News Archives: November, 2025
Federated Hermes reported Q3'25 earnings Thursday night and hosted its Q3'25 earnings call on Friday morning. In the press release, President & CEO J. Christopher Donahue, says, "In the declining rate environment of the third quarter, investors with interest in capital preservation and liquidity continued to rely on our money market offerings. They also turned to our microshort and ultrashort funds, which are a step further out the yield curve and pursue higher yields than money market strategies."
The release tells us, "Fixed-income assets were a record $101.8 billion at Sept. 30, 2025, up $1.6 billion or 2% from $100.2 billion at Sept. 30, 2024 and up $3.1 billion or 3% from $98.7 billion at June 30, 2025. Top-selling fixed-income funds during Q3 2025 on a net basis were Federated Hermes Ultrashort Bond Fund, Federated Hermes Sustainable Global Investment Grade Credit Fund, Federated Hermes Municipal Ultrashort Fund, Federated Hermes Government Ultrashort Fund and Federated Hermes Short Term Income Fund."
It explains, "Money market assets were a record $652.8 billion at Sept. 30, 2025, up $59.8 billion or 10% from $593.0 billion at Sept. 30, 2024 and up $18.4 billion or 3% from $634.4 billion at June 30, 2025. Money market fund assets were a record $492.7 billion at Sept. 30, 2025, up $52.3 billion or 12% from $440.4 billion at Sept. 30, 2024 and up $24.7 billion or 5% from $468.0 billion at June 30, 2025."
Federated states, "Revenue increased $61.0 million or 15% primarily due to an increase in revenue resulting from higher average money market and equity assets. During Q3 2025, Federated Hermes derived 52% of its revenue from money market assets, 46% from long-term assets (29% from equity, 11% from fixed-income, and 6% from alternative/private markets and multi-asset) and 2% from sources other than managed assets. Operating expenses increased $43.3 million or 15% primarily due to a $17.7 million increase in distribution expenses resulting primarily from higher average managed money market fund assets, an increase in Other expense of $13.7 million primarily due to fluctuations in foreign currency exchange rates and a $8.5 million increase in Compensation and related expense primarily related to higher incentive compensation."
On the earnings call, Donahue comments, "Now turning to fixed income, assets increased by $3.1 billion from the prior quarter to reach a record high of $101.8 billion at the end of Q3. Fixed income total net sales improved by $4.1 billion, as we had $1.7 billion of net sales in the third quarter compared to net redemptions of $2.4 billion in the second quarter. Q3 net sales included about $1.4 billion from two large public entities that have regular sizable inflows and outflows. We had 24 fixed income funds with net sales in the third quarter, led by the three ultrashort funds with $579 billion combined, and the sustainable global investment-grade usage fund about $240 million."
He says, "This was occasioned by positives in Ultrashorts and Total Return Bond Fund that were overcome by negatives in high-yield bonds.... Fixed income is expected to have net redemptions of about $650 million, with wins of about $380 million in high yield and short duration offset by a single $1 billion high-yield redemption."
donahue tells the call, "Moving on to money markets, we reached another record high at the end of Q3 for total money market assets, which increased by $18 billion to reach $653 billion. Money market fund assets increased by $24.7 billion or 5% in Q3 to reach a record high of $492.7 billion. Money market separate accounts decreased by $6.3 billion in Q3, reflecting seasonal patterns."
He continues, "Market conditions remained favorable for cash as an asset class. In addition to the appeal of relative safety in periods of volatility, money market strategies present opportunities to earn attractive yields compared to alternatives such as bank deposits and direct investments in T-bills and commercial paper."
Donahue then comments, "We're also developing money market funds and share classes available in tokenized form and working with parties on digital asset infrastructure. These efforts include a planned GENIUS Act compliant money market fund designed to serve as collateral for stablecoins. Last week, we announced that we have made two of our UCITS money market funds, our Sterling Prime and U.S. Dollar Prime, available in tokenized form through Archax. Archax is a well-known digital assets operator in the U.K., having launched in 2018 and become the first FCA-regulated digital Securities Exchange broker-dealer and custodian."
He says, "This represents a Federated Hermes initial non-U.S. digital asset initiative. The Archax relationship complements our digital efforts, where we are the sub-adviser for the superstate short-duration U.S. government securities fund, a private tokenized fund with about $735 million in assets. We will also participate in the launch of a collaborative initiative between BNY and Goldman that will use blockchain technology to maintain a record of their customers' ownership of select money market funds, a significant step towards enhancing the utility and transferability of existing money market fund shares."
Donahue adds, "We are exploring numerous other additional digital asset opportunities. We are committed to the digital space where we expect ongoing innovation and growth. Our estimate of money market mutual fund market share, including sub-advised funds remained at about 7.11% at the end of the third quarter. Now looking at recent asset totals as of a few days ago, managed assets were approximately $865 billion, including $645 billion in money markets, $96 billion in equities, $102 billion in fixed income, $19 billion in alternatives, private markets, $3 billion in multi-asset. Money market mutual fund assets stood at $486 billion."
Finally, during the Q&A session, one analyst asks about expenses. CFO Tom Donahue responds, "Obviously, the digital things and money market stuff and other expansions, I don't see outsized expenses coming in here. And if they do, we would fully expect them to come with revenue shortly thereafter."
