FEDERATED HERMES, INC. Q3 FY2025 earnings call

• Equity: Led by gains from money market and equity strategies. MDT strategies had strong net sales and top performance rankings.
• Fixed Income: Reached record assets with improved net sales.
• Alternative Private Markets: Active in various funds and made acquisition of FCP.
• Money Markets: Favorable market conditions, developing tokenized funds.
• Financials: Q3 revenue up 10%, operating expenses up 10%, tax rate 24.4%, cash and investments $647 million.

Equity: Ended Q3 with record assets under management (AUM) of $871 billion. Equity assets increased by $5.7 billion or 6% from the prior quarter. Q3 equity net sales were slightly negative $130 million. MDT equity strategies had net sales of $2 billion. 7 of 8 MDT equity mutual fund strategies are in the top quartile for trailing 1-3 years, all top quartile for trailing 5-10 years. 53% of equity funds were beating peers and 33% were in the top quartile for the trailing 3 years. Q4 through October '24 combined equity funds and SMAs had net sales of $580 million. Fixed Income: Assets reached a record high of $101.8 billion, up $3.1 billion from the prior quarter. Net sales improved by $4.1 billion, with Q3 net sales of $1.7 billion compared to net redemptions of $2.4 billion in Q2. 44% of fixed income funds were beating peers and 15% were in the top quartile for the trailing 3 years. Q4 through October '24 combined fixed income funds and SMAs had net redemptions of about $250 million. Alternative Private Markets: Assets decreased by about $1.7 billion mainly due to real estate transactions. MDT market-neutral alternative strategy had net sales of $173 million in Q3. Actively in the market with various funds and announced acquisition of FCP, planning to close around end of Q1 2026. Money Markets: Total money market assets reached record high of $653 billion. Money market fund assets increased by $24.7 billion to $492.7 billion. Estimated market share of money market mutual funds remained at about 7.11% at end of Q3. Revenue contribution details: Not explicitly broken down by percentage but each segment's financial performance is detailed.

• Equity: Q4 through October '24 combined equity funds and SMAs had net sales of $580 million.
• Fixed Income: Q4 through October '24 combined fixed income funds and SMAs had net redemptions of about $250 million.
• Alternative Private Markets: Pipeline over $2 billion, ~2/3 to fund in Q4, alternatives funding through first half of 2026.
• Money Markets: Continuing development of tokenized money market funds.

• FX and related expenses increased due to pound weakness against the dollar in Q3.
• U.S. withholding tax matter on certain non-U.S. funds.
• Volatility in market conditions affecting asset performance.

Q: Touch on MDT franchise growth and sizing A: Enthusiasm with growing momentum, net sales up through October '24, and pipeline across different geographies and client types Q: Expense trajectory A: FCP acquisition will add expenses but expected to be accretive, digital and other initiatives expected to come with revenue shortly Q: Institutional investors allocations and deployment pace A: Strong pipeline, ~2/3 to fund in Q4, alternatives funding through first half of 2026