Intangible assets, net, including goodwill	1,270,080		1,282,020
Other long-term assets	188,660		203,476
Total Assets	$	2,018,187	$	2,060,839

Liabilities, Redeemable Noncontrolling Interests and Equity
Current liabilities	$	270,707	$	265,446
Long-term debt	223,350		75,000
Other long-term liabilities	346,911		346,409
Redeemable noncontrolling interests	63,202		236,987
Equity excluding treasury stock	1,652,481		1,461,728
Treasury stock	(538,464)		(324,731)
Total Liabilities, Redeemable Noncontrolling Interests and Equity	$	2,018,187	$	2,060,839


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Unaudited Changes in Long-Term Assets - By Asset Class
(in millions)	Quarter Ended						Year Ended
	Dec. 31, 2021		Sept. 30, 2021		Dec. 31, 2020		Dec. 31, 2021		Dec. 31, 2020
Equity
Beginning assets	$	97,425	$	100,506	$	80,405	$	91,788	$	89,011
Sales1	4,371		4,332		5,618		21,829		20,463
Redemptions1	(7,106)		(5,707)		(6,047)		(26,761)		(26,721)
Net sales (redemptions)1	(2,735)		(1,375)		(429)		(4,932)		(6,258)
Net exchanges	(2)		3		(8)		41		(70)
Acquisitions/(dispositions)	0		408		0		408		(71)
Impact of foreign exchange2	(162)		(510)		946		(1,096)		1,195
Market gains and (losses)3	2,190		(1,607)		10,874		10,507		7,981
Ending assets	$	96,716	$	97,425	$	91,788	$	96,716	$	91,788

Fixed Income
Beginning assets	$	97,226	$	90,801	$	79,546	$	84,277	$	69,023
Sales1	7,920		12,935		9,046		42,626		37,283
Redemptions1	(7,438)		(6,604)		(6,046)		(29,744)		(26,138)
Net sales (redemptions)1	482		6,331		3,000		12,882		11,145
Net exchanges	(23)		(7)		(10)		(81)		(15)
Acquisitions/(dispositions)	0		17		0		17		(1)
Impact of foreign exchange2	(9)		(89)		181		(133)		190
Market gains and (losses)3	(126)		173		1,560		588		3,935
Ending assets	$	97,550	$	97,226	$	84,277	$	97,550	$	84,277

Alternative / Private Markets
Beginning assets4	$	22,064	$	20,962	$	18,146	$	19,084	$	18,102
Sales1	1,696		1,319		574		4,823		2,840
Redemptions1	(1,460)		(533)		(661)		(3,170)		(2,615)
Net sales (redemptions)1	236		786		(87)		1,653		225
Net exchanges	0		0		(3)		(2)		(4)
Acquisitions/(dispositions)	0		81		0		81		452
Impact of foreign exchange2	107		(554)		1,061		(254)		615
Market gains and (losses)3	513		789		(33)		2,358		(306)
Ending assets	$	22,920	$	22,064	$	19,084	$	22,920	$	19,084

Multi-asset
Beginning assets	$	3,692	$	3,699	$	3,737	$	3,948	$	4,199
Sales1	75		71		50		301		241
Redemptions1	(119)		(103)		(166)		(936)		(724)
Net sales (redemptions)1	(44)		(32)		(116)		(635)		(483)
Net exchanges	14		9		3		42		(20)
Acquisitions/(dispositions)	0		54		0		54		0
Impact of foreign exchange2	0		0		0		(1)		1
Market gains and (losses)3	118		(38)		324		372		251
Ending assets	$	3,780	$	3,692	$	3,948	$	3,780	$	3,948

Total Long-term Assets
Beginning assets4	$	220,407	$	215,968	$	181,834	$	199,097	$	180,335
Sales1	14,062		18,657		15,288		69,579		60,827
Redemptions1	(16,123)		(12,947)		(12,920)		(60,611)		(56,198)
Net sales (redemptions)1	(2,061)		5,710		2,368		8,968		4,629
Net exchanges	(11)		5		(18)		0		(109)
Acquisitions/(dispositions)	0		560		0		560		380
Impact of foreign exchange2	(64)		(1,153)		2,188		(1,484)		2,001
Market gains and (losses)3	2,695		(683)		12,725		13,825		11,861
Ending assets	$	220,966	$	220,407	$	199,097	$	220,966	$	199,097

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 beginning assets for the year ended December 31, 2020 include $8.2 billion of fund assets managed by a previously non-consolidated entity, HGPE, in which Federated Hermes held an equity method investment. Effective March 1, 2020, HGPE became a consolidated subsidiary.


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Unaudited Changes in Long-Term Assets - By Asset Class and Product Type
(in millions)
	Quarter Ended
	Dec. 31, 2021
	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	$	58,218	$	39,207	$	60,262	$	36,964	$	14,299	$	7,765	$	3,518	$	174	$	136,297	$	84,110
Sales	2,507		1,864		6,138		1,782		1,374		322		75		0		10,094		3,968
Redemptions	(4,198)		(2,908)		(6,468)		(970)		(1,174)		(286)		(115)		(4)		(11,955)		(4,168)
Net sales (redemptions)	(1,691)		(1,044)		(330)		812		200		36		(40)		(4)		(1,861)		(200)
Net exchanges	(2)		0		(23)		0		0		0		14		0		(11)		0

Impact of foreign exchange2	(59)		(103)		0		(9)		63		44		0		0		4		(68)
Market gains and (losses)3	570		1,620		(47)		(79)		226		287		116		2		865		1,830
Ending assets	$	57,036	$	39,680	$	59,862	$	37,688	$	14,788	$	8,132	$	3,608	$	172	$	135,294	$	85,672

	Year Ended
	Dec. 31, 2021
	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	$	54,312	$	37,476	$	53,557	$	30,720	$	12,100	$	6,984	$	3,744	$	204	$	123,713	$	75,384
Sales	14,265		7,564		30,862		11,764		3,699		1,124		299		2		49,125		20,454
Redemptions	(15,915)		(10,846)		(24,902)		(4,842)		(2,657)		(513)		(894)		(42)		(44,368)		(16,243)
Net sales (redemptions)	(1,650)		(3,282)		5,960		6,922		1,042		611		(595)		(40)		4,757		4,211
Net exchanges	(362)		403		(33)		(48)		(2)		0		41		1		(356)		356
Acquisitions/(dispositions)	408		0		17		0		81		0		54		0		560		0
Impact of foreign exchange2	(522)		(574)		(90)		(43)		(162)		(92)		0		(1)		(774)		(710)
Market gains and (losses)3	4,850		5,657		451		137		1,729		629		364		8		7,394		6,431
Ending assets	$	57,036	$	39,680	$	59,862	$	37,688	$	14,788	$	8,132	$	3,608	$	172	$	135,294	$	85,672

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.


Federated Hermes reports Q4 and full-year 2021 earnings						Page 10 of 13

Unaudited Changes in Long-Term Assets - By Product Type

(in millions)


	Quarter Ended						Year Ended
	Dec. 31, 2021		Sept. 30, 2021		Dec. 31, 2020		Dec. 31, 2021		Dec. 31, 2020

Total Fund Assets
Beginning assets5	$	136,297	$	135,161	$	110,811	$	123,713	$	107,724
Sales	10,094		11,139		12,204		49,125		46,401
Redemptions	(11,955)		(9,702)		(9,020)		(44,368)		(40,974)
Net sales (redemptions)	(1,861)		1,437		3,184		4,757		5,427
Net exchanges	(11)		55		(18)		(356)		(103)
Acquisitions/(dispositions)	0		560		0		560		0
Impact of foreign exchange1	4		(699)		1,258		(774)		1,038
Market gains and (losses)2	865		(217)		8,478		7,394		9,627
Ending assets	$	135,294	$	136,297	$	123,713	$	135,294	$	123,713

Total Separate Accounts Assets3
Beginning assets	$	84,110	$	80,807	$	71,023	$	75,384	$	72,611
Sales4	3,968		7,518		3,084		20,454		14,426
Redemptions4	(4,168)		(3,245)		(3,900)		(16,243)		(15,224)
Net sales (redemptions)4	(200)		4,273		(816)		4,211		(798)
Net exchanges	0		(50)		0		356		(6)
Acquisitions/(dispositions)	0		0		0		0		380
Impact of foreign exchange1	(68)		(454)		930		(710)		963
Market gains and (losses)2	1,830		(466)		4,247		6,431		2,234
Ending assets	$	85,672	$	84,110	$	75,384	$	85,672	$	75,384

Total Long-term Assets3
Beginning assets5	$	220,407	$	215,968	$	181,834	$	199,097	$	180,335
Sales4	14,062		18,657		15,288		69,579		60,827
Redemptions4	(16,123)		(12,947)		(12,920)		(60,611)		(56,198)
Net sales (redemptions)4	(2,061)		5,710		2,368		8,968		4,629
Net exchanges	(11)		5		(18)		0		(109)
Acquisitions/(dispositions)	0		560		0		560		380
Impact of foreign exchange1	(64)		(1,153)		2,188		(1,484)		2,001
Market gains and (losses)2	2,695		(683)		12,725		13,825		11,861
Ending assets	$	220,966	$	220,407	$	199,097	$	220,966	$	199,097

1) Reflects the impact of translating non-U.S. dollar denominated AUM into U.S. dollars for reporting purposes.

2) 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.

3) Includes separately managed accounts, institutional accounts, certain sub-advised funds and other managed products.

4) For certain accounts, Sales and Redemptions are calculated as the remaining difference between beginning and ending assets after the calculation of total investment return.

5) The beginning assets for the year ended December 31, 2020 includes $8.2 billion of fund assets managed by a previously non-consolidated entity, HGPE, in which Federated Hermes held an equity method investment. Effective March 1, 2020, HGPE became a consolidated subsidiary.


Federated Hermes reports Q4 and full-year 2021 earnings						Page 11 of 13


Unaudited Managed Assets (in millions)	Dec. 31, 2021		Sept. 30, 2021		June 30, 2021		March 31, 2021		Dec. 31, 2020
By Asset Class
Equity	$	96,716	$	97,425	$	100,506	$	96,170	$	91,788
Fixed-income	97,550		97,226		90,801		86,464		84,277
Alternative / private markets	22,920		22,064		20,962		19,301		19,084
Multi-asset	3,780		3,692		3,699		3,981		3,948
Total long-term assets	220,966		220,407		215,968		205,916		199,097
Money market	447,907		413,713		429,804		419,080		420,333
Total Managed Assets	$	668,873	$	634,120	$	645,772	$	624,996	$	619,430

By Product Type
Funds:
Equity	$	57,036	$	58,218	$	59,933	$	56,767	$	54,312
Fixed-income	59,862		60,262		58,486		55,581		53,557
Alternative / private markets	14,788		14,299		13,225		12,231		12,100
Multi-asset	3,608		3,518		3,517		3,797		3,744
Total long-term assets	135,294		136,297		135,161		128,376		123,713
Money market	312,834		292,311		301,971		297,182		301,855
Total Fund Assets	$	448,128	$	428,608	$	437,132	$	425,558	$	425,568
Separate Accounts:
Equity	$	39,680	$	39,207	$	40,573	$	39,403	$	37,476
Fixed-income	37,688		36,964		32,315		30,883		30,720
Alternative / private markets	8,132		7,765		7,737		7,070		6,984
Multi-asset	172		174		182		184		204
Total long-term assets	85,672		84,110		80,807		77,540		75,384
Money market	135,073		121,402		127,833		121,898		118,478
Total Separate Account Assets	$	220,745	$	205,512	$	208,640	$	199,438	$	193,862
Total Managed Assets	$	668,873	$	634,120	$	645,772	$	624,996	$	619,430


Federated Hermes reports Q4 and full-year 2021 earnings						Page 12 of 13


Unaudited Average Managed Assets	Quarter Ended
(in millions)	Dec. 31, 2021		Sept. 30, 2021		June 30, 2021		March 31, 2021		Dec. 31, 2020
By Asset Class
Equity	$	97,751	$	100,076	$	99,165	$	95,167	$	85,572
Fixed-income	97,229		93,685		88,405		86,939		82,144
Alternative / private markets	22,243		21,446		20,047		19,278		18,549
Multi-asset	3,763		3,713		4,067		3,974		3,831
Total long-term assets	220,986		218,920		211,684		205,358		190,096
Money market	419,392		414,141		427,993		412,720		420,436
Total Avg. Managed Assets	$	640,378	$	633,061	$	639,677	$	618,078	$	610,532
By Product Type
Funds:
Equity	$	58,290	$	59,918	$	58,662	$	56,832	$	50,022
Fixed-income	60,339		59,618		57,006		55,416		51,934
Alternative / private markets	14,419		13,704		12,703		12,239		11,670
Multi-asset	3,590		3,533		3,880		3,783		3,634
Total long-term assets	136,638		136,773		132,251		128,270		117,260
Money market	294,618		289,566		301,990		288,403		311,769
Total Avg. Fund Assets	$	431,256	$	426,339	$	434,241	$	416,673	$	429,029
Separate Accounts:
Equity	$	39,461	$	40,158	$	40,503	$	38,335	$	35,550
Fixed-income	36,890		34,067		31,399		31,523		30,210
Alternative / private markets	7,824		7,742		7,344		7,039		6,879
Multi-asset	173		180		187		191		197
Total long-term assets	84,348		82,147		79,433		77,088		72,836
Money market	124,774		124,575		126,003		124,317		108,667
Total Avg. Separate Account Assets	$	209,122	$	206,722	$	205,436	$	201,405	$	181,503
Total Avg. Managed Assets	$	640,378	$	633,061	$	639,677	$	618,078	$	610,532


Federated Hermes reports Q4 and full-year 2021 earnings						Page 13 of 13


Unaudited Average Managed Assets	Year Ended
(in millions)	Dec. 31, 2021		Dec. 31, 2020
By Asset Class
Equity	$	98,040	$	80,591
Fixed-income	91,564		74,403
Alternative / private markets1	20,754		18,206
Multi-asset	3,879		3,813
Total long-term assets	214,237		177,013
Money market	418,562		436,895
Total Avg. Managed Assets	$	632,799	$	613,908
By Product Type
Funds:
Equity	$	58,426	$	45,585
Fixed-income	58,095		46,899
Alternative / private markets1	13,266		11,424
Multi-asset	3,696		3,622
Total long-term assets	133,483		107,530
Money market	293,644		324,490
Total Avg. Fund Assets	$	427,127	$	432,020
Separate Accounts:
Equity	$	39,614	$	35,006
Fixed-income	33,469		27,504
Alternative / private markets	7,488		6,782
Multi-asset	183		191
Total long-term assets	80,754		69,483
Money market	124,918		112,405
Total Avg. Separate Account Assets	$	205,672	$	181,888
Total Avg. Managed Assets	$	632,799	$	613,908

1) The average balance at Dec. 31, 2020 includes $8.2 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.