Federated Hermes, Inc.

Good morning, ladies and gentlemen, and welcome to the Federated Hermes Q3 2021 Analyst Call and Webcast. At this time, all participants have been placed on a listen-only mode, and we will open the floor for your questions and comments after the presentation. It is now my pleasure to turn the floor over to your host, Ray Hanley, President of Federated Investors Management Company. Sir, the floor is yours.

Thank you and good morning and welcome. Leading today's call will be Chris Donahue, Federated Hermes CEO and President, and Tom Donahue, Chief Financial Officer. Joining us for the Q&A are Saka Nasebi, who is the CEO of the International Business of Federated Hermes, and Debbie Cunningham, our Chief Investment Officer for Money Markets. During today's call, we may make forward-looking statements, and we want to note that Federated Hermes' actual results may be materially different than the results implied by such statements. Please review the risk disclosures in our SEC filings. No assurance can be given to future results, and Federated Hermes assumes no duty to update any of these forward-looking statements. Chris?

Thank you, Ray, and good morning. I will review Federated Hermes' business performance, and Tom will comment on our financial results, including waivers. Q3 ended with a record long-term assets under management of $220 billion, including record assets in fixed income at $97 billion and in alternate private markets of $22 billion. Assets under advice by EOS at Federated Hermes were $1.7 trillion at the end of Q3. We added one new client in the third quarter and six new clients year-to-date. While equity fund flows were negative in the third quarter by $867 million, we saw positive net sales in 15 equity fund strategies and added about $400 million in equity assets from the Hancock Horizon transaction. Our equity fund performance compared to peers was solid. Using Morningstar data for trailing three years at the end of the third quarter, 50% of our equity funds were beating peers, and almost 20% were in the top quartile of their category. Equity SMAs had third quarter net redemptions of about 15 million, down from 160 million in Q2, down from 450 million in Q1, and down from 900 million in Q4 of 2020. the domestic strategic value dividend strategy had positive Q3 SMA sales of $34 million and slightly positive combined fund and SMA sales. For the first three weeks of Q4, equity funds and SMAs had net redemptions of about $463 million. Interestingly, about three-fourths of this was a tactical shift by one client. Now turning to fixed income. Q3 was another very solid quarter of net sales and performance. Assets increased by $6.4 billion, or 7% from the prior quarter, with nearly all the growth coming from net sales. Fixed income separate account net sales of $4.6 billion were driven by multi-sector strategies. Most of the Q3 separate account net sales came from a large public entity. Fixed income fund net sales of $1.7 billion were driven by short duration strategies of $1.4 billion with solid results in core total return strategies as well. That's about $360 million. We had 19 fixed income funds with net sales in the third quarter. Now, we're progressing towards the planned Q4 launch of our first two active, transparent ETFs, an investment-grade short-duration corporate bond fund and a high-yield short-duration bond fund. These initial offerings draw on our strengths in these areas, and we're focused on the successful launch and growth of these initial products while we also plan for additional ETF offerings. At the end of the third quarter, and using Morningstar data for the trailing three years, we had 28% of our funds in the top quartile and 44% above median. For the first three weeks of Q4, fixed income funds and SMAs had net sales of about $454 million. Now, in the alternative private market category, net sales were diversified across unconstrained credit, 568 million, absolute return credit, a little over 200 million, real estate, 180 million, and direct lending, 68 million. We began Q4 with about $1.4 billion in net institutional mandates yet to fund into both funds and separate accounts. These additions are expected to occur in fixed income and alternative private markets, including the aforementioned unconstrained credit, direct lending, and trade finance. Now, we are working on two new private markets products. We expect the initial closing for our new direct lending fund during Q4 for about $270 million and expect to raise additional assets in 2022. We're also working on a new private equity fund with an initial closing set for Q4. This will be a mix of existing clients rolling over to the new fund and some new clients. We expect around $300 million in the initial close with an additional capital raise to be expected to occur next year. Moving to money markets. Assets were down about $16 billion in Q3, with about $10 billion from funds and $6 billion from separate accounts. Our money market mutual fund market share, including subadvised funds, was about 7.2 percent at the end of Q3, down slightly from Q2 of 7.4%. While the Fed raised the administered rates in mid-June, the money fund yield curve remained flat and rates didn't change much in the third quarter. We believe that we will see higher short-term rates in 22. We continue to experience more waivers for competitive purposes. Tom will update this program, as I mentioned. Now taking a look at recent asset totals, managed assets were approximately $636 billion, including $413 billion in money markets, $99 billion in equities, $98 billion in fixed income, and $22 billion in the alternative private markets, and $4 billion in multi-asset. Money market mutual fund assets were $290 billion. With that, I'll turn it over to Tom. Okay, Chris, thank you.