# FEDERATED HERMES, INC. (FHI)

Informational only - not investment advice.

CIK: 0001056288
SIC: 6282 Investment Advice
SIC breadcrumb: [Finance, Insurance, And Real Estate](/division/H/) > [Security And Commodity Brokers, Dealers, Exchanges, And Services](/major-group/62/) > [SIC 6282 Investment Advice](/industry/6282/)
Latest 10-K filed: 2026-02-27
SEC page: https://www.sec.gov/edgar/browse/?CIK=1056288
Filing source: https://www.sec.gov/Archives/edgar/data/1056288/000105628826000007/fhi-20251231.htm

## At a glance

FY2025 · period end 2025-12-31 · filed 2026-02-27 · accession 0001056288-26-000007 · source: https://data.sec.gov/api/xbrl/companyfacts/CIK0001056288.json

| Metric | Value | FY | Provenance |
| --- | ---: | ---: | --- |
| Revenue | 1,800,663,000 USD | 2025 | verified |
| Net income | 403,299,000 USD | 2025 | verified |
| Assets | 2,229,337,000 USD | 2025 | verified |
| Free cash flow | 294,583,000 USD | 2025 | computed |
| Net margin | 22.40% | 2025 | computed |
| Operating margin | 28.54% | 2025 | computed |
| Revenue YoY | +10.33% | 2025 | computed |
| ROE | 33.69% | 2025 | computed |

Computed values are grepcent-computed from the verified facts above and may differ from ratios the company itself reports. Free cash flow = operating cash flow − capital expenditures. Net margin = net income ÷ revenue. Operating margin = operating income ÷ revenue. Revenue YoY = FY2025 revenue ÷ FY2024 revenue − 1 (consecutive fiscal years only). ROE = net income ÷ period-end stockholders' equity.

No market price, no rating, no forecast on this site. Not investment advice.

### Peer percentile fingerprint

| Ratio | FHI | Peer median | Percentile | N |
| --- | ---: | ---: | ---: | ---: |
| Net margin | 22.4% | 15.3% | 73 | 34 |
| Operating margin | 28.5% | 21.8% | 68 | 20 |
| Revenue growth | 10.3% | 7.6% | 64 | 34 |
| FCF margin | 16.4% | 20.2% | 39 | 29 |
| ROE | 33.7% | 15.5% | 82 | 34 |
| ROA | 18.1% | 4.8% | 97 | 35 |
| Liabilities / equity | 0.81 | 1.57 | 27 | 34 |

Percentile = share of the N covered peers reporting that ratio whose value is lower (ties counted half); computed among grepcent-covered companies in SIC industry 6282 Investment Advice, not the whole market. A higher percentile means a higher value of the ratio, not a better company. Ratios with fewer than 8 reporting peers are omitted. Latest reported values per company; fiscal periods may differ. Descriptive arithmetic - not a score, rating, or ranking.

## Selected Fundamentals
| Metric | Value | Unit | FY | Filed |
| --- | ---: | --- | ---: | --- |
| Revenue | 1800663000 | USD | 2025 | 2026-02-27 |
| Net income | 403299000 | USD | 2025 | 2026-02-27 |
| Assets | 2229337000 | USD | 2025 | 2026-02-27 |

## Financials

Annual standardized facts from SEC companyfacts as of latest extracted filing date 2026-02-27. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0001056288.json. Derived margins, ratios, and free cash flow are computed from the extracted annual SEC facts.

| Metric | 2008 | 2009 | 2010 | 2011 | 2012 | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | 2025 |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Revenue |  |  |  |  |  | 1,143,371,000 | 1,102,924,000 | 1,135,677,000 | 1,326,894,000 | 1,448,268,000 | 1,300,447,000 | 1,445,814,000 | 1,609,574,000 | 1,632,093,000 | 1,800,663,000 |
| Net income |  |  |  |  |  | 208,919,000 | 291,341,000 | 220,297,000 | 272,339,000 | 326,364,000 | 270,293,000 | 239,496,000 | 298,980,000 | 268,314,000 | 403,299,000 |
| Operating income |  |  |  |  |  | 335,683,000 | 341,508,000 | 330,280,000 | 347,927,000 | 418,151,000 | 366,272,000 | 336,796,000 | 387,549,000 | 361,467,000 | 513,882,000 |
| Diluted EPS |  |  | 1.73 | 1.45 |  |  |  | 2.18 | 2.69 | 3.23 | 2.75 | 2.65 | 3.40 | 3.23 | 5.13 |
| Operating cash flow |  |  |  |  |  | 265,671,000 | 387,375,000 | 206,282,000 | 334,940,000 | 373,241,000 | 170,383,000 | 323,948,000 | 311,831,000 | 346,554,000 | 297,345,000 |
| Capital expenditures |  |  |  |  |  | 12,839,000 | 9,799,000 | 17,274,000 | 15,045,000 | 13,500,000 | 10,421,000 | 4,372,000 | 7,915,000 | 4,024,000 | 2,762,000 |
| Dividends paid | 375,651,000 | 98,499,000 | 228,651,000 | 99,960,000 | 256,750,000 |  |  |  |  |  |  | 97,915,000 | 98,093,000 | 184,811,000 | 104,872,000 |
| Share buybacks |  |  |  |  |  | 81,771,000 | 48,642,000 | 29,247,000 | 15,740,000 | 66,759,000 | 228,349,000 | 218,141,000 | 177,066,000 | 137,615,000 | 262,775,000 |
| Assets |  |  |  |  |  | 1,155,107,000 | 1,231,410,000 | 1,543,683,000 | 1,880,131,000 | 2,060,839,000 | 2,018,187,000 | 2,020,479,000 | 2,101,844,000 | 2,084,684,000 | 2,229,337,000 |
| Liabilities |  |  |  |  |  | 527,961,000 | 440,032,000 | 504,049,000 | 626,765,000 | 686,855,000 | 840,968,000 | 912,966,000 | 947,747,000 | 933,964,000 | 965,860,000 |
| Stockholders' equity |  |  |  |  |  | 594,826,000 | 761,215,000 | 857,121,000 | 1,041,280,000 | 1,136,997,000 | 1,114,017,000 | 1,045,692,000 | 1,128,252,000 | 1,095,206,000 | 1,196,948,000 |
| Cash and cash equivalents |  |  |  |  |  | 104,839,000 | 316,264,000 | 156,832,000 | 249,174,000 | 301,819,000 | 233,327,000 | 336,782,000 | 383,180,000 | 504,441,000 | 582,542,000 |
| Free cash flow |  |  |  |  |  | 252,832,000 | 377,576,000 | 189,008,000 | 319,895,000 | 359,741,000 | 159,962,000 | 319,576,000 | 303,916,000 | 342,530,000 | 294,583,000 |

### Ratios

ROE and ROA use period-end equity/assets. Liabilities / equity uses total liabilities divided by stockholders' equity. Current ratio uses current assets divided by current liabilities when both are reported.

| Metric | 2008 | 2009 | 2010 | 2011 | 2012 | 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | 2025 |
| --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: |
| Net margin |  |  |  |  |  | 18.27% | 26.42% | 19.40% | 20.52% | 22.53% | 20.78% | 16.56% | 18.58% | 16.44% | 22.40% |
| Operating margin |  |  |  |  |  | 29.36% | 30.96% | 29.08% | 26.22% | 28.87% | 28.17% | 23.29% | 24.08% | 22.15% | 28.54% |
| Return on equity |  |  |  |  |  | 35.12% | 38.27% | 25.70% | 26.15% | 28.70% | 24.26% | 22.90% | 26.50% | 24.50% | 33.69% |
| Return on assets |  |  |  |  |  | 18.09% | 23.66% | 14.27% | 14.49% | 15.84% | 13.39% | 11.85% | 14.22% | 12.87% | 18.09% |
| Liabilities / equity |  |  |  |  |  | 0.89 | 0.58 | 0.59 | 0.60 | 0.60 | 0.75 | 0.87 | 0.84 | 0.85 | 0.81 |
| Current ratio |  |  |  |  |  | 2.21 | 3.39 | 1.68 | 2.00 | 2.17 | 2.07 | 2.53 | 2.51 | 2.70 | 2.75 |

## As-reported value updates

2 tracked differences above grepcent's stated thresholds were found between the earliest XBRL-filed value and the value currently on file for the same fiscal period.

Ledger: /company/FHI/revisions/


## Quarterly

Quarterly standardized facts from SEC companyfacts as of latest extracted filing date 2026-07-31. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0001056288.json.

Flow metrics use discrete quarter-length periods from 10-Q/10-Q/A filings. Q4 revenue and net income are derived only when annual FY and nine-month YTD facts exist for the same fiscal year; derived Q4 values are labeled. EPS Q4 is not derived.

| Quarter | End date | Revenue | Net income | Diluted EPS | Method |
| --- | --- | ---: | ---: | ---: | --- |
| 2022-Q3 | 2022-09-30 |  |  | 0.78 | reported discrete quarter |
| 2023-Q1 | 2023-03-31 |  |  | 0.78 | reported discrete quarter |
| 2023-Q2 | 2023-06-30 |  |  | 0.81 | reported discrete quarter |
| 2023-Q3 | 2023-09-30 | 402,656,000 | 75,026,000 | 0.86 | reported discrete quarter |
| 2023-Q4 | 2023-12-31 | 391,497,000 | 82,178,000 |  | derived Q4 = FY annual - nine-month YTD |
| 2024-Q1 | 2024-03-31 | 396,371,000 | 75,033,000 | 0.89 | reported discrete quarter |
| 2024-Q2 | 2024-06-30 | 402,583,000 | 21,027,000 | 0.20 | reported discrete quarter |
| 2024-Q3 | 2024-09-30 | 408,456,000 | 87,538,000 | 1.06 | reported discrete quarter |
| 2024-Q4 | 2024-12-31 | 424,683,000 | 84,716,000 |  | derived Q4 = FY annual - nine-month YTD |
| 2025-Q1 | 2025-03-31 | 423,540,000 | 101,134,000 | 1.25 | reported discrete quarter |
| 2025-Q2 | 2025-06-30 | 424,844,000 | 91,000,000 | 1.16 | reported discrete quarter |
| 2025-Q3 | 2025-09-30 | 469,446,000 | 104,126,000 | 1.34 | reported discrete quarter |
| 2025-Q4 | 2025-12-31 | 482,833,000 | 107,039,000 |  | derived Q4 = FY annual - nine-month YTD |
| 2026-Q1 | 2026-03-31 | 478,957,000 | 96,378,000 | 1.27 | reported discrete quarter |
| 2026-Q2 | 2026-06-30 | 502,776,000 | 104,318,000 | 1.38 | reported discrete quarter |

## Filed narrative (10-K & 10-Q)

## Business

Verbatim Item 1 Business section from FHI's latest 10-K: [/company/FHI/business/](/company/FHI/business/).

## Risk Factors

Verbatim Item 1A Risk Factors from FHI's latest 10-K: [/company/FHI/risk-factors/](/company/FHI/risk-factors/).

## Latest quarter (10-Q)

Latest 10-Q source: https://www.sec.gov/Archives/edgar/data/1056288/000105628826000026/fhi-20260630.htm

Extracted from a substantive MD&A body after the formal Item 2 span was a TOC or reference stub.
Confidence: high
Filing date: 2026-07-31
Report date: 2026-06-30

Results of Operations

Revenue. Revenue increased $77.9 million for the three-month period ended June 30, 2026, as compared to the same period in 2025, primarily due to (1) an increase in equity revenue of $33.5 million due to an increase in average equity assets, (2) an increase in money market revenue of $26.2 million due to an increase in average money market assets and (3) a $13.9 million increase due to the acquisition of FCP.

Revenue increased $133.3 million for the six-month period ended June 30, 2026, as compared to the same period in 2025, primarily due to (1) an increase in money market revenue of $59.5 million due to an increase in average money market assets, (2) an increase in equity revenue of $58.6 million due to an increase in average equity assets and (3) a $13.9 million increase due to the acquisition of FCP.

For the six-month periods ended June 30, 2026 and 2025, Federated Hermes’ ratio of revenue to average managed assets was 0.21% and 0.20%, respectively. The increase in the rate was primarily due to an increase in revenue from higher average equity assets and a change in the mix of asset classes of money market assets during the first six months of 2026 compared to the same period in 2025.

Operating Expenses. Total Operating Expenses for the three-month period ended June 30, 2026 increased $62.1 million, as compared to the same period in 2025. Distribution expense increased $22.4 million primarily due to higher average money market fund assets. Compensation and Related expense increased $16.7 million primarily due to FCP-acquisition-related compensation ($6.5 million) and an increase of $5.0 million in regular compensation, including FCP compensation. Other expense increased $9.2 million primarily due to fluctuations in foreign currency exchange rates. Professional Service Fees increased $7.0 million primarily due to fees of $4.7 million incurred as a result of the acquisition of FCP. Intangible Asset Related expense increased $2.9 million primarily due to $3.0 million of amortization of intangible assets associated with the FCP acquisition.

Total Operating Expenses for the six-month period ended June 30, 2026 increased $123.0 million, as compared to the same period in 2025. Distribution expense increased $49.0 million primarily due to higher average money market fund assets. Compensation and Related expense increased $27.5 million primarily due to (1) higher incentive compensation ($10.5 million), (2) an increase of $6.8 million in regular compensation, including FCP compensation and (3) FCP-acquisition-related compensation ($6.5 million). Other expense increased $27.4 million primarily due to (1) a value added tax (VAT) refund received in 2025 related to amended VAT filings in the U.K. ($12.9 million) and (2) fluctuations in foreign currency exchange rates ($12.2 million). Professional Service Fees increased $9.8 million primarily due to fees incurred as a result of the acquisition of FCP ($6.2 million) and an increase in costs related to global technology projects ($2.2 million). Intangible Asset Related expense increased $3.1 million primarily due to $3.0 million of amortization of intangible assets associated with the FCP acquisition.

Nonoperating Income (Expenses). Nonoperating Income (Expenses), net decreased $2.6 million for the three-month period ended June 30, 2026, as compared to the same period in 2025. The decrease is primarily due to a $2.0 million decrease in Investment Income, net.

Nonoperating Income (Expenses), net decreased $3.4 million for the six-month period ended June 30, 2026, as compared to the same period in 2025. The decrease is primarily due to (1) a $2.3 million decrease in Investment Income, net and (2) a $1.2 million decrease in Gain (Loss) on Securities, net from a smaller increase in the market value of investments in the first six months of 2026 compared to the increase in the market value of investments during the same period in 2025.

Income Taxes. The income tax provision was $37.2 million for the three-month period ended June 30, 2026, as compared to $34.1 million for the same period in 2025. The increase in the income tax provision was primarily due to increased U.S. pre-tax income in 2026. The effective tax rate was 25.8% for the three-month period ended June 30, 2026, as compared to 26.1% for the same period in 2025. The decrease in the effective tax rate was primarily due to a valuation allowance on foreign deferred tax assets and lower foreign losses in the three-month period ended June 30, 2026 as compared to the same period in 2025.

The income tax provision was $71.0 million for the six-month period ended June 30, 2026, as compared to $66.3 million for the same period in 2025. The increase in the income tax provision was primarily due to increased U.S. pre-tax income in 2026. The effective tax rate was 25.9% for the six-month period ended June 30, 2026, as compared to 24.8% for the same period in 2025.

45

Table of Contents

[[GREPCENT_TABLE]]
[["Management's Discussion and Analysis (continued)"],["of Financial Condition and Results of Operations (unaudited)"]]
[[/GREPCENT_TABLE]]

The increase in the effective tax rate was primarily due to a valuation allowance on foreign deferred tax assets and increased foreign losses in the six months ended June 30, 2026 as compared to the same period in 2025.

Pillar Two legislation has been enacted in certain jurisdictions in which Federated Hermes operates. The legislation was effective for the year beginning January 1, 2024. Federated Hermes is in scope of the enacted legislation and has performed an assessment of its potential exposure to Pillar Two income taxes based on the most recent tax filings, country-by-country report and financial statements for the constituent entities of Federated Hermes. Based on the assessment, for fiscal years 2026, 2025 and 2024, Federated Hermes expects to be able to rely on the transitional safe harbor for each of the jurisdictions in which it operates. As a result, Federated Hermes does not expect a material exposure to Pillar Two income taxes in those jurisdictions. This assessment will continue to be monitored and updated as additional guidance and/or legislation is released.

Net Income Attributable to Federated Hermes, Inc. Net income increased $13.3 million for the three-month period ended June 30, 2026, as compared to the same period in 2025, primarily as a result of the changes in revenues, expenses, nonoperating income (expenses) and income taxes noted above. Diluted earnings per share for the three-month period ended June 30, 2026 increased $0.22, as compared to the same period in 2025, due to increased net income ($0.16) and a decrease in the shares outstanding resulting from share repurchases ($0.06).

Net income increased $8.6 million for the six-month period ended June 30, 2026, as compared to the same period in 2025, primarily as a result of the changes in revenues, expenses, nonoperating income (expenses) and income taxes noted above. Diluted earnings per share for the six-month period ended June 30, 2026 increased $0.25, as compared to the same period in 2025, due to a decrease in shares outstanding resulting from share repurchases ($0.14) and increased net income ($0.11).

Liquidity and Capital Resources

Liquid Assets. At June 30, 2026, liquid assets, net of noncontrolling interests, consisting of cash and cash equivalents, investments and receivables, totaled $537.5 million, as compared to $769.4 million at December 31, 2025. The change in liquid assets is discussed below.

At June 30, 2026, Federated Hermes’ liquid assets included investments in certain money market and fluctuating-value Federated Hermes Funds that may have direct and/or indirect exposures to international sovereign debt and currency risks. Federated Hermes continues to actively monitor its investment portfolios to manage sovereign debt and currency risks with respect to certain European countries, China and certain other countries subject to economic sanctions. Federated Hermes’ experienced portfolio managers and analysts work to evaluate credit risk through quantitative and fundamental analysis. Further, regarding international exposure, certain money market funds (representing approximately $266 million in AUM) that meet the requirements of Rule 2a-7 under the 1940 Act (Rule 2a-7) or operate in accordance with requirements similar to those in Rule 2a-7, include holdings with indirect short-term exposures invested primarily in high-quality international bank names that are subject to Federated Hermes’ credit analysis process.

Cash Provided by Operating Activities. Net cash provided by operating activities totaled $109.7 million for the six months ended June 30, 2026, as compared to $33.1 million for the same period in 2025. The increase in cash provided was primarily due to (1) an increase in cash received related to the $133.3 million increase in revenue previously discussed and (2) an increase of $51.7 million in cash due to a decrease in net purchases of trading securities for the six months ended June 30, 2026 as compared to the same period in 2025. These were partially offset by (1) an increase in cash paid related to the $49.0 million increase in Distribution expense previously discussed and (2) an increase of $21.9 million in cash paid for incentive compensation for the six months ended June 30, 2026 as compared to the same period in 2025.

Cash Used by Investing Activities. During the six-month period ended June 30, 2026, net cash used by investing activities was $215.1 million due primarily to cash paid for the FCP acquisition, net of cash acquired. See Note (4) to the Consolidated Financial Statements for additional information on the FCP acquisition.

Cash Used by Financing Activities. During the six-month period ended June 30, 2026, net cash used by financing activities was $174.2 million due primarily to (1) $128.7 million of treasury stock purchases, (2) $54.7 million or $0.72 per share of dividends paid to holders of Federated Hermes common shares and (3) $13.9 million of distributions to noncontrolling interests in subsidiaries. These were partially offset by $22.8 million of contributions from noncontrolling interests in subsidiaries.

Borrowings. On March 17, 2022, pursuant to the Note Purchase Agreement, Federated Hermes issued unsecured senior Notes in the aggregate amount of $350 million at a fixed interest rate of 3.29% per annum, payable semiannually in arrears in March and September in each year of the agreement. The entire principal amount of the $350 million Notes will become due March 17, 2032. Citigroup Global Markets Inc. and PNC Capital Markets LLC acted as lead placement agents in relation to the

46

Table of Contents

[[GREPCENT_TABLE]]
[["Management's Discussion and Analysis (continued)"],["of Financial Condition and Results of Operations (unaudited)"]]
[[/GREPCENT_TABLE]]

$350 million Notes and certain subsidiaries of Federated Hermes are guarantors of the obligations owed under the Note Purchase Agreement. As of June 30, 2026, the outstanding balance of the $350 million Notes, net of unamortized issuance costs in the amount of $1.5 million, was $348.5 million and was recorded in Long-Term Debt on the Consolidated Balance Sheets. The proceeds were, or will be, used to supplement cash flow from operations, to fund share repurchases and potential acquisitions, to pay down outstanding debt and for other general corporate purposes. See Note (11) to the Consolidated Financial Statements for additional information on the Note Purchase Agreement.

As of June 30, 2026, Federated Hermes’ Credit Agreement consists of a $350 million revolving credit facility with an additional $225 million available via an optional increase (or accordion) feature. Borrowings under the Credit Agreement may be used for general corporate purposes including cash payments related to acquisitions, dividends, investments and share

[Excerpt truncated for page length; source filing is linked above.]

## Latest 10-K MD&A (excerpt)

Latest 10-K Item 7 source: https://www.sec.gov/Archives/edgar/data/1056288/000105628826000007/fhi-20251231.htm
Complete FY 2025 MD&A: /company/FHI/mda/fy2025/

Extracted structurally from real Item 7 body heading to real Item 7A/8 boundary. Published MD&A gate trimmed front/tail over-capture.
Confidence: high
Filing date: 2026-02-27
Report date: 2025-12-31

ITEM 7 – MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with Item 1- Business, Item 1A – Risk Factors and Item 8 – Financial Statements and Supplementary Data.

General

Federated Hermes is a global leader in active investing with $902.6 billion in managed assets as of December 31, 2025. The majority of Federated Hermes’ revenue is derived from advising Federated Hermes Funds and Separate Accounts in domestic and international public and private markets. Federated Hermes also derives revenue from providing administrative and other fund-related services (including distribution and shareholder servicing) as well as stewardship, real estate development and renewable energy project development services. For additional information on Federated Hermes’ markets, see Item 1 – Business – Distribution Channels and Product Markets.

Investment advisory fees, administrative service fees and certain fees for other services, such as distribution and shareholder service fees, are contract-based and are generally calculated as a percentage of the average net assets of managed investment portfolios. Federated Hermes’ revenue is primarily dependent upon factors that affect the value of managed/serviced assets, including market conditions and the ability to attract and retain assets. Generally, managed assets in Federated Hermes’ public market investment products and strategies (together with other offered services, as applicable, offerings) can be redeemed or withdrawn at any time with no advance notice requirement, while managed assets in Federated Hermes’ private market investment offerings are subject to restrictions on withdrawals. Fee rates for Federated Hermes’ services generally vary by asset and service type and can vary based on changes in asset levels. Generally, advisory fees charged for services provided to multi-asset and equity offerings are higher than advisory fees charged to alternative/private markets and fixed-income offerings, which in turn are higher than advisory fees charged to money market offerings. Likewise, Federated Hermes Funds typically have higher advisory fees than Separate Accounts. Similarly, revenue is also dependent upon the relative composition of average AUM across both asset and offering types. Federated Hermes can implement fee waivers, rebates or expense reimbursements for competitive reasons such as to maintain positive or zero net yields (Voluntary Yield-related Fee Waivers), to maintain certain fund expense ratios, to meet regulatory requirements or to meet contractual requirements (collectively, Fee Waivers). Since Federated Hermes’ public market offerings are largely distributed and serviced through financial intermediary customers, Federated Hermes makes payments, out of its reasonable profits and other resources, to the financial intermediary customers that sell these offerings. These payments are generally calculated as a percentage of net assets attributable to the applicable financial intermediary and represent the vast majority of Distribution expense on the Consolidated Statements of Income. Certain components of Distribution expense can vary depending upon the asset type, distribution channel and/or the size of the customer relationship. Federated Hermes generally pays out a larger portion of the revenue earned from managed assets in money market, multi-asset, and fixed-income funds than the revenue earned from managed assets in equity and alternative/private markets funds.

Federated Hermes’ most significant operating expenses are Compensation and Related expense and Distribution expense. Compensation and Related expense includes base salary and wages, incentive compensation and other employee expenses, including payroll taxes and benefits. Incentive compensation, which includes share-based compensation, can vary depending on various factors including, but not limited to, the overall results of operations of Federated Hermes, investment management performance and sales performance.

The discussion and analysis of Federated Hermes’ financial condition and results of operations are based on Federated Hermes’ Consolidated Financial Statements. Federated Hermes operates in one operating segment, the investment management business. Management analyzes all expected revenue and expenses and considers market demands in determining an overall fee structure for services provided and in evaluating the addition of new business. Federated Hermes’ growth and profitability are dependent upon its ability to attract and retain AUM and upon the profitability of those assets, which is impacted, in part, by Fee Waivers. Fees for mutual fund-related services are ultimately subject to the approval of the independent directors or trustees of the mutual funds and, as required by law, fund shareholders. Management believes that meaningful indicators of Federated Hermes’ financial performance include AUM, gross and net offering sales, total revenue and net income, both in total and per diluted share.

42

Business Developments

Business Combination

On April 7, 2025, FHL acquired a majority (60%) equity interest in Rivington Energy Management Limited (Rivington), a U.K.-based renewable energy project development business. See Note (3) to the Consolidated Financial Statements for additional information.

On October 23, 2025, Federated Hermes entered into an agreement to acquire a majority (80%) interest in FCP Fund Manager, L.P. (FCP), a U.S.-based real estate investment manager. The transaction is expected to be completed in the second quarter 2026. See Note (3) to the Consolidated Financial Statements for additional information.

Current Regulatory Environment

With Federated Hermes’ global operations, Federated Hermes, and certain of its subsidiaries and offerings (such as the Federated Hermes Funds), are registered with or licensed by, and subject to examination by, various U.S. and/or non-U.S. regulators, self-regulatory agencies or exchanges, such as, among others, the SEC, FINRA, CFTC, DOL, NYSE, FCA, CBI, CIMA, Monetary Authority of Singapore, ASIC and CSSF.

Federated Hermes’ business and offerings are subject to various U.S. and/or non-U.S. laws, regulations, rules, codes, notices, directives, guidelines, listing standards, judicial decisions, orders, circulars and/or conditions. See Item 1 – Business – Regulatory Matters and Item 1A – Risk Factors – General Risk Factors – Regulatory and Legal Risks – Potential Adverse Effects of Changes in Laws, Regulations and Other Regulatory Requirements for additional information.

43

Asset Highlights

Managed Assets at Period End

[[GREPCENT_TABLE]]
[["in millions as of December 31,","","2025","","2024","","2025 vs. 2024"],["By Asset Class"],["Equity","","$","97,898","","","$","79,423","","","23","%"],["Fixed-Income","","100,127","","","98,059","","","2"],["Alternative / Private Markets","","19,101","","","18,864","","","1"],["Multi-Asset","","2,854","","","2,883","","","(1)"],["Total Long-Term Assets","","219,980","","","199,229","","","10"],["Money Market","","682,604","","","630,349","","","8"],["Total Managed Assets","","$","902,584","","","$","829,578","","","9","%"],["By Offering Type"],["Funds:"],["Equity","","$","54,988","","","$","43,752","","","26","%"],["Fixed-Income","","45,973","","","45,550","","","1"],["Alternative / Private Markets","","12,085","","","11,501","","","5"],["Multi-Asset","","2,850","","","2,764","","","3"],["Total Long-Term Assets","","115,896","","","103,567","","","12"],["Money Market","","508,403","","","461,720","","","10"],["Total Fund Assets","","624,299","","","565,287","","","10"],["Separate Accounts:"],["Equity","","42,910","","","35,671","","","20"],["Fixed-Income","","54,154","","","52,509","","","3"],["Alternative / Private Markets","","7,016","","","7,363","","","(5)"],["Multi-Asset","","4","","","119","","","(97)"],["Total Long-Term Assets","","104,084","","","95,662","","","9"],["Money Market","","174,201","","","168,629","","","3"],["Total Separate Account Assets","","278,285","","","264,291","","","5"],["Total Managed Assets","","$","902,584","","","$","829,578","","","9","%"]]
[[/GREPCENT_TABLE]]

44

Average Managed Assets

[[GREPCENT_TABLE]]
[["in millions for the years ended December 31,","","2025","","2024","","2023","","2025 vs. 2024","","2024 vs. 2023"],["By Asset Class"],["Equity","","$","88,627","","","$","79,893","","","$","81,348","","","11","%","","(2)","%"],["Fixed-Income","","99,446","","","96,773","","","89,079","","","3","","","9"],["Alternative / Private Markets","","19,474","","","20,250","","","21,096","","","(4)","","","(4)"],["Multi-Asset","","2,853","","","2,902","","","2,887","","","(2)","","","1"],["Total Long-Term Assets","","210,400","","","199,818","","","194,410","","","5","","","3"],["Money Market","","643,025","","","588,653","","","511,568","","","9","","","15"],["Total Average Managed Assets","","$","853,425","","","$","788,471","","","$","705,978","","","8","%","","12","%"],["By Offering Type"],["Funds:"],["Equity","","$","49,538","","","$","43,380","","","$","43,314","","","14","%","","0","%"],["Fixed-Income","","45,636","","","44,600","","","43,482","","","2","","","3"],["Alternative / Private Markets","","12,049","","","12,292","","","12,999","","","(2)","","","(5)"],["Multi-Asset","","2,758","","","2,766","","","2,749","","","0","","","1"],["Total Long-Term Assets","","109,981","","","103,038","","","102,544","","","7","","","0"],["Money Market","","475,501","","","429,273","","","365,500","","","11","","","17"],["Total Average Fund Assets","","585,482","","","532,311","","","468,044","","","10","","","14"],["Separate Accounts:"],["Equity1","","39,089","","","36,513","","","38,034","","","7","","","(4)"],["Fixed-Income","","53,810","","","52,173","","","45,597","","","3","","","14"],["Alternative / Private Markets","","7,425","","","7,958","","","8,097","","","(7)","","","(2)"],["Multi-Asset1","","95","","","136","","","138","","","(30)","","","(1)"],["Total Long-Term Assets","","100,419","","","96,780","","","91,866","","","4","","","5"],["Money Market","","167,524","","","159,380","","","146,068","","","5","","","9"],["Total Average Separate Account Assets","","267,943","","","256,160","","","237,934","","","5","","","8"],["Total Average Managed Assets","","$","853,425","","","$","788,471","","","$","705,978","","","8","%","","12","%"]]
[[/GREPCENT_TABLE]]

1) A Separate Account was reclassified from Multi-Asset to Equity effective October 1, 2025.

45

Changes in Equity Fund and Separate Account Assets

[Excerpt truncated for page length; the complete text is on the linked full-MD&A page.]

Read the full FY 2025 MD&A: /company/FHI/mda/fy2025/
All MD&A years: /company/FHI/mda/


## MD&A history

Prior-year 10-K MD&A spans are extracted from SEC filings with the same bounded parser used for the latest filing. Each year's full verbatim text is on its own sub-page.

- [FY 2024 MD&A](/company/FHI/mda/fy2024/): filed 2025-02-28; accession 0001056288-25-000004 (https://www.sec.gov/Archives/edgar/data/1056288/000105628825000004/fhi-20241231.htm)
- [FY 2023 MD&A](/company/FHI/mda/fy2023/): filed 2024-02-23; accession 0001056288-24-000006 (https://www.sec.gov/Archives/edgar/data/1056288/000105628824000006/fhi-20231231.htm)
- [FY 2022 MD&A](/company/FHI/mda/fy2022/): filed 2023-02-24; accession 0001056288-23-000006 (https://www.sec.gov/Archives/edgar/data/1056288/000105628823000006/fhi-20221231.htm)
- [FY 2021 MD&A](/company/FHI/mda/fy2021/): filed 2022-02-25; accession 0001056288-22-000010 (https://www.sec.gov/Archives/edgar/data/1056288/000105628822000010/fhi-20211231.htm)




## Macro cross-references

Indicators mapped to this company's SIC classification (industry 6282 Investment Advice) by grepcent's deterministic macro-sector crosswalk. A navigational mapping, not a statistical or causal claim.

- [FEDFUNDS](/indicator/FEDFUNDS/): Federal Funds Effective Rate
- [DGS2](/indicator/DGS2/): Market Yield on U.S. Treasury Securities at 2-Year Constant Maturity
- [DGS10](/indicator/DGS10/): Market Yield on U.S. Treasury Securities at 10-Year Constant Maturity
- [T10Y2Y](/indicator/T10Y2Y/): 10-Year Treasury Constant Maturity Minus 2-Year Treasury Constant Maturity
- [M2SL](/indicator/M2SL/): M2

Macro-to-micro threads including this sector: [Interest rates & the Fed](/thread/interest-rates-fed/), [Money & trade](/thread/money-trade/), [Consumer & credit](/thread/consumer-credit/), [Government finances](/thread/government-finances/), [Sector employment](/thread/sector-employment/).

All macro indicators: /indicators/


## For LLMs & downloads

Markdown twin: /company/FHI.md · JSON record: /company/FHI.json · verified financials: /company/FHI/financials.json / /company/FHI/financials.csv · machine TOC for the whole site: /llms.txt