Federated Hermes, Inc.

Greetings. Welcome to the Federated Hermes Q1 Analyst Call and Webcast. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note this conference is being recorded. I will now turn the conference over to your host, Ray Hanley, President of Federated Investors Management Company. You may begin.

Thank you, and welcome to all. Thank you for joining us. Leading today's call will be Chris Donahue, CEO and President of Federated Hermes, and Tom Donahue, Chief Financial Officer. Joining us for the Q&A are Sacra Nasebi, CEO of Federated Hermes Limited, and Debbie Cunningham, our Chief Investment Officer for MoneyMarkets. 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 as to future results, and Federated Hermes assumes no duty to update any of these forward-looking statements. Chris?

Thank you, and good morning. I will review Federated Hermes' business performance. Tom will comment on the financial results. We ended Q1 with record assets under management of $907 billion led by gains in equity and money market strategies. Equity assets closed Q1 at a record high of $101 billion. During Q1, equity assets increased by $2.9 billion or 3% from year end, driven by $2.2 billion in net sales. Gross equity sales reached a record high of $9.1 billion in Q1. Equity sales results continue to be led by our MDT fundamental quant strategies. MDT equity and market neutral strategies together had a record $5.8 billion of gross sales and over $3.5 billion in net sales in Q1. For the second quarter through April 24th, These MDT strategies had net sales in combined funds and SMAs of 687 million. Now looking at fund performance rankings as of March 31st, seven of nine MDT fund strategies are in the top performance quartile of their Morningstar categories for trailing three years. We also had net sales in 32 equity fund and SMA strategies during the first quarter, including, of course, a variety of MDT offerings and the Asia X Japan Fund and the Strategic Value SMA. MDT's offerings were mid-cap growth and large-cap growth, plus five others. Importantly, for our global efforts, the MDT U.S. Equity Usage Fund, launched in June of 2005, has seen strong demand from clients outside of the U.S. Net sales in this strategy were $177 million in the first quarter, and the fund has grown to about $800 million in assets. Looking at overall equity fund performance at the end of the first quarter, and again using Morningstar data for trailing three years, 51% of our equity funds were beating peers, and 30% were in the top quartile of their category. For Q2 through April 24th, combined equity funds and SMAs had net sales of $606 million. Now turning to fixed income. Assets ended Q1 at just under $100 billion, down $329 million from year end. Fixed income had Q1 net redemptions of $422 million. However, we had 25 fixed income funds and SMAs with net sales in the first quarter, led by three ultra-short funds, total return bond fund, the collective and the fund combined, short-term income, and our core ag and core plus SMAs. Regarding performance at the end of the first quarter and using Morningstar data for trailing three years, 41% of our fixed income funds were beating peers. 21% were in the top quartile of their category. For Q2 through April 24th, combined fixed income funds and SMAs had net redemptions of $214 million. In the alternative private markets category, assets decreased slightly in Q1 compared to year end as the impact of FX rates offset net sales of 82 million. The MDT market neutral fund and recently launched ETF combined for 341 million in net sales. Positive net sales were also achieved in trade finance strategies. We held the final close of our European Direct Lending III, the third vintage of our European Direct Lending Fund in the first quarter. The fund raised $780 million. For reference, EDL I raised $330 million, EDL II raised $700 million. We are now in the market with Global Private Equity Co-Invest Fund, the sixth vintage of the PEC series. Today we post on about $300 million. PEC 1 to 5 raised approximately $400 to $600 each, and PEC 5 raised about $500 million. We're also in the market with the European Real Estate Debt Fund, a new pulled European debt fund. As previously announced on April 9th, we completed our acquisition of an 80% interest in FCP Fund Manager LP, a privately held U.S. real estate manager. The acquisition added $3.2 billion of managed assets at closing in April. FCP brings U.S. multifamily housing expertise, complementing our longstanding U.K.-based real estate capabilities. Across our long-term platform, we began the second quarter with about $1.1 billion in net institutional mandates yet to fund into both funds and separate accounts. Approximately $1.4 billion on a net basis is expected to come into private market strategies including direct lending, private equity, and trade finance. Fixed income is expected to Net sales of about $1.1 billion, with a core plus win of about $1.8 billion, partially offset by about $800 million redeeming from a government bond strategy. Equity strategies are expected to have net redemptions of about $1.4 billion, with net global equity expected redemptions of $3 billion, which offsets MDT's additions of $1.7 billion. The global equity redemptions are mainly self-advised assets from an institutional client who notified us of their intention to internalize the management of these assets. We continue to have a strong relationship with this client in the EOS part of our business. The client has made a strategic decision to internalize, not driven by performance, which has generally been ahead of benchmark. Moving on to money markets. We reached another record high at the end of Q1 for total money market assets, which increased by $2 billion to reach $685 billion. Reflecting seasonal patterns, Money market separate accounts increased by $8 billion. Money market fund assets decreased by $6 billion in Q1 compared to the year-end totals. Market conditions remain 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 like bank deposits and direct investments in D-bills and commercial paper. Our estimate of money market mutual fund market share, including subadvised funds, was about 6.9% at the end of Q1, down from 7.0% at the end of 2025. Now, let's have a little discussion on digital assets and what we're doing there. We are focused on this area as in infrastructure evolution, not a speculative asset class. We are working on digital initiatives designed to enhance distribution efficiency, settlement speed, transparency, operational automation, and global reach while maintaining regulatory, fiduciary, and governance standards. Importantly, Digital structures must enhance access, efficiency, and integration into modern treasury portfolio and collateral workflows. They must operate within regulatory frameworks, preserve investor protections, and provide valuation integrity. Through deep engagement with our operational partners, we are well positioned to properly evaluate governance, ownership representation, transfer restrictions, and risk management implications of tokenized funds as we build out our digital capabilities. While we are initially prioritizing products aligned with our core strength in liquidity management, we of course expect over time to see digital products developed for ETFs or other mutual funds, private market vehicles, across many or all market classes. The firm's digital initiatives include the upcoming launch of our Money Market Management Digital Treasury Fund, which is expected to support both traditional and on-chain distribution. The initial reserved shares class will provide a non-tokenized, genius-compliant structure geared to institutional investors and stablecoin issuers seeking high-quality reserve assets. We are also developing an on-chain share class intended to place official books and records on the blockchain infrastructure once a fully digital transfer agency model is available. This dual-track approach offers flexibility between traditional custody and fully on-chain models. We have selectively engaged with regulated digital asset intermediaries focusing on tokenized funds as regulated financial instruments. Initial use cases emphasize cash on-chain liquidity solutions, with a longer-term view towards supporting additional asset classes as market structures evolve. As we have previously mentioned, we are participating in the launch of a collaborative initiative between BNY and Goldman Sachs that will involve mirrored tokenization of money market fund shares to improve transferability, collateral utility, and real-time ownership tracking of money market fund shares. We are also expanding digital engagement beyond U.S. money markets towards a global strategy. In the UK and Europe, we are exploring digital sterling liquidity products and assessing tokenization for broader regulated fund distributions. We are participating in tokenized offerings where Federated Hermes funds are used as the underlying assets rather than being directly tokenized. This includes our alliance with ArchEx, the first FCA-regulated digital securities exchange to offer tokenized access to a usage money market fund. The platform enables professional investors to hold beneficial ownership tokens across multiple blockchains, and access money market liquidity directly on-chain. We are exploring similar partnership opportunities. Finally, looking at recent asset totals as of a few days ago, managed assets were approximately $902 billion, including $668 billion in money markets. $107 billion in equities, $101 billion in fixed income, $22 billion in alternatives to private markets, and $3 billion in multi-asset. Money market mutual fund assets were $487 billion. Tom? Thanks, Chris.