Federated Hermes Q1 2025 slides: AUM reaches $840B, equity sales turn positive

Introduction & Market Context

Federated Hermes, Inc. (NYSE:FHI) presented its Q1 2025 Analyst Update on April 25, revealing strong asset growth and improved sales momentum across key business segments. The asset manager reported total assets under management (AUM) of $839.8 billion as of March 31, 2025, representing an 8% year-over-year increase from $778.7 billion in Q1 2024.

The company’s shares responded positively to the results, with premarket trading showing a 7.05% increase to $41.00, according to available market data. This follows a period of solid performance, with the stock trading within a 52-week range of $31.23 to $43.92.

Quarterly Performance Highlights

Federated Hermes reported earnings per share of $1.25 for Q1 2025, continuing its trend of strong financial performance. The company declared a quarterly dividend of $0.31 per share, maintaining its commitment to shareholder returns.

Total (EPA:TTEF) revenue for Q1 2025 reached $423.5 million, with growth across multiple asset classes. Notably, equity assets increased by $1.5 billion (2%) from the previous quarter to $80.9 billion, while fixed-income assets grew by $1.4 billion (1%) to $99.5 billion. Liquidity assets, which remain the company’s largest segment, rose by $6.8 billion (1%) to $637.1 billion.

As shown in the following comprehensive overview of the company’s key metrics:

Detailed Financial Analysis

A significant development in Q1 2025 was the positive turn in equity net sales, which reached $1.377 billion after several consecutive quarters of outflows. This reversal comes after net outflows of $1.944 billion in 2022, $7.414 billion in 2023, and $10.902 billion in 2024, suggesting a potential inflection point for the company’s equity business.

The following chart illustrates the recent trends in equity and fixed-income sales:

Federated Hermes maintains a diversified revenue stream across asset classes, which provides stability through market cycles. The company’s revenue mix has evolved over time, with money market funds contributing an average of 34% of revenue (less distribution expense) since Q1 2013, while equity products have contributed an average of 43%.

The company’s diversified revenue mix is clearly illustrated in this long-term trend analysis:

The company’s distribution strategy leverages multiple channels, with U.S. financial intermediaries representing 67% ($559 billion) of AUM, U.S. institutional clients accounting for 26% ($222 billion), and international clients comprising 7% ($59 billion).

Strategic Initiatives

Federated Hermes continues to emphasize its expertise in active management across diverse asset classes. The company’s equity strategies, totaling $80.9 billion, span global/international, strategic value dividend, growth/Kaufmann, and quantitative equity approaches. The presentation highlighted the company’s expansion into ETFs, with several active ETF products launched in recent years.

The detailed breakdown of equity strategies demonstrates the company’s diversified approach:

Similarly, the company’s fixed-income strategies, totaling $99.5 billion, cover a wide range of sectors including multi-sector, corporate, high yield, municipal, government, and global fixed income. Combined with liquidity assets of $637.1 billion, the total fixed-income and liquidity AUM reaches $736.6 billion.

Federated Hermes has also developed its alternative and private markets capabilities, which now account for $19.4 billion in AUM. These include private equity and infrastructure ($7.6 billion), real estate ($7.1 billion), private credit ($3.4 billion), and other alternative strategies ($1.4 billion). Multi-asset strategies contribute an additional $2.8 billion.

The company continues to strengthen its position in ESG investing and stewardship services. With a 60+ member stewardship and responsible investing team, Federated Hermes provides engagement services for $2.1 trillion in assets under advisement. The company has built 20 years of engagement records and engaged with 1,000 unique issuers in 2024 alone.

Forward-Looking Statements

Federated Hermes emphasized its financial strength and flexibility as a pure-play asset management company. The company has consistently delivered value to shareholders through dividends and share repurchases, with dividends representing 46% ($3.0 billion) of cash returned to shareholders since its IPO in 1998. Share repurchases account for 34% ($2.2 billion), while acquisitions represent 20% ($1.3 billion).

The company’s dividend history shows steady growth, with a compound annual growth rate of 11% since its IPO:

Looking ahead, Federated Hermes appears well-positioned to capitalize on its diversified business model and global footprint. The company’s presence spans major financial centers worldwide, with assets concentrated in North America ($784.3 billion) but with growing international exposure in Europe ($50.0 billion), Asia Pacific ($3.4 billion), and other regions.

The company’s Q1 2025 results align with the positive outlook mentioned in its Q4 2024 earnings call, where CEO Chris Donahue highlighted the favorable environment for money market funds, stating, "If you have a 5 handle, it’s total Nirvana. If you have a 4 handle, it’s delightful on a money fund." The continued growth in money market assets, which reached $637.1 billion in Q1 2025, validates this optimistic view.

With its diversified asset mix, global distribution capabilities, and strategic focus on active management and ESG integration, Federated Hermes appears well-positioned for continued growth in the evolving asset management landscape.

Full presentation:

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