Earnings call transcript Q1 2023

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Operator

Greetings. Welcome to the Federated Hermes Q1 2023 Analyst Call and Webcast. [Operator Instructions] Please note this conference is being recorded.

I will now turn the conference over to your host, Ray Hanley, President of Federated Investors Management Company.

You may begin.

Ray Hanley

Holly. you, Thank welcome. and Good morning Federated Leading the today's Federated and and of Chief CEO Donahue, for and international Debbie Cunningham Markets. are and Tom Chris the of Nusseibeh, Hermes; Saker Officer Officer Q&A CEO Limited, Donahue, our the business for President Investment are call Hermes Money Chief joining Financial

Please disclosures the Federated these may be results our today's we results by No be During implied actual assurance call, risk to Federated Chris? may future given Hermes' make assumes review such filings, SEC as update statements. different no statements. duty in results forward-looking than the Hermes statements. can forward-looking materially and to

Chris Donahue

and morning. Ray you, good Thank

In a that market billion. review money Federated ended driven and market assets management considerable Federated Hermes $XX $XXX quarter uncertainty, a business growth fluctuations high billion $XXX in will under first by total will assets Hermes QX of record results. of record quarter comment of with the Tom saw I financial performance. on to our billion

mid-November Turning $X.X in $XX.X market Strategic value about has quarter. $XX Value includes in strategy strategic which billion million. which produce billion of to U.S. net sales launched $XXX was million assets now solid $XXX in to continued the $X of assets. billion net gains increased and dividend to The with The positive equities, sales by first Dividend million ETF

Mid equity and net XX ex-Japan, Markets, sales strategies positive Core. Large leaders, QX in Cap MDT MDT Cap Global saw MDT, including Asia We international All Cap Emerging

remains performance Our peers equity compared solid. to

equity were their the first of at years peers top quartile and three quarter, XX% trailing end in the for beating data XX% our of were Morningstar the funds category. of Using the

equity three first QX, of million. net had the For redemptions of $XXX funds and combined SMAs weeks

net yield quarter market of strategy return sales our assets in quarter. billion redemptions. of had income, bond prior Core $XXX to at Plus offset up quarter. were million $XXX billion to QX $XX.X $X.X fixed net million total High from as were flagship to net Within category about compared by funds, about in positive values $XXX prior increased redemptions the higher partially million now first Turning sales net million in by the $XXX fund

XX income Core million added Plus That in including the and funds. redemptions other Henderson sales Within in $X.X strategies positive fixed QX billion $XX billion $X.X fund, redemption net quarter of from sustainable income down net our and first $XXX had fixed Income funds prior offshore total million funds, credit funds. first SMA including yield return We strategies. quarter, billion of is about sales about CW net three occurred with high SDG $X.X engagement in quarter. fixed grade the the the bond in investment the obviously

for of the funds the data income category. Morningstar at peers Regarding quarter, end trailing performance again beating in were were three of top their first quartile the years, the XX% for XX% using fixed our and

For of fixed SMAs million. of $XX the three income and first funds redemptions had weeks QX, net

first the absolute category, real market by the and partially In increase by Net $XX.X This lending, compared impact quarter estate. approximately prior were losses. positive net and billion. led sales to in credit, neutral alternative offset due $XXX private markets reaching increased million quarter, sales the market direct by FX assets to was return

X, equity of PEC private of vintage private our our and Horizons We co-invest third continue marketing vintage the Horizon equity of X, fund the fifth funds. series

solutions of equity of also our II, the marketing the the private second Fund. of the estate real Innovation fund vintage our We have Hermes and our first vintage Fund, innovation vintage Fund debt nature-based begun first

About Markets, the mandates strategies, Global Asia global of billion both attention and we're Emerging total the funds is separate in $X.X includes $X.X diversity yet with of winning. QX began accounts, equity to ex-Japan, in to this pay expected come biodiversity, of to in We and net about - equity. which billion net institutional fund mandates types global

Approximately to Fixed these in $X.X equity, market and income net private lending in includes Core unconstrained strategies, wins yield to grade credit. credit, wins about billion investment come million, direct total private is is the have expected in of expected which high $XXX Plus.

billion; markets separate markets markets already highs which market record I've money Moving asset money money to reached and money total we for accounts funds, mentioned. $XXX

March to strategies from certain quarter elevated compared yields benefit system and of first investors the into class, movement deposits. in cash levels strategies concerned also conditions reflected Money market as favorable The in continued asset from as increasingly the an for became bank increase market yields, failure liquidity to favorable bank banks, money deposits following market higher financial

rates expect bank strategies conditions As market market to peak, short-term and for interest favorable we compared markets both remain will deposit money direct rates.

down market XXXX. of market estimate at including fund from sub-advised the about Our of end end the mutual money quarter, the share of X.X% was X.X% first at funds

asset ago, as recent a assets few and managed at now $XXX in billion $X in mutual billion equities, in Money billion assets totals Money in billion including $XX income, private were Markets, alternative fixed Market days billion multi-asset. $XXX approximately billion, Tom? billion $XX Looking fund were in of $XXX $XX

Tom Donahue

Thank you, Chris.

and lower revenue to prior assets, assets million higher and mainly QX the increasing and million interest. increased for days equity X% revenue too Total $X offset performance by by by quarter fees $XX.X average million, or carried fewer higher increasing average Market due revenue $X.X Money from partially

tax expense asset The million. non-cash performance $XX.X $X.X $X.X $X.X restricted expense, of impairment payroll $X.X compensation QX $XX.X QX million interest which compared stock million higher decreased were included from related million which or in million and QX and operating expenses to million X% seasonally due fees $XX.X million QX, about higher to seasonality. of of and charge. a carried was intangible increase included

QX also from expense depreciation lease we of to from related million increased the incentive space to higher related reset of as due London. compensation our in acceleration expense, $X.X Office quarter a million included and XXXX. termination for primarily prior we consolidated The in $X.X occupancy compensation accruals increase the as

of expected mainly to line in the quarter prior the from due timing The operating FX also and The item to used the exposure expense million impact quarter other the a in hedge claim. non-recurring increase prior retention a includes related forwards decrease of ad the certain advertising in promotional an pound spend. of includes million is increase $X.X to from and currency expense from $X.X

interest, investment subtracting investments. added to gains impact the the In QX after per on positive non-operating about earnings attributable $X.XX our income, of impact to for share market non-controlling the due

The reflects tax about compensations non-controlling tax rate shares deductions effective impact the price was The for certain vested impact price stock rate non-taxable interests. to for EPS positive grant QX's $X.XX. and QX. of a as the original higher was at $XX.X QX compared

impact XXXX. the no tax we interests, our XX% full from in the Assuming to effective to rate non-controlling XX% year expect range for the be of

$XXX end investments were of $XXX was the cash of about QX, At million us. to million available which

As from shares noted in previous the million. quarter, $X.XX, a during the dividend press for of increase release, totaled the about declared the X% dividend about our and an of XXX,XXX approximately $X.X repurchases Board share

Chris? And

Chris Donahue

$X.X in those redemptions billion funds. in that our were and said funds ultrashort offshore I net were

the correct of you we knew that, Thank should probably most think you. record. nonetheless but I

And turn for now your questions. over we it

Operator

Worthington will session. a we today at Instructions] for be first time, Your from question-and-answer JPMorgan. [Operator is question conducting this Ken At coming

Ken Worthington

the good taking Thanks question. morning. Hi, for

Chris Donahue

Good morning

Ken Worthington

does in the SMA then, talk And competitor for mid-cap the your to the fund higher position to the of crisis pool impact about you these banks first, do products? terms So municipality really you outlook these businesses? over pools money the growth? this for rates how participation? of And Maybe are the what growth business and state extent banking think better can time

And Florida. the there that much more states municipalities? of seemed pools be winnable And is pool here say bank together where these that then like the lastly, couple Texas lately? a have to so struggled you and located business like other manage regional California Are already there

Chris Donahue

state Chris. the Ken, even well. this many other of states, the in that as ways. There In opportunities divide are let's have is many front on we these state where sub-pools the pool there in pool, certain main and up are

have a don't viewed the state yields and buy or for always don't are the competition size pools tends those bigger to part extent to to of it. claim that things on the polite and to have those That's And enable happen, pools get therefore assets right the the make or big pool our don't as manage securities to one sufficient which to pool big right grow.

things RFPs with with that regional the to state done that have can't on information long based happening it, to Another the in that don't We is part times not I state it But impacting California pools, banks processes, you are can bid do the very in overall, they on are long-term complicated. contracts their say that. what get business lead I appear pool. of does that. will happen what

a for hard thing for turn those good really on thing pools obviously a it's business. pretty new state dime. that's old to tough so a business, it's keeping And but for getting And

that point I'd group is those next make we calls the all have time. sales groups that a The on separate

where become there are mention small we not can working now to we the an whatever we So a on them going Debbie? think that is and I'm whenever pool of on to opportunity the manager right handful state states. of

Debbie Cunningham

choices. time participants They the pools long over Chris long don't government and investment for the themselves, Ken, state the state taking mentioned local Chris, don't have themselves participants such the to do in the pools. but the time Thanks lead have lead pools pools, be have

cash They from oftentimes of They are amount have others. at of in alternative. you funds which by money And money of market participants a managed manage, in looking state some bank funds market could are a pool, we be our we some in an which mentioned. as substantial as

So funds, from outlook competitors money business. excellent, out going participant state pools this gathering a for assets market Much outlook there our like basis of our to however, forward for the is are

of going they speaking a not are Generally I'm that and rate and into lower, start same comes see rate It's - I pools. direction products. trajectory, that for our types terminal much other assets sorry, our an as out trajectory quickly. money getting rates when state that going flooding environment, said, down increasing the And the market type for of actually reach like, money generally in are we these outlook

same districts of with regard to spending the at they state certain from state or I they are there the idiosyncrasies school state disbursements cash lot are with flow pools rather receive times, and when the municipalities the cash generally then a are pools, have a mention, local the of but state period receiving no themselves - will cash within though the longer however, it. those the receipts time

that there are So annual we definite pools those cyclical deal as within cycles well.

Chris Donahue

at mentioned point is final pools state in high an I billion we are $XXX all-time The of

Ken Worthington

then you. you've And been this time. doing Thank long Great. a Yes. Chris, for

planning succession in is a big And Or like think longer-term really that look some point, as built you'll What are leadership You've an At outsider the think about leadership? thinking about stays you for business. family? Federated? retire. we do you

Chris Donahue

a health And time. your that to contribution standard is, my our indispensable. hearing and keeps of the is where from long comment I as you're human No being And to keep the and going for Board appreciate But that as good in of long terms here is enthusiasm my participation, enterprise? growing, of me.

the York now required under over the that Exchange of In every means New year And and with with process doesn't you what exactly to Board go that exact board. every this you is that terms in case candidates a mean have succession gone the answer. candidates gets succession you the have we're of we've plans rules, Stock that a over gang that or it

And of beautifully. a good on bus. And we I plenty candidates Executive to if succeed would Committee the way hit get if me enterprise continue has it, the by our so put

is thing the what in best the interest don't mention But the what's of entire I will voting is we that's and will we do stock, approach such control yesterday. how that, does it. forget enterprise other family The like would the A/B did voting do the the with

that structure, certain pattern what go can't So we but down and through. the happen we will process you say the the will for the see road,

Ken Worthington

very you Thank Great. much.

Operator

from Your Davitt Research. is coming question at next Patrick Autonomous

Patrick Davitt

everyone. morning good Hi,

continuing in guiding but Sydney passes better been April. the rotation in deposits, a once we spike April you've big see quarter, to looks it Fed really starting and big the than this has obviously For money be uptick fund would in to driven situation normally the

until pulled-forward? you the start of think an has lull you think all Or do So now we'll more clear do a the been see we get from Fed? that

Debbie Cunningham

in due of this where has There of come April. beginning think new didn't I come generally that sort quarter outflows quarter taxes year. first to It's obviously were a fruition. inflows

what money will rates, products March the has or that continue next the before and see kick-started especially in flows rate expect degree in that to approaches happens in upticks with continue way the several comparison that this a in So and positive I the regional process versus even banks we'll some deposit the to some of year, into Fed terminal to impact reaches we to months so. of funds

Chris Donahue

that it on accurate and Patrick, the difference at and though might helpful nobody point what's to retail a be Institutional And numbers retail. on between take has even institutional look what's

been and we retail, share this into the the of figure the would we've tend related market, is because gaining the is to too. for sticky these kinds we basically to have buckets be market which On - of kind good going that more all and risk biggest retail rates the because back assets it be of

it that to will, trade, talk little by probably like How to into early, really the you a in our In terms gave it I they a an but it the tell some bank pipeline? me hinting started giving give over moves the those was hard me bank you or problems. answer, phone. much already if of and accelerated of you is the will you say. of one, if guys you lot our they of institutional up could salespeople, It's beat if even the wouldn't institutional, I are to

come, can't how tell so there's to I already trade more been much but done. that And has you

Patrick Davitt

And on then Helpful. Thanks. expenses.

part those kind a of lot items. you one-time entirely It consider run and is of You clear me, to onetime or really what kind rate which mentioned a step-up. type wasn't seasonal little of of

asset? in So much the imagine operating a a in expenses XQ, frame expect to year I how off items you those with be track maybe then all including could cadence will XQ And to in step-up of roll more broadly, higher you repeat? much what should expect this continued not MMF of we distribution how

Chris Donahue

Okay.

office, million. So space of some saving the $X.X London

get space a non-recurring So we don't savings million future. claim some not a But that's reoccur. that from expect to that's having going the $X.X we're insurance The mentioned But to number. into thing. I

two in non-recurring. things those So add to $X.XX of about terms up

that payroll For say the can I have the other future, stock I'd which on in But the comp things down on for seasonality be compensation, would and our numbers incentive those by mentioned tax on the comments that comp. change all be of $X the million. will you QX course,

happen them, else So that's what just a change for QX not comp. complementing to is going in

item - So that and on more expect getting with service the we are obviously and would the would distribution, would and are say so the up. we up see both fees to technology. to growing money assets expect opportunity communications Systems still absolutely the spend distribution go and I line professional

would tech line I the items, spending, both expect So go to those - line up.

occupancy always look that low and timing whole promotional talked QX's already said, for year, year. I at the about over and I've advertising the office we've just always the and the -

year. last quarter, rest related enough low. in Had QX's that up the about So QX travel the of I'd to and expect go intangibles

think And other quarter. FX claim on FX - went changes go through and the for the knows is would other I who up. expect in that I those what I So to every the

Okay?

Patrick Davitt

That's helpful. Yes, was you. helpful. that Thank

Operator

today Your coming Fannon at Jefferies. next question from for is Daniel

Daniel Fannon

how fee that across Thanks, Can The the billion rates compares coming rate you $X.X of you that institutional talk diversity fee good in? business overall the the you have morning. of about that's kind book of And it. that of highlighted to today? long-term backlog or

Chris Donahue

Ray?

Ray Hanley

XX with that's the through money BTPS of - talked as neighborhood basis in Then a weighted points. the came book know, private about you Sure. the to, market owner. side, the so those Hermes we've into that strategies But lot current relationship being as on of

mandates just as out there, marketplace, diversify But next the we in itself two. the we money new that's new rates. move look base in fee investor so increasingly And and better for in or that's come going the to not at the number quarter working all

is roughly sort everything as blend are separate you there really far But as - also as rates basis. individual are 'XXs funds. there so with look individual a the biggest equity, a of there are low you the together, advisory strategies half of and in clients or fee on again which for unlike and negotiated of lot individual rates account, are what for mid example across those typical, numbers variance when part are should fund the then And there so the to on to

range is by On the fixed dynamic rate in fee income there point similar our the varies more blended by XX-basis client, side, fixed varies kind of separate a income accounts, mandate. again but for like

that a fee range are pipeline lot a that the and at point figures. where number. rates But you for starting have least of You'll now around gives good that's

Chris Donahue

To add I'd of businesses. fee on Saker some the rates. that ask color comment - to to those

Saker Nusseibeh

mean, in fee and Thank we negotiation into you the the the have negotiation then we've Ray to of a our get And some very inflow very you had size same it's and a the other Ray good expected a said, advertised institutional it's if mandate, mandate to that. also think institutional GEMS a back rule-of-thumb the side, win to huge rates and them. the institution I quite as I rightly has customer covered with of relationships as much. example whether and as funds look, for equity

some in format is the institutionally, of although On other private a the markets, at the wins you fund. had of a hand if sold sold that lot of our lending, actually in we've look in direct

Europe, we'd close answer. is discount what some might quite but there in So the practice as to be we're getting

that mandates things rates market, we lending like our on general to Ray you BTPS, can had are our view we point our were increasing said, we direct they fee and in this in fund. as see we old what our reiterate away when So - in think clients, from private as I move of with

You the and in with government see can conjunction people launch the we're - inflow. government nature believe have see to in double where new an which Europe seeing with the in these you fund, into, first we in come example, and innovators U.K. funds conjunction can clients in a in our for there, I are fund actual the this equity

general, is some last the that it's opportunities mandates. with I performance points gives institutional year. in negotiable as because mandates. of to also fee people basis Asia where dealing separate hate answer, ex-Japan value that following And got give strong with each on within see because is of there in clients based kind then One hope we're turmoil I

Daniel Fannon

That's very helpful. Thank pretty you. balances Cash balance continued quiet. Buybacks have And then the on a follow-up just been to sheet. grow.

environment, go maybe, appetite So year - as you the versus your for progresses? think and should building buybacks cash we talk as M&A that about about or the

Chris Donahue

we're Dan, talk is C.W. nicely there. We don't anything business We're Hey, still active. to growing working about. on have which our Henderson going

say, modestly we you We and shares that. buy continued as to, analyzed

You dividend, the noticed we in the things but increase also continued did table. to all a modest on be

I may globe. as think last increase usage I around new develop seed the we quarter our products mentioned that

use as getting on least team we're So at now, - in getting money nice X% and not we high so pretty a that fund we're our our invest a that's make it. on of by managed another numbers it's yields competent and cash holes the we burning market highly some money

Daniel Fannon

you. Thank Understood.

Operator

Your Lee RBC Capital next is coming question Markets. from at Kenneth

Kenneth Lee

taking for morning thanks question. my Hi, good and

couple think market? these we you mentioned nature-based being to that the a starting like to from marketed Just about over alternative should contribution time starting of to of you're potential AUM some solutions. Thanks. How side, funds the funds on the

Chris Donahue

it, over and you big effort, fill then date situation. current a the I Overall I'll whole will answer broad without let in be could give time, a as on the going done market's private market, good entire infrastructure enterprise. are There the private of some lot as credit the on of as being estate, unconstrained well. a real on rest in and direct lending, things work Saker

answer. broad up that's so And

those. you the there, let the Estate Saker nature-based and Fund. on will solutions debt the I funds Debt Now, talk the about Real fund, individual fill blank in Fund

Saker Nusseibeh

Chris. Thank you,

several for and in So some of are estate of very negotiate generally markets a sum talking clients our a the takes really funds with project to some years of what about up, that several real because years years over line example but XX takes the private big Chris products and large time and we're management. says, get negotiation, pays to long-term assets long under lined back

a extreme if lending, at is On business we will that. lending on direct growing hand, we above that's we come to it we that continuing we that like, we like a differentiated back real the for hopes launched, our and other you the high report side direct the as $X grow were and other have other and estate we on product, to the the that rapidly billion year see just something because close last as come have

the of So are these spectrum. two ends

the fund I'll is nature is biodiversity mention and equity funds, that about There leaders. the in the are and when mentioning innovative demand such mention I worth our large mentioned products it's fund, we in in which for Canada products also talked that Europe nature You something our we inflow and it. we've had as because didn't

us what field. with work innovators the differentiates is in Now we

in for So the biodiversity example, fund.

fund. strong Museum. a very and relations that manage the the the That's such have scientist community ability History we works within had why London launch, with to grow partly successful Natural We

to which encouraged we field in we this the part we and biodiversity have clients Now, fund, emphasize format. we've in of that of this the U.K. in field believe the first by with the the and in a nature being the government, - are I've and U.K. in then case got to attracts conjunction launched the once first

to do we've might to the build to about slow key be I There can format we this we at is that's learn if clients. to it potential But and actual think and others, formats pure this ones the huge how call that government, within innovate got the least process. listen be acknowledged with because is a by investment how the other going

information. some see So you can

a increases I I products, over projects, I time time. small likely incremental market the very some large you're potential you answers think the any public see question. fund. takes reasonably as In of with to your think would But very a that other large. is the traditional in it quick, more hope

Kenneth Lee

Got you. could you any around there. government helpful U.S. follow-up debt and money the I ceiling on market ongoing very if share Very, may, debate thoughts impact your the from money market side, wonder just fund if funds. I potential about One back Thanks. the

Debbie Cunningham

Groundhog resolved On until we've waking it's Secretary exhausted really we'd resolution. continue apply been Day, Treasury here like up it there'll before, rather and than continue extraordinary not Certainly she resolved and have pressure measures yet. to keep will to sooner to expectations they're at Yellen, be this are, use to later, almost but some our then point

be be So for short-term suspensions with that past a months and similar the down this, resolved, some instances, road maybe passed, been is kick it to will temporary is our few in experiences can it it's get will the potential expectation ceiling any since attached debt as the call it that what to there well lot bill the that's of as would a are should congressional increased. to to kind perspective of from a be allow disagreements, let's

not we perspective. any even But expecting of a default a from type Treasury U.S. technical are

keep a dealt of but very within that were event, current the context thankfully, again that a debt that, the has prepared the security event last it limit market operational in come technical the in with minds were there now a a of remote ICI, very ways over default - that of exists, of our are single ever if of prepared - Now both an one and the SIFMA, a DTCC let's could technical perspective, their marketplace this an system are from be it rolling having for decade, if market standpoint, the in said the fruition. to call such the to there treasury from course

Kenneth Lee

helpful Super again. you. there. Got Thanks

Chris Donahue

Sure.

Operator

Your next Dunn question John at Evercore ISI. coming is from

John Dunn

derisk you your for that institutions Maybe, higher And you. in the Thank income impact are could us the income fixed for into fixed level shift then, income? fixed demand now you has menu. and income actually on set rates seeing

Chris Donahue

we but the and years, into over to sales, asking side, our know last is sales gross have from look retail side income way gross the all looking First the XXXX, are approach which all XXXX, on gross average have about of I several all, your fund sales the averaged and and you at mutual at guys SMAs COVID monthly okay, where you're mutual $X.X fixed XXXX, the trends funds on net billion. SMA question during about I of

And in we a there $X.XXX is the tells billion. first here fixed total is return this excellent but So is for because the income biggest you accomplices funds that the I products. are now XX the positive what bond were quarter, mentioned, demand these that there has well. is quarter, flows it's yield, enjoy people it getting obviously one fund, actually other as in When

robust were amount be trust income. income among you the et always of remember core our stock demand of cetera, component a And that portfolio. take off, will there departments, market retail have a to for clients, fixed in the fixed Even the if

core some as well. in gain players, we world showing return performance biggest you had have space Last us glitches, year, manage enormously of the how the money to were that the steady, in we some able of and some Eddie helped which in

So that's things you're I more have specific interested, overall an don't if John, but you know approach.

Debbie Cunningham

I'll add too. thing one

reaches last the - the been the the Our is for rate, market despite not go That's years, in maybe terminal in but it the engaged people the back Fed to fact, even that that XX is not. think the landing land to expectation, fact for when not that's rates zero. normal have

a Fed time Cash that trajectory longer period Fed a Ultrashort the are that of Funds rates and its you you Plus like or X% point are into to funds, X% maintain Microshort top X%, takes those rates the get that the when So will the it a is of products for the cycle, not at when funds, is of at you zero. taking flows see back higher because the

John Dunn

deposit Got how you you get comments it it. of done less more money likely And any funds. makes that slide market is more on impacting could well? roll-ups then maybe just, or Do think it

Chris Donahue

on reported now all seen call bottom thing compete as it and there money don't this is presenting funds market people times, and the we've for and are money over inevitable world market XX used and small Well, XX really be over to to the an I've the years money. XXX many real it's

And not so this costs worth too to manage It that conclusion it. it. come to the money eventually each of much those is

it, enough and the they We have risk here, these CFO And force specialist, is about to don't are the to There gets their on cost well go-to-player. as before, known we I've people want it have size of as of said make sales work. one we structure. M&A a improve excited every people call

you're sell if week. even to this funds, are to we to you miss call us in If you happen going money some going

And we we it to that's a that the does assets. can't but market of very always Does this say, event, money all same strengthening another is regulation, loving the fund it accelerate catalytic thing of I that give thing as would an it? why home a are and on - mixture, the oligopolization there does increase and industry. every in always thing adds mixture the add speech good kind for to time an I as particular be warm some

that we that though, vigorously does It even we effect. so new And against don't have regulations sense. think makes fight

John Dunn

Thanks very much.

Operator

from is Your today KBW. next Mike coming question Brown at for

Mike Brown

of Great. inflows to fund Okay. little question about money the just wanted bit I ask quarter. a morning. Good nuance a the in

clearly how there and big revenues contribution? the distribution out did the nuance also they expenses bank's in how it's how this quarter difference quarter? the in Is that come the play on in came the a come that through expense through? timing guessing, revenues for that between given the I'm how the impact stress, not any that but the the quarter piece later did So revenue of post very

Chris Donahue

it's Well, other, that in but comment I I'll that. has can at terms the Ray on one pick the Ray part and later it of when the on so comes or the average of deal FHI and distribution, And of further earnings Tom let obvious up for Tom pro are assets in the will quarter, it it a basically effect. and engine impacts rata comment how and daily

Tom Donahue

we get revenue. exact right the Well, in much same there's as more comes comment. not at time It

attained got happy. used call success additional distribution that expense and payments the up old to go item revenue Our we assets. because the In the days, we're I with that

Ray Hanley

a probably many instances. fund fees Tom as one pass-through collect the said, of into course that lot remember and distribution Yes, of that that in built we

Mike Brown

ETFs on then so - Okay. mean an follow-up management I to is just view and - more tend a maybe market I has out it different vehicle support short-term investment attractive environment prior is income cash that the that days. that obviously business. Great. maybe environment certainly ETFs, fixed than a is money a and high-rate but proliferation view it's a And attractive tool, as riskier? a the there, This is there yields, of little the these

at to cash? the you keep of love Is it more municipalities has look here that and here of about have is in still a landscape? terms close. follow-up It's but large sure is has you're bit that these then a landscape of maybe Institutional oranges would and this some about rate apples dynamics talking through just how I'm pressure Or on played assets really fee that because space? their a there competitive how tougher in some narrowed And competitive of time, noticed you the of it - talked - very are over one players

Chris Donahue

to we know. pressures And answer the that haven't amount crawl on competitive first first oh, players any we've the happening? The new normal last you haven't that than pricing. many So for noticed been and dealing with well, one isn't go, let's more doing decades. question. we'll back the I why been don't any how Recently

an have things that Debbie the customer because the they can, to so places use and big biggest of the in keep points other players out, the money OGIP player to keep more diversify move different is the get like three even diversification. world, ability remember though - them for as obviously about of even who or their want to their this, they the number cash and purveyors lot of a cash they One

what given banking happened coming answer that the and the so of more question. in to world the see the that's may second you part of anything, If

appreciate I management a a cash to cash the quibble fully it don't as part, support you observation service but we cash or we your Do first management word call tool? solution. the that management On and I use offer service.

other our Ultrashort have fund. funds asset variable net the they and with the really which sequences. it never the that a values even marketplace, we lows or like resiliency, on short-term no And higher going money funds, highs over mentioned when of talk investments is ETFs or Microshort various be gives own is the ETF And what's and going higher in market matter lot why to you competitive getting about

dividends every the They don't day. pay

know You price, a to security. you're going don't it's be to or back a like just a going get not, buck if

a market products longer wants not So have products if then those compete money to But thing, cash fine, funds. that. the to we for someone with going specifically do are

Debbie Cunningham

ETFs needed add a with and The I'd various are in T+X that for thing putting certainly is liquidity world uses. to on their generally not part, expected that its money for and funds. and is, the for what's the settlement their for They basis settling us cash cash for expecting market most T+X are only utilized redeeming

negative a the perspective So a sector. from that's big comparative also to ETF

Mike Brown

Great. Very all for helpful. you Thank Okay. that.

Operator

today next at for Brian Deutsche question Your Bedell from coming Bank. is

Brian Bedell

Good Thanks. morning, folks. Great.

during one much of Another April are April. $X days Two-part saw than the you We in imply in is outflows funds. inflows few to impact was outflow better on a question. month - the guess what one, the Number elevated at otherwise that payments? from billion able of - there with tax money would

dynamics. cash the sorting secondly, then And

there. I'll very a of later we're just innings where there versus dynamic obviously, much use brokerages the sorting retail an example cash So in banks. Schwab sort seeing is at of different the as done

that However, or later bank in advised are cycle. the sorting assets side, retail not the on

then Federated within money suite perspective retail give Chris are do presence don't a that, relative funds what you extent the the side. vehicle versus brokerages, you on know at a have bank I the brokerages? as at just banks to you some bigger channel in So shelf just And Debbie, think your can retail of any we if what with then on bank or complex

Chris Donahue

and cash it to that it's favor charge on same basically out So is that means is beta of in of expression that you're of sorting, is XX in the it. much what basis that where customer as a or the is of may balloon using to shift is to or giving thing it, what figuring zero the - in in its pay the lovely are charge beta squishing that opposed basically but banking we're in happened and rate what actually are And, having maintain cash for or having the interest a of are to some bank its because administered order gain all design for or concocted up you it's keep, income and is obvious and a deposit of the generally points cash the describes is expression, if banks deposits little deposit is, seeing beta bank sorting rate and return very the not the the marketplace of be looking effect, the industry XX how because people customer market for the that there's with of at net that. it

we there where notwithstanding, review increase banks because We've finger prohibitions I'd question, to handy. that Debbie developed keep ask that's Now, get question to the in banks don't or and also total what in and relationships on really are her can where into then the we'll in minute. are the you hard say And enough sale keep the a say contrary April shows the those cycle, asked tie-in They real customers. and see pulse are nice and outflows a a situations deposits time as customer? between the tax are we seen that to the a on

Debbie Cunningham

in all, it the and several in March but in at March market kick-started earnest about interest trillion. marketplace, during also recently, it, rates than the raising if trillion would were did it amazingly, less was are start I than back total deposits they down Sure. quarter, billion, so most the are little From not Fed $XXX March, XXXX look it XXXX it deposit was deposits money beta began in deposits, first call first less and up a side, you think and when $X.X down of $X.X up of trillion began little just I in funds

perspective. rate leave like today's a Having we're a rising $X look deposit the said XX% banks still another difficult and beta it's historically generally very follow to or interest environment, when deposit institution a it's yes, In to the environment, a for into about that, in beta less see you a at XX%. like it than from deposit fund. money specific market specific security of entity go So, type type a

X% at overnight to last upon a still That's in this that at. I and paid saw goes X.XX% So deposit rate average the than what and for curve showing banks by X.XX% depending environment. of are you less interest security the point are rate out looking type is the

to than less beta that and X% So a deposit perspective the we're from XX% will get average? historical banks

first this in we're number and a it's There's it Like ballgame. a to what close nowhere to to terminal the lot say, seems not given exactly go still that be, but in would that reaching rates. but others hard half. what still short-term rate I'd say inning we a close Chris to are peak said, like in I'm will what sure or yet do, they're

Chris Donahue

came gave to up billion] off March got Brian, timing, before XXX, said think and around tax so [$XXX billion] so days a billion]. in was tax, the payment [$XXX and - before We at date, the tax then April. we on and [$XXX out the after ended And XXth the few the I we were up season, money in went started back money we around we numbers around we

up or little was which seven positive five in So that or six we bit having day a bit a little actually ended unusual

Brian Bedell

Great.

exposure money guess part that your fund or one I your just exposure word. And Okay. question, right is the - of

of versus brokerage, platforms or brokerages? do wider a larger banking you say terms the retail I or retail banking retail should have platforms more retail on versus banking In channel on franchise funds

Chris Donahue

platforms. biggest by far be the clients we can platforms side, retail are but on probably on Our but wherever be would and side - we brokerage on the on

Brian Bedell

Okay. Great. much. very Great. Thanks

Operator

question next Patrick Your coming a Autonomous is from Research. at Davitt follow-up question

Patrick Davitt

how you. remind part since Thanks repurchases, you for And equation? like that? sounds you return planning big you the your the dividends that us have think you're evaluate always could about And capital of Special of a often Thank follow-up. how not been part it toolkit.

Chris Donahue

- number a and And disappointed we them we - those, not the the stock the in we're Yes. not of getting those income reflected was, past. were looked the of at price earnings. we rewarded by our so We where number with we were paid the shareholders were earning highly when price that

of And cases so to those to lot a dividends number a us. in of pay sense made it special

shares we and I So the been like in process seed thought we're through higher yield and tick said, amount with getting you've has the basically through is money our as things, same went and have to of price getting that pockets than we're and - on that's bunch that why noticed and a acquisitions, it not many much a and still through go the rates stock would bought decent so hole added I the in a it. it's we haven't normal but we we on of burning cash, and up pretty used

it always the definitely mix has it's for in been So as us.

Patrick Davitt

Thanks.

Operator

remarks. We turn and have for the the call will Hanley answer Ray session. to over the reached And I now question end of closing

Ray Hanley

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

Operator

This conference. concludes today's

disconnect a your wonderful may Thank time your day. have this lines for participation. and at you You

Federated Hermes (FHI) 28 Apr 232023 Q1 Earnings call transcript