Earnings

Federated Hermes Restores Equity Net Sales After a Redemptions Quarter

The Tip Desk · October 31, 2026 · 3 min read

Diluted earnings were $1.50 a share as equity assets hit a record $110.5 billion and the firm posted $1.9 billion of equity net sales.

Federated Hermes, Inc. (FHI) reported diluted earnings of $1.50 a share for the third quarter of 2026, compared with $1.34 a year earlier, on net income of $111.9 million. The active investment manager also posted $1.9 billion of equity net sales, reversing a $1.1 billion net redemption in the second quarter, and lifted equity assets to a record $110.5 billion at Sept. 30, 2026.

President and chief executive officer J. Christopher Donahue said the firm generated positive net equity sales in the third quarter, including across its MDT suite of quantitative investment solutions, and that assets in MDT institutional separate accounts and MDT subadvised accounts, as well as total equity assets, reached record highs. Top-selling equity funds on a net basis included the MDT Large Cap Growth Fund, MDT Small Cap Core ETF, MDT All Cap Core Fund, MDT Large Cap Value Fund and U.S. Strategic Dividend ETF.

Equity assets were up $15.8 billion or 17% from $94.7 billion at Sept. 30, 2025. Equity market gains were a $874 million loss in the quarter, versus a $9.8 billion gain in the second quarter. Long-term assets overall recorded $2.4 billion of net sales, reversing a $1.7 billion net redemption in the prior quarter, and a $2.4 billion market loss versus a $10.8 billion gain in the second quarter.

Total managed assets were $884.4 billion at Sept. 30, 2026, down $27.2 billion or 3% from $911.6 billion at June 30, 2026, after a record $911.6 billion in the second quarter. Total average managed assets for the third quarter were $897.7 billion, up 4% from $859.5 billion a year earlier. Money market assets were $649.9 billion, down $27.0 billion or 4% from $676.9 billion at June 30; money market fund assets were $486.3 billion.

Revenue increased $37.9 million or 8% to $507.3 million from a year earlier, primarily due to higher average equity assets and the second-quarter acquisition of FCP Fund Manager, L.P., now operating as Federated Hermes FCP Manager, LLC. Investment advisory fees, net rose 12% to $346.8 million. The company derived 50% of revenue from long-term assets, 49% from money market assets and 1% from other sources.

Operating expenses increased $14.0 million or 4% to $354.0 million, driven by an $8.5 million rise in distribution expenses and a $7.1 million rise in compensation tied to FCP. Operating income rose 18% to $153.3 million. Nonoperating income (expenses), net decreased $12.1 million to a $1.2 million expense from $10.9 million of income a year earlier, on lower investment market gains and interest and dividend income.

Fixed-income assets were $99.4 billion at Sept. 30, 2026. Alternative/private markets assets were $21.7 billion, after a $2.6 billion or 14% sequential jump in the second quarter that included $3.2 billion from the FCP acquisition. Donahue said the company continued to see demand for alternative strategies, including MDT Market Neutral offerings, with alternative/private markets fund assets reaching record highs.

Separate-account long-term assets ended at $108.5 billion with $2.7 billion of net sales, versus a $2.8 billion net redemption in the second quarter. Fund long-term assets ended at $126.0 billion with a $306 million net redemption.

During the quarter, Federated Hermes purchased 992,312 shares of class B common stock for $57.4 million. The board declared a dividend of $0.38 a share, payable Nov. 13, 2026 to shareholders of record as of Nov. 6, 2026.

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