Federated Hermes (FHI) 29 Jan 212020 Q4 Earnings call transcript

Company Profile

Participants

Ray Hanley	President, Federated Investors Management Company
Chris Donahue	President and CEO
Tom Donahue	Chief Financial Officer
Saker Nusseibeh	Chief Executive Officer, International Business
Debbie Cunningham	Chief Investment Officer, Money Market
Ken Worthington	JPMorgan
William Katz	Citi
Robert Lee	KBW
Mike Carrier	Bank of America
Kenneth Lee	RBC Capital Markets
John Dunn	Evercore ISI
Dan Fannon	Jefferies
Brian Bedell	Deutsche Bank

Call transcript

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Greetings. Welcome to the FHI Fourth Quarter 2020 Analyst Call and Webcast. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] Please note this conference is being recorded. conference Investors your Management the President Ray turn Federated of Company. now over host to Hanley, I’ll

You may begin.

Ray Hanley

Federated Donahue, Thank Debbie Hermes; you, us CEO Donahue, Officer of of Chris Investment call for Cunningham, will and and good Saker Money Business for morning. the CEO Leading the Q&A the and Chief Nusseibeh, and International Financial and Officer, Chief today’s are be Hermes; Market. joining Tom the President Federated of

any to want make review than may Chris? these can results you assurance that the forward-looking forward-looking by the No we to call, future we may different disclosure update risk note Hermes’ and and Federated materially such SEC today’s the no results of filings. actual During invite given assumes of our Federated statements. be Hermes statements in implied statements. be to duty We results

Chris Donahue

you, Thank Tom will Federated and Hermes’ morning performance business on results. I Ray. Good financial comment review will all. our

expand Federated grow other continue EOS our up reached of engagers beginning last Hermes year At year. from our end, XX of We engagement specialists at and activities. the staff to and XX at

billion, about advice positive reached at gains beginning may trillion, and a long-term Total driven last $XXX redemptions nearly XX from in Opportunities QX, nearly year, closed Uses of year and up over which Impact Global from management SDG the and QX, $XX of of Kauffman billion. strategies billion level the this up Saker increased the sales, were net driving Fund. Cap, high interesting at $XXX Equity reached for Equity net lower at fund assets Small have record in flows value by end $XXX net funds year sales three net end record in in $XX billion managed market our Emerging by of with and XX% MorningStar at data in the of news more call. the sales XX% a $X.X of some positive trailing on Fund. under later Assets Global subject reduction assets and the above the the Engagement Using Markets gross SMID XX% Equity We the quartile Equity were the Others fourth median. the led saw ESG, included million. top were quarter U.S. positive at redemptions. two-thirds a from and under years

Turning now to fixed income.

$XX billion quarter nearly year. or billion Assets year, net again $X of or end by $XX up strong quarter billion at of growth reached for and $X up the XX% another driven third was billion. sales the of from record the fourth entire level the X% The

mandates. in $XXX grew were our three were led yet in Across sales to top income for sales high of net sales assets fourth sales, just At duration array under billion fixed XXXX net high $X.X with mortgage-backed, strategies market funds, the bond billion, net income to as median. XX% Corporate, bond above total years, short demand. end, in account sectors, $X.X separate fixed million strategies, $XXX SMA year to we net fund. were leaders over funds did $XXX intermediate combined yield of We million. were income fixed strategies our in was funds meet XX demand. solid which about million quarter multi-sector reach multi-sector and which had with quartile broad for income million net $XXX management. strategies Fourth quarter. by high Ultrashort the Fixed funds Our data well-positioned about We yield MorningStar with mandates all return institutional in bond trailing and return yield, municipal about the had using total began the XX% and short had and was

assets Moving about $XX of by fourth $XX about from separate year. Money billion, billion partially from and mid The account fund billion. decrease to offset Year assets billion higher peak quarter asset fund lower about were about $XX of up XXXX the reflected the assets $XX money down prior Market. end

As experienced business and once Money in highs has higher reached we higher have our lows past cycles, again. Market

$XXX Money at Mutual in of were Money from look Mutual at $XX end in sub-advised Market totals. in recent assets share billion in Our quarter X.X%, billion a asset Market including billion share Fund $XXX income, and multi-asset. including billion, Markets, quarter Fund funds alternative assets $X billion now Taking $XX down Money fixed prior equities, $XXX Managed about X.X%. was billion. at in were approximately the $XX billion

employees of the more to for our stage planning As now, offices. we of return are

the in the While returned the financials. coming we conditions turn Tom it whether to months, this informed begin decision for over process With I not by calendar. will expect to our employees by more offices to the and about that, be the

Tom Donahue

about in million Okay, the Market by assets, and lower carried diversified quarter. in and compared the same as Money combined and Market quarter, carried Money was to and long-term our of as related impact third higher again mix. revenue business significant revenue fees value the in $X.X fixed equity, performance QX was for of prior private included the Chris. income, the Total interest interest, performance waivers showing markets, you. million fund our quarter $XX.X including growth to fees Thank revenue in assets, offset

about million preceding fees to to But $X XXXX million acquisition, periods. about Over unable are ranged the million including million. averaged project about from the average $XX items years, annual for $X from future still the about $X we $XX to carried Hermes Annual and million. these million period and ranged performance $XX last five interest

than was for by interest class and about on from of increase QX to waivers the consolidated primarily quarter dividend predict to due QX about net from Non-operating time due in payment the related of prior Market could about in included and due of of million. under associated QX lower fee incentive assets, the Hermes related computing income million. earnings yield higher compensation per with million yield to fund per was impact incentive distribution $X.XX the was the offset in waivers operating non-recurring unused $X.X operating which to income funds. yields $X.XX dividends QX. of of two and attributable and the lower previously Multiple assets factors the method $X to increase from of that subsidiaries waiver levels. to occupancy money and income the decrease increased Money to continue be in reduced impact exclusion was to the minimum $XX prior lease waivers The the EPS special was equity increase per $X.X expenses, mainly quarter in increase QX compared impact $X difficult $X of $X.X QX due investments from reflects net million. and to prior impact to from a NCI The restricted unvested vacation at the operating funds non-controlling the income yields, quarter expense by shares on distribution The comp Looking prior consolidate income dividend Based This impact by share related reduced The in expense share. expected. higher share compared about on million. of higher The mainly expense assets. expense million value of and million. partially will the recent these $XX expense in quarter are including gain paid Office the the expected on of minimum mainly

$XX now. with open for During XXX,XXX nearly market. we million, to in QX the we questions for this open approximately up bought all call would of shares purchased like Shomali, the

Operator

And Worthington Please with first question. your Ken from question Sure. is JPMorgan. proceed our [Operator with Instructions]

Ken Worthington

talk Hi. repo. Good you. about thank is, outlook the happening lot morning about market Debbie, If sure in. really of for what’s been is and can I’m there? not come the We’ve if the yields repo call. she chatter a and seen Debbie There’s on you

repo Market in uneven? are How the near-term, right is So, continues your and view part Money alternatives there a what repo? repo of investments it, call the be, on now. fund the to Are market big if

Debbie Cunningham

driving Sure, currently somewhere point basis to as in market and in what X Debbie. basis Ken. X week earlier low basis race repo to actually late This to is some trading X as points factory is lower we’re hub hit points With this rates, and [ph], thin a of range, basis on various negative. markets a week those afternoon, Treasury was regard last times the

fourth the largely the or already that of I part expect have the this couple do that, just proceeds the we stimulus, cash come that, needs nonetheless, And work round, much. were but flow, was stimulus far, you from small by participate huge were end until in it quarter. so at of very amount that passed was supply that And been and what’s in to that territory. that in Stimulus, Driven one, of securities, of portion, of cash has two addition mortgage-backed funded balances that quarter. forward, be Biden any as things, new and a middle negative round Treasury thin the good the in number you grown end. know, Now second didn’t We second, we first sometime way in so to of funding. Treasury, and it guess, mainly of amounts change, in to a the third however, did know, thankfully, fairly short not first come the not would administration hasn’t as put to again, of

Money very whole perspective, type actually the do They in The non-overnight types XX%. from have curve liquidity paper, in bit our those yield, the be to and As prime still we liquidity term curve lot. you would basically small, basis month funds, XX-ish to products, the reduce XX overnight far is of those as other types points one I in that allocations of go a paper of not bit one percent other with is exposure get that year. amounts there less would type the two to when to in world. products, using our repo a are look other than lines. overnight rate particular, our generally repo for be a products use along out agency motion funds, largest that in taxable that from less types has X to this and repo, But repo although basis purposes our overnight can than different at to going that from and liquidity positions we overnight in other of order also yield you with request our mean, where would little to exposure three Market be in Treasury CDs, repo anywhere X Treasury types government to more marketplace, and security the point attempt points obviously, little a securities do our at out a types, whole to

So, hopefully, helpful. that’s

Ken Worthington

lot us to That then and your can and more for maybe consolidation, of of Tom was share Federated, the doing maybe, time thinking succession you’re decide And great. at how about fishing you and been Chris, succession of other things? planning, leadership generation there’s a and golfing next you talk when of with you, spend and

Chris Donahue

two all, first the And consolidation the are do now right plenty items. completely different get of we and Well, thing time grandchildren’s to stuff succession of anyway. thing

no are plans you which are there current for discussing. So that

an meeting and of yesterday better we the directors with I part our our of independent Board However, spent FHI. had hour

by a only and succession bus, of their me, executive by Going that not one through bus at of discussions. or reports a level over the anybody hit else, filters how hit and each our those plans, and I staff if Tom gets the get

there good chapter and we’re but good you And give so verse that, to options. plans and are all going on not of

it We confident to have staff bus, way I strong by past. a the very am has hit the machine and the roll would that I ended most if get executive a that continue

of thing it deal at In consolidation, the way happening our with consolidation new what put then changed our this reverse we’ve always terms into in the call markets and is, and acquisition me big and and the and there’s We about Inc., sale heard private for are are we to that Hermes completed order other way Hermes, of because you’ve name to I the get whole work. of you’ve merger MEPC reflecting the the we’ve the working the marketplace. from ready now end. now hairy that busy And making year at business Hermes, seen affiliation that it Federated stuff looked transformational done we’ve with

that’s we So are what about.

which not If worked roll continue consolidation. out PNC ups on of that’s we will do unlike We where to do to that’s well areas both areas will and continue we year’s excellence. role very, last deal, so possible, see in our very

Ken Worthington

very Thank much. Awesome. you

Operator

Katz with from next question question. proceed with your is our Citi. Please And William

William Katz

much. very Thanks Okay.

talk Market business. stock about and about around think First wondering regulators little or question the F Debbie, I little some sort could that, market the where maybe, prime you talk the and reformulated risks? was how am of be wondering centers drivers today exposure Money dialogue you Chris, with the going And can down could you mentioned might your a a the so particularly I how you about underneath if was sequentially, with share I then there? that’s and of the that bit your

Chris Donahue

cover I’ll let some of will I prime question. Debbie regulation. the exposure the cover

on their trigger, was disruptions short-term the we’ve in of started. important And all the had the the what and totally pointed and on to that happen seen we President’s out before under the And new this what was is subject. I’ve which that was that Many and rejected we on and markets. Group Washington artificial before had call drawer is trigger all which of before, just regime everything been shutdown in The report is will we unwise. that elimination they’re have SEC one front, unnecessary know don’t causing basically before. most throwing getting XX% both the an of So really regulation in seen government a discussed out the Working they which

financing the when get with Money in we arguments short-term say Money municipalities especially on to So the to all tremendous could return with those side happened and on of relevant what the it’s especially Because billion had as free are of nothing great part funds pandemic. side. But is efforts Congress ready to by vehicle fund, of the we’ve that hard before. stimulus there predict. market tax our to this Market the of are into a apropos and $XXX you marketplace-oriented short-term And of is the prime Market friends beauty of money cash

back So exposure come I’ll let share. talk the on prime about the I’ll market Debbie then and

Debbie Cunningham

Thanks, Chris, and Bill. good to you hear from

as they’re parts or offshore assets assets. separate the LGIP related that more billion side and far go type prime fund about a billion Market prime total now, As in towards so assets and of is right non-money of accounts, $XXX other that’s within our there Money of $XX types

remain prime allocation As financial world, sectors and far paper those the CD the with asset-backed to of market, to within exposure as world the commercial products then the of types largest sectors other commercial paper.

tiny Ken’s some the then, have have to non-traditional which first shortest a the in it, really would We Treasury also issues exposure but very repo what and market, in repo, you ABS traditional know, same be doesn’t back with agency and tranches as the question, question, exposure. and associated exposure,

liquidity Money that covered out not perspective. Market, add piece to As very with come the about talking just to particular. came far funds gates We’ve what and some where be considered triggers be a up group change as perspective they in items, out what from perspective. President’s they Market will back be the that ideas be separately is they the the versus do and also things should base will whether comprehensive thought on on gates was entirely President’s XXXX, And two but from saying, and ICI will that I [ph] into the some a all, delinked ICI from what market, should think working and went talked also Money for some was feed working with a a of was focusing Chris in that focusing in feeds of the triggers and to on number broader amendments one XXXX broader what with regulatory groups. about then the Chris whether liquidity we at effect end I those whether seen just the should having with and

with So, you, Chris. to turn that, it back I’ll

Chris Donahue

going another the market there’s and we that share, the always is of part on market calculation has whole market to to at of been respect our the operator And With share money looking hard Debbie. you, revenues. history and it’s looked share ‘XXs a of Thank market revenues. share owner Bill, have for as aspect pricing at historically back reason of funds, that

some end, year were money. at in there moves So

Some hot of money. it was

a if it clips, a we and moving daily yield and and the going $X billion of quoted in net and some regular is Some billion on of looked billion, was money competitors see that $X of ebb information We’ve the at higher because the some as and flow at I $X of out share basis just X.X, business. to X.XX X.XX, always. in, -- ‘XX, those share, X.XX. like has the we our market put put X.XX, mention as go on variously X.XX, that in they it, calculate year one X.XX, reforms would high the been you back is a ends when those just also market and

are So share. the not the as over highs like are worried higher we long higher and mentioned, market as I lows, quarter-to-quarter we about getting long-term

William Katz

Okay. Thanks.

quick up, of facility Thank from and didn’t relatedly I apologize. of then on best flow Just that you. And it, luck. and are where maybe where you’ve there hear the pipeline, you you, normally seeing dynamic missed We in I if follow terms did give any detail some institution today. we I

Ray Hanley

Hey, Bill. Ray. It’s

data, stronger fixed the early part couple and obviously, bit So, equity SMA results slightly positive, positive. $XXX with combined million. be the are about positive weeks actually to continues of through the quarter, funds the three income The of a are and a

weeks first it’s the to quarter. total, long-term be running flows continue In billion. So, $X.X the for about of positive three

it’s So but solidly equity ahead, fixed income is really again positive.

William Katz

Thank you.

Chris Donahue

Thanks.

Operator

proceed Please with Robert question And Lee question. is your KBW. our with next from

Robert Lee

you. taking my Tom everyone. Maybe Great. question Good Thanks for questions. morning, for

kind there that constantly goes year, the next with understanding of million-ish away. the $X So one-time want think was just through to

also in but incentive you’ve You comp, the mentioned run had EOS the up employees.

we next off know, a up should of or part catch if thought kind for the was we of give I guess, that jumping -- year. of million year you bit $X does the good little I So, exclude a some, one-time, for point a incentive, the I

fund performance and whatnot. good had You’ve

So maybe trying that drove level mid year? just for set some -- of kind next to

Tom Donahue

Sure.

Federated take instead basically dedicated XXXX. our their employees vacation to So of work at in decided

in I QX, And them occur the take XXXX QX, normally all because QX, -- expense we QX, take XXXX, expenses to had in expect would what would so vacation it we in mean. to

So it’s run and year is rate a normal in bundled the not -- million number a around it’s up quarter probably one full $X there.

it run million, normal and we said, would I So look vacation days. so was $X about million that’s is rate $X at how the

Chris Donahue

Saker EOS, So like on last on it need but your the you part of the -- EOS, because up Rob. what’s at I’d you think to and Saker? and to hear question, there. going people comment I phrased run

Saker Nusseibeh

Thank you, Chris.

part So to bolster of there’s the in was, know long-term about our part ‘XX. two things acquisition Federated back by One our that fact, North positioning, EOS. America and that plan the is particularly to roadmap was going to of

the that part of plan. was So

second is the services that with of billion. had combined beginning year, major two about EOS of Holland, the this institutional The a of increase our to continue clients since we’ve one value and sign-up out €XXX we clients to

Chris. it, that other. need business we to to the and grow leads So put we it’s more resources Back we one grow -- continue to more you, because that obviously, the the to

Chris Donahue

Saker. Thank you,

Robert Lee

Okay.

Chris Donahue

important will of and and an And light impact the the what’s at future it’s world. very, investment basically Federated very is of the in around investment all management Rob, here, engagement of going about and here on

Robert Lee

keep your jumping $XXX obviously, prompting, kind $X am just the just stays, $X off Great. Maybe that next I offsetting follow-up, is the year? million -- million, is of exclude it so think revenue, being right I I for your for mean, to company if point I should of maybe million to on sorry,

Chris Donahue

to Yeah. helpful, in going the I Yeah. predicting Rob, end, be that. just because not I’m that stopped

that then the beginning, million really those bonuses depends about long all quarter, remember enterprise performance what this quarter I everything see the by management the short carried $X on interest you on and and he in Saker going how and sales the that’s As Hermes, talk and in how and delivers it and not said how another managing were you a that or one off quarter give to how off through, investment things, if and by comes it. and fees factors guidance much happen. million you the all so, which the $X on to is wrong The we like

Robert Lee

Hard Yeah. the try, Great. ESG to other, I backed know the but on and EOS.

C on where now to updated know Also right product here. most the in stampings those out keep and Where business. Just on are pension launched thematic the or obviously side, are up and initiatives here of the of Hermes [ph] building related is I and that running us U.S. the kind caps part products U.K. that getting the are the you in of U.S.? products

Chris Donahue

at to make into create on Federated issues is of engagement in EOS I will comments. is process the of no clients, the But at being informed all then There’s And Hermes. out the our allow managed making put decision some product more Federated Saker separate the Board some by on about for And products. U.K. out that’s that the six X,XXX EOS. friends coming What Hermes of particular EOS. does companies got the data Well, I’ll to direct comes by across product is we’ve talk what thing our talk it their of

Saker Nusseibeh

Thank you, Chris.

sort understand two in to got EOS ways. you’ve So of

clients First off, the companies with depth depth have. ensure we and than our do, that benefit of more because very the company way to But representing the and of engagements typically stretching with business engagement for we long a of the have, the engage because period, of behalf we returns and XX companies the That’s years. enhance also and to in on clients we these the of with that a we that long-term over our Because same history engagement, expertise of engaged of practices the long-term. work all. best we

in We engagement are oldest the world. the anywhere team

specific would claim experienced and we world. best team but the engagement gives we team And also We companies, sectors anywhere in engagement insights particular have the markets. world. about us are largest about That the in the anywhere

that we then integrated across part of all that having Federated businesses, of Boston the available All our or our of actively within managed and assets any other Office, are managed are of the assets as stewardship of office Hermes, out used the either we Pittsburgh is information may you the That do. London like, have. part office, is if parcel our beauty, what that offices

in stewardship markets, an for requirement Now additionally, towards the activity our the more stewardship particularly invest with changes see and market over of passive services lead the investors, it. for demand that moves a European us inevitably out of time we and the more will increased into to

So out of it. we things get two

It like it’s the EOS right. and a our part our making making that of I answers clients. information our question informed on helps as And better helps returns If own us -- that active into to in back for in business to feeds decisions metrics enhance it of hope you, you management. current Chris. making its decision of trees

Chris Donahue

Okay.

Robert Lee

guys. Thanks, Yeah.

Operator

Mike is question Carrier your of next with proceed with our Bank And from question. America. Please

Mike Carrier

Hi. performance and helpful. estate seems the like Saker. the given real is for thanks historical Good But like challenging level levels year terms morning But seemed overall fees and of interest for in interest, probably are question. a carried generally, of always strong. just it is even This taking what carried the for performance

like off average level from that an we I seasoned in higher the base year portfolio, a and carrying like levels interest? could of of asset some just the those a curious standpoint significantly, mean, are fees has portfolio and Just that’s more increased in what’s or that performance throwing dip

Chris Donahue

So I’ll try the that answer can. to that I best

when thing looking that’s the cannot referring to say you from say fees fees. performance estate. not back our we are performance performances, exclusively but performance gathered. most real Generally to real our of speaking, fees is, where are poor estate, Now, extrapolate first we our But

Now, can are call things I portfolios have managed generate into generated of in for we our the the remember, that and in you of the is better integrating if and our that is fund investments that estate, pioneers the indeed would and to buildings to three clients tend through we the management, we value enough two that that enhance unit that through we’re for fees separately because real buy previous and of clients make on ESG, in development if you that, performance what in over the can’t for in of in firm a that United equivalent the said you all in integrating although into you And calls, One And back can remind well. you as Cross, time, can directionality. I which ESG for States doing there’s example a you factors Kings it’s it, performance performance performance time, go fees. The is actually the each increases generate development there massive of fees how Kingdom, long-term. you way the was the called living United trust see degree, return you trend [ph]. is, some the and see years there calculated trend see we over predict the

we that We time growing. that we manage. manage So the And do that think for into sectors go tend buildings we to well. are over we them

performance reached the then other as spikes. you bit major regularly average to in not is finished or fees. These of we get the to every performance that, additional client. performance why and for when Now, a tend now or a and finalized are as see addition investment happen projects that that’s occasionally landmark But when fees in we fees

real Now, if back the our average estate. can historically, for you look fees performance you

as we will have fees, is but predicted that also but been also methodology, fees say cannot been, to the than more cannot I think is I no I being always not. be reason it’s cannot level do predict performance creating in has which that. our expect you forward, not Going performance of creating danger and of therefore

Tom Donahue

Hey, Mike.

Mike Carrier

Got it.

Tom Donahue

million that last $XX.X Tom. mentioned in my fees I and quarter this million performance remarks. is $X.X carried Mike, interest was When the and

core we to So our rate. work through, to tax performance And us, what’s occur, a and and fees where somebody core NCI but team and just because think says, it little earnings. did help as carried view people does which there’s interest tax the because

look you and basically difference difference versus share that quarter-to-quarter. QX it went QX I per a $X.XX $X.XX down those about a with to If through, it’s numbers bring at just

Mike Carrier

And waiver Okay, team then realize thanks only just earlier a follow helpful. up guys. Market, and current for guidance the That’s quarter. on the comment Money Debbie, gives for the

that how either catalysts the team throughout rates lift and year you’re any benefit, year? curious thinking do stimulus, a that or over could watching yields? you just be You the pressure like other potential that We’re about are the the mentioned some could of

Debbie Cunningham

obviously at are we’re-- good environment. rates stimulative not the this change a also to Fed still policy. in point, and near-term. week, going For very anchored Chair us, we’re There are it’s the this told Powell term to be in short to earlier -- going And

pockets are what gets in and need we from their think -- be pockets our employment. high any tend consumer, widespread, with expectation we that, Fed can high this virus pent depending we what business, or And of distribution it pent that there’s sector or the the of to But to distribution out is or it’s inflation when there. What extremely satisfied. up will upon is And dual with really And at virus case, sector the vaccine mandate, demand up but well. believe of as becomes about moderately that’s at for be there’s will least whole him. more also in of drive low. point. know So the inflation It’s necessarily a that lot the business concerned also inflation not demand

the curve that currently means the -- a yield again. the they’ve is too that think And those steeper to XXXX, of XXXX might least probably second policy that with the little at for to going given that, about Fed as some progressing. in to likely what think, also the we’re of pick And that However, inflation a given drive more again, in in up. no begin way rate half timeframes, Those bit to travel up long, we’re happen. what that be that I at that’s thinking a guidance us traditional scenarios. we a up be play leads just think mode Fed There’s will from business is things is, not drive XXXX. we rate pick begins to But begins to

more to leave they maybe demand of this liquidity those a put that or cash supply and kind these context of pulls the point, of this market end lot is driven as it’s funds, out and lot itself a of on year, equity cash So of some and the will or end will and bond comfortable side off front essentially front a as little where the technical that’s re-enter will just up the demand. lot to cash yield steepen. a A at that market With get this the going day, that less front -- markets backed in existence. does the bit by yield starts in of curve markets, end a curve be probably

that’s as the the probably On side, industry picks the the other side equation, for commercial up, side. should is supply stagnant pick additional of if get supply GSE on supply though Treasury pretty we up the supply, paper year,

XX in that That situation. get basis a get You or you got demand points little doesn’t you points, points to means basis Money XX of less a X bit yield basis get points. Perhaps curve. basis more steeper it you mean probably Market supply X

we’re neighborhood the that standpoint looking of steepness at sort in that’s from XXXX. a So

Mike Carrier

Thanks Okay. lot. a Great color.

Operator

question. is Markets. proceed And Kenneth next RBC with question from Capital Please Lee with your

Kenneth Lee

my income sales net strong question. strong We the for fixed Hi. -- taking for very for see quarters. few past Thanks

think you’re if to could what the wondering there. key Just able some be factors of highlight you

Chris Donahue

And see the anxious muni the is renewed across that interest see our factors inside clientele is Some in are to distribution. yield space. of we the still this there key and Board

And most more on short strong now. going of not obvious appetite all firms. just duration bonds, And for all anyone is go tax making who remains questions of because are there getting increases. allocating at that oh, for potential a a the decision, brand in implications new we We’re stocks to money,

year, products with of very, proved that’s them we I it had, very think, strong Our last positive was why flows. XX

where continuing, salespeople of occurred enhancement flows put last And it relationships. on clients on phone email, and does that they your really you yes, build which can mentioned. have. though going if places they even Board So curtain was positive is focused quality across But going what’s are have behind And year. the number traveling, relationships the the the on as the not it in income, fixed that are the Ray it was courses in. the are already already a Because and up little golf new you enhancing the are going, crimp the stuff still

products a getting Federated construction. look the depth array as enhance at you mentioned portfolio of the and I’ve quality which an look through broader to get opens, in We’re But into here at new clients. portfolios means the before,

bets type when So answer of lot the types a fund being intermediate or made to the return tear the total up our portfolios, as of with construction, into bond clients. portfolio ends that are by short our these you products the

to move in for there still quality keeps people fixed the income marketplace positive current by many this flow demand situation. the and is a as So yield

Tom Donahue

our part on just been yield as Hermes high to had strong the SDG strong solid fund within started of said, Yeah. the Ken, quarter quarter. off But we credit had short into menu, engagement has first also this and last high been fourth yield solid very a high quarter certainly the institutional highlight, I very a gotten has and yield has Chris duration and product seen then domestic product.

across of high concentration we’re on to income side So on. the have coming that mentioned, duration sectors, spread XX and up SDG with in net and first the through a short in I sectors part sales funds as are really fixed positive yield, they QX

Kenneth Lee

to quick are but if there if just talked Great. wondering very up, Pension of year on expect any we outflows. it’s I from potential about a those we on follow see Thanks. any Scheme since updated one should for the BT thoughts expectations impact that flows? helpful That’s meaningful a while may. this, I What’s color. and And been kind sales know this

Chris Donahue

big get redemption are client, the they we into don’t specifics profile. of beautiful or like to their Because investment a

a they we that they’re down at don’t that be their liberty beginning, may taking in circumstances. back you think be or we the to as to have just discussed assets mutual time way going their related give have long-term what the they redemption substantial not we’re repeat us But that the know, and with that nature on As were products they had fund announced to we and at continue. reason may own over we won’t or profile even and though to no sometimes not And

Kenneth Lee

Thank very you Understood. much.

Operator

with question Dunn And proceed is from John with ISI. our Evercore your question. next Please

John Dunn

kind flows Small there basically much Cap as ship Hi, come strategies. new clients, being and substitute from can a able for sold guys. be was existing that notion that of the I wondering, any versus typically Kaufmann how just to are between products of so of clients

Chris Donahue

on that Kaufmann array, cap. as have of the broad those And know, the a product, cap mid focused Kauffman good large alternatives. very they’re methodology, you So we obviously and are obviously, for the

of as the MDT the that On have good Core Cap about have I’m the side, you strong includes performance assets a over well. which flows picked very the have good Small includes All and also we talking -- And timeframe. Cap funds Small and a couple up which Cap have MDT,

product. investments are all over well. international And, the their on the friends Cleveland basically we in in addition, frankly, side, as cap international In scale the have SMID our

specific some Small some successfully very, have some us funds to continue invest we could the include about for to other general enable clients specific So that that Small Cap they where very Caps talk and to Kaufmann, future.

John Dunn

should willingness in Market we think ABC Money price to have better rates, Great. people deals a credit. people’s get being higher towel, how to spur rates maybe And to needed about Market throw -- deals, when talked think that about sellers like, different more eventually, get would the Money and then you guys activity? scenarios But we are how and

Chris Donahue

way is overall whether life. is bets of that And always are XX% to increase at higher in things various rates the into them incensed cash cash the about it’s that just a event, But their that for bets the those demand on, managed. have in back in And in the marketplace markets money that will it in going with would money percentage they’re standard issue, if occur other of constant their supply, into In whole ‘XXs. people management a of back hand, be sequence, ebb whether the increase is there always market, to funds the cash. any portfolios look long more increases couple need the flow you money the Yes, on and and in off, of wealth there history value, being always To helpful. me, the the go more. you

Tom Donahue

the Money they The earn. long-term that we John, people where to to if with, to Markets. look work continue you’re do is way we what with also M&A arrangements earn, and referring that to available at out deals is

want still willing environment, but throw low of So the isn’t able interest that. the with worked And much with do and and to ready, And we willing as to -- it’s what to, and we us, and the out to transactions we what’s pretty hook easy with in do up say, still anybody towel share risk earn. at who there being we’re to look it’s and do if are in, people available, course, ready and they earned well them.

John Dunn

Thanks very much.

Operator

Dan with with from question. your proceed is Jefferies. question next Fannon Our Please

Dan Fannon

Thanks.

to I outflows in months. balances fee follow say QX, seen waivers, recent a just up as start of But today. Just the that the year on assume the guidance we’ve for the

that talk you about the that can either backdrop? inputs about that just some make think that So current or of we number lower number make could the variables could higher or as

Tom Donahue

where the today. the Yeah. forecast, did about were When we -- we they assets are

much So, basically, not change.

discussions. go then Of Debbie’s changes to that. assets assets But current all changes paragraph variables variables always -- course, we forecast But that’s down, all given with and assets all there, currently. the and we have up, our go used rates on we updated are whole a the stopped

Dan Fannon

Okay. And the to then regards sharing with the just with partners. distribution

little other increased the and your as more I the as bit -- of it has fee that economic waivers So we changes between you or this a as forward? you seems with Have -- partners revenue was, disproportionate. about think, think those relationship what share like expense how was have should distribution that -- -- quarter, the going

Chris Donahue

the class funds And the and blend one part. is -- has funds of an out of across our each at each end revenue really really of Dan, it’s distribution, a and classes shares. comes each level of what It’s of and expense. -- just like -- of really shares change anything it’s different those really on all act a not

why not So yields during which points It’s funds waving did couple the very said always a that by a now, wave weren’t to you this this day it model. come we’ve before linear. is they of threshold. have to as difficult they begin is that QX, basis cross overall And course, gross when down, that

You characteristics and predicting have fee the difficult. funds move can that this have different in and out, makes one it’s just of they variables and very

Dan Fannon

Okay. you. Thank

Operator

is Brian question Please with Bedell our next Bank. with question? your proceed And Deutsche from

Brian Bedell

folks. morning, Good Thanks. Great.

Chris Donahue

Hi.

Brian Bedell

and Just a up one then Market question Money few on Dan’s follow ESG questions.

pressure on to come thinking would management you question actual the and we should what a, that about side, is On is that, terms you’re the there should deaf the fee would words thinking then your distribution be that about the that be, could distribution waivers distribution be distribution of partners? in with sharing waivers, asset I how guess, a I magnitude natural if of fees the reachable? more guess, read we the there floor your

Tom Donahue

answer, the the it’s that level would would be distribution all revenue. it floor -- fees, within would would have a this each But waivers really similar level. you beyond point when be a individual blend typically wouldn’t give level the that -- of complex then in, occur we fund at fee it it that a distribution say, fund, there Brian, So for you could wouldn’t them change,

Brian Bedell

Okay.

importantly, trends in couple what’s in do Okay. to $X.X for really U.S. question you your guess the million and then especially demand of ESP -- up this come the getting year. more much demand to as sort Fair the on that question see Europe? a funds broader side, Saker, the a And to XXX from the what really EOS to here or too, improve is And of million sort one, catch that then in we’re on U.S. up if of from clients? you’re enough. U.S. how has beginning few just the questions attraction probably of $XXX seeing the the catching of U.S. is, I How

Chris Donahue

Saker?

Saker Nusseibeh

Sorry. Yeah.

course. Of

separate is answer buckets. the about that in it So to got three you’ve think

in the time is But not driven EOS will as Europe just expect. States. take move can demand United We you’d demand a also by moves. see in it to that up, the increasing regulatory but whole, So market catch partly for for as

So of indications time, in indication in getting about that also where see But is Asia, actively as would catch you about separate way product that new of the it’s we demand up because we’re increasing a and should demand Index they do. being will something That’s it. some already and for Europe. that, the U.S. in best reflecting they’re growing are think the as VIX providers one. very stewardship talking That’s one with

w better the domestic is an of of make I accounts the That’s clients labeled one managed think decisions The ESG the to that’s actively this way ESG, that data another get other products is, into taken necessarily it as are a without our need about you more integrate buy, firm wealth much we -- ESG. factor how actually helps do should part enhance well calling think is because in create it. XX% is, we create that and better general because mind, third ESG And the then over And we And specific Board right consider Why are we that, from the in to the that want the the products long-term. second sustainable to mark ESG. answer do my active have we’re own that those past returns long products. do time. across -- and wealth we what the integrates over

be it’s discrepancy get Europe, Now, you any and between yeah, kind going discrepancy of to the in because that U.S. market. there is the a same

in acknowledgement does with takes a enhance United will obviously yes. coming might there So different do example, strengthening? Europeans but the see market that across The out answer and if be Europe be that question more time. of It acknowledgement high it. to the is is, trend on an different products general, that. the fiduciary yield something ESG is But it But the other hand, the There Board, sustainable a structure. might appeal law is specific we specific for see we’ll call returns. There very States is

Brian Bedell

Yeah. No. That’s…

Chris Donahue

we’re obviously, if And the So, the not of And analysis, baked with office our all, questions they’re I enterprise both responsibility may, customization which on inside And already the stage most comment. integration Federated first, is for if on well Hermes where other offerings inside Hermes, U.S., I is, in your very along along first full process and office, other proud accomplishing this interpret the our two well, there. are making well we our integration. and of of the our integration Brian, the what we is are the base. client the in cake. in teams RIO with ESG one three is, investing way And interest ESG

the we’ve of clients, interest, On done overwhelmingly, some question two things are and our happening. with surveys

getting with the First, discovering of more advisors are questions are are their new the they clients of are And methodologies. we more getting it more, more activities incorporating meaning our FAs that will from This regarding into administration. ESG. and increase the their

This okay? Now force. universal, is very universal. it is strong is very, this not But a not

Brian Bedell

ESG funds the on the you’ve domiciled what them But that it’s a that lot the compelling. time saw it’s that’s know funds levels very year? to the No. asset a build are as of through Yeah. I U.S. it -- I And this you end just of guess, -- I of are takes seeing, distribution. are launched, the of survey,

Saker Nusseibeh

we products the But $XXX year from the been half, million of $XXX quarter. is of basis third and at that around over asset So, just the a up over up new. end Brian, the they’re have last and relatively that started group would million the

know, mutual ESG, So and with That proceeded records. these because of funds, typically opportunities with need additional bigger interest of have they up nicely, relatively open seasoning as but the to inception terms they along in distribution need dates. in recent -- you additional track be progress, topical need again, to said,

Brian Bedell

Yeah. sense. really it. for detail Thanks much appreciate No. that. That on all the so makes I all

Operator

management question-and-answer closing for call session. to the I’ll turn have reached end now over we And remarks. the the And of

Ray Hanley

our for us. we for you. thank concludes Well, today That joining call thank and you

Operator

today’s this concludes conference. And

Thank lines You this participation. at for time. may your disconnect you your

We use cookies on this site to provide a more responsive and personalized service. Continuing to browse, clicking I Agree, or closing this banner indicates agreement. See our Cookie Policy for more information.