Timing and Magnitude of Rate Cuts Will Influence Federated Hermes' Near-Term Results

Several issues have made it increasingly difficult for asset managers running predominantly active portfolios to generate positive organic growth in assets under management. Poor relative active investment performance, the growth and acceptance of low-cost index-based products, and the expanding power of the retail-advised channel are leaving them more dependent on market gains to increase managed assets. We believe there will always be room for active management, but the advantage of getting and retaining placement on platforms will go to asset managers with greater scale, established brands, solid long-term performance, and reasonable fees.