This firm has been in building mode. In addition to purchasing London-based Hermes Investment Management (initially 60% in 2018, the rest later in early 2021), Federated Investors picked up parts of PNC’s investment-management business in 2019 and Hancock Horizon’s small set of nine mutual funds in 2021. While the latter two acquisitions were scale plays, the Hermes purchase came with an intention to transform into an ESG-investing leader in what the firm called a reverse merger.
To signal its commitment, the publicly traded but family controlled firm changed its name to Federated Hermes. Although some of Hermes’ capabilities, including its expansive active ownership effort, are compelling, integration has been slow, and it is not yet clear how well these efforts are being coordinated on either investment or product development grounds.
Meanwhile, Federated Hermes’ continues as one of the fund industry’s larger and better money market managers, with USD 420 billion in money market assets, comprising two thirds of the firm’s assets under management as of April 2022. The centralized fixed-income group (15% of AUM) is also a bright spot overall, but the disparate equity franchises (15%) have struggled with some investment personnel turnover and volatile performance. Alternatives (4%) remain limited at the firm.