Federated Hermes Q4 Earnings Call Highlights

Core Insights - The company reported a record $903 billion in assets under management at the end of 2025, driven by growth in money market and equity strategies [3][7] - Equity assets increased by $3.2 billion, or 3%, in Q4 2025, with net equity sales of $1.5 billion for the quarter and $4.6 billion for the full year [1][4] - Money market assets rose by $30 billion in 2025 to $683 billion, with money market mutual fund assets reaching a record $508 billion [2][7] Asset Management Performance - The firm experienced substantial improvements in equity flows, particularly from MDT strategies, which achieved record gross sales of $19.1 billion and net sales of $13 billion in 2025 [6][8] - Fixed income assets ended the year at $100 billion, down $1.7 billion from the prior quarter, with net redemptions of $2.8 billion in Q4 [11][12] - Alternatives and private markets saw slight asset increases and positive net sales, with the MDT Market Neutral Fund contributing $149 million in net sales [13] Revenue and Financials - Fourth-quarter revenue increased by $13.4 million, or 3%, compared to the prior quarter, driven by higher money market and equity assets [17] - Operating expenses rose by $7.3 million, or 2%, primarily due to increased distribution expenses [19] - The effective tax rate was reported at 24.4%, with an estimated range of 25% to 28% for 2026 [20] Strategic Initiatives - The company is advancing tokenization and digital asset initiatives, including partnerships for tokenized U.S. money market funds [5][18] - Management highlighted the launch of the MDT U.S. Equity UCITS Fund, which reported over $500 million in net sales since inception [8] - The firm is also marketing a Global Private Equity Co-Invest Fund and a new European Real Estate Debt Fund [14]