Federated Hermes Reports Record AUM and Innovations

Federated Hermes, Inc. ((FHI)) has held its Q2 earnings call. Read on for the main highlights of the call.

The recent earnings call of Federated Hermes, Inc. painted a generally positive picture, highlighting robust growth in equity strategies and record-breaking assets under management, particularly in money markets. The company showcased its innovative strides in digital assets, although it faced challenges with fixed income outflows and rising operating expenses.

Record Assets Under Management

Federated Hermes concluded the second quarter of 2025 with an impressive $846 billion in assets under management. This achievement was largely driven by a significant $8.1 billion or 10% increase in equity strategies from the previous quarter, underscoring the company’s strong performance in this area.

Significant Equity Net Sales Growth

The company reported remarkable growth in equity net sales, which reached $1.8 billion in the second quarter, reflecting an organic growth rate of nearly 9%. Notably, MDT equity strategies saw net sales increase to $3.8 billion, up from $3.3 billion in the first quarter.

Strong Money Market Fund Performance

Federated Hermes achieved a new milestone with its money market fund assets, which climbed by $3.1 billion to a record high of $468 billion by the end of the second quarter, demonstrating the firm’s stronghold in this sector.

Innovations in Digital Assets

The company is actively engaging in the digital asset space, focusing on the development of tokenized money market funds and digital asset infrastructure. Collaborations with major financial institutions like Bank of New York and Goldman Sachs on blockchain initiatives highlight Federated Hermes’ commitment to innovation.

Successful Acquisitions and Product Development

Federated Hermes successfully completed the acquisition of a majority interest in Rivington Energy Management Limited. This move enhances its Private Markets platform, particularly in renewable energy expertise, showcasing the company’s strategic expansion efforts.

Fixed Income Outflows

Despite the positive trends, the company experienced a decrease in fixed income assets by approximately $800 million or 1% in the second quarter, primarily due to net redemptions of $2.4 billion.

Decline in Performance Fees

The second quarter saw a decline in total carried interest and performance fees, which fell to $1.4 million from $5.9 million in the previous quarter, indicating a challenge in maintaining fee-based income.

UK Property Trust Restructuring

Federated Hermes is anticipating $1.2 billion in redemptions from the restructuring of its U.K. Property Trust in the third quarter, marking a significant shift in its property investment strategy.

Higher Operating Expenses

The company reported an increase in operating expenses for the second quarter, attributed to the absence of a $12.9 million VAT refund that was recorded in the first quarter, highlighting a challenge in managing operational costs.

Forward-Looking Guidance

Looking ahead, Federated Hermes is optimistic about its growth prospects, with record assets under management and a notable increase in equity assets. The company is actively pursuing digital asset initiatives and potential acquisitions in the private markets space to drive future growth. Despite a decrease in fixed-income assets, alternative private markets saw a 7% increase, indicating a strategic focus on diversification.

In summary, Federated Hermes, Inc.’s earnings call reflected a positive outlook with strong growth in equity strategies and money market funds, alongside innovative ventures in digital assets. While challenges such as fixed income outflows and higher operating expenses were noted, the company’s forward-looking strategies suggest a promising path for continued growth and expansion.