It maintains an Average Parent rating.
Federated Hermes' diverse product lineup supports patience in tumultuous markets. Its money market business grew meaningfully during the recent period of rising interest rates, which helped offset underperformance and outflows from its equity and fixed-income divisions. As a result, while some of the firm's peers reduced headcount, Federated Hermes generally kept its talent through the turbulence.
The firm continues to integrate with sustainable investing shop Hermes Investment Management, which it acquired in 2021. Over the past few years, the firm has improved investors' use of environmental and social factors, and it continues to develop new sustainability-focused offerings, mostly for European clients.
Still, Federated Hermes has more to do to stay competitive. Some equity groups have struggled with personnel turnover and volatile performance, and while the firm is taking steps to remedy this, it remains to be seen how these changes play out. It was also slow to launch ETFs, which quickly became the top choice for new products in the US but constitute a tiny portion of the firm's assets under management. Finally, it faces pressure from fee compression; nearly half its share classes sport High or Above Average expenses.