Q2 2026 Federated Hermes Inc Earnings Call Transcript
Key Points
- Record assets under management of $912 billion, driven by growth in equity and private market assets.
- Equity assets hit a record high of $110 billion, with MDT strategies achieving $6 billion in gross sales and over $3.5 billion in net sales.
- Strong fixed income performance with 26 funds and SMAs seeing net sales, and Q3-to-date net sales of $362 million.
- Private markets assets grew to $21.6 billion, boosted by the FCP acquisition and successful fundraising for new funds.
- Digital initiatives, including the launch of a digital treasury fund and tokenization efforts, position the company for future growth.
- Money market fund assets decreased by $2.9 billion in Q2, with market share slipping to 6.7% from 6.9%.
- Equity net redemptions of $1.1 billion, including a $3 billion expected global equity sub-advisory redemption.
- Q2 operating expenses increased by $17.3 million, partly due to $9.7 million in FCP acquisition-related transaction costs.
- Fixed income performance lagged, with only 39% of funds beating peers and 19% in the top quartile over three years.
- The Q2 effective tax rate of 25.8% is at the lower end of the 25%-28% range, but uncertainty remains for 2026.
Greetings. Welcome to the Federated Hermes Q2 Analyst Call and Webcast. (Operator Instructions) Please note, this conference is being recorded.
I would now like to turn the conference over to your host, Ray Hanley, President of Federated Investors Management Company. You may begin.
Hello, and welcome. Thank you for joining us today. Leading our call today will be Chris Donahue, CEO and President of Federated Hermes; and Tom Donahue, Chief Financial Officer. Joining us for the Q&A are Saker Nasevi, the CEO of Federated Hermes Limited; and Debbie Cunningham, our Chief Investment Officer for Money Markets. .
During today's call, we will make forward-looking statements and want to note that our actual results may be materially different than the results implied by such statements. Please review the risk disclosures in our SEC filings. No assurance can be given as to future results, and Federated Hermes assumes no duty to update any of these forward-looking statements. Chris?
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