Federated Hermes, Inc.

Greetings and welcome to the Federated Hermes Third Quarter 2026 Analyst Call and Webcast. At this time, all participants are placed on a listen-only mode and 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. And please note, this conference is being recorded. I will now turn the conference over to your host, Mr. Ray Hanley, President, Federated Investors Management Company. Sir, the floor is yours.

Thank you. Welcome to our call. 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 Sacher Nasebi, who is the CEO of Federated Hermes Limited, and Debbie Cunningham, the 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 as to future results, and Federated Hermes assumes no duty to update any of these forward-looking statements. Chris?

Thanks, Ray. Good morning, all. I will review Federated Hermes' business performance. Tom will comment on our financial results. We ended the third quarter with record equity assets under management of $110.5 billion, up $949 million from Q2, as positive net inflows of $1.9 billion were partially offset by lower market valuations. Equity sales results were led by MDT fundamental quant strategies. had a record $6 billion in gross sales and $3.2 billion in net sales in the third quarter. Now, looking at fund performance rankings at the end of Q3, seven of nine MDT fund strategies were in the top performance quartile of their Morningstar categories for the trailing three years. We had net sales in 33 equity fund and SMA strategies during Q3, including a variety of MDT offerings. Institutional separate accounts, including sub-advisory mandates, added $1.5 billion in Q3 net sales, nearly all in MDT strategies. Now, looking at our equity fund performance at the end of the third quarter and using Morningstar data once again for the trailing three years, 56% of our equity funds were beating peers and 33% were in the top quartile of their category. Now for the fourth quarter through October 23rd, combined equity funds and SMAs had net sales of $242 million. Now turning to fixed income. Assets ended Q3 at $99 billion, net positive sales of $700 million, were offset by a decrease of $1.8 billion due to lower market values. We had 22 fixed income funds and SMAs with net sales in the third quarter led by the Sterling Cash Plus Fund, our ultra-short bond funds, total return bond ETF, conservative micro-short fund, and the C.W. Henderson short-term muni SMA. Fixed income institutional separate accounts had Q3 net sales of $924 million, driven by a large public entity that has regular sizable inflows and outflows. Regarding performance at the end of the third quarter and using Morningstar data for the trailing three years, 49% of our fixed income funds were beating peers and 21% were in the top quartile of their category. For Q4 through October 23rd, combined fixed income funds and SMAs had net redemptions of $2 billion, which includes $1.7 billion in redemptions from a client in the total return bond strategy who went in the direction of taking additional risk for this part of their multi-billion dollar mandate. On September 30, this fund, total return bond fund, ranked in the top third of its category for the trailing 10 years, 66 percentile for three years, top 28 percent for one year, and top 18 percent for the trailing three months. Now, in the alternative private markets category, assets were up slightly, reaching $21.7 billion. The MDT Market Neutral Fund and ETF combined for $180 million net sales. We're in the market with the Global Private Equity Co-Invest Fund, the sixth vintage of our PEC Series, and the European Real Estate Debt Fund, A new pulled European debt fund that will invest in senior and whole loans. Across our long-term investment platform, we began the fourth quarter with about $6.5 billion in net institutional wins yet to fund into both funds and separate accounts. Equity strategies are expected to have net sales of about 7 billion in MDT additions. Approximately 1.2 billion on a net basis is expected to come into private markets, including direct lending, private equity, and trade finance. Fixed income is expected to have net redemptions of about 1.7 billion, which includes the aforementioned redemption in the multi-sector field. Moving on to money markets. Total money market assets decreased by 27 billion, or 4%, from the second quarter, as funds decreased by 13.6 billion, or 3%, and separate accounts decreased by about 13.4 billion, or 8%. Money market fund assets were impacted by the mid-September increase in interest rates by the Fed, and by September's corporate tax payments. Money market separate account assets were impacted by the liquidity levels of large state pools that we manage and typically peak with tax collections at the end of the year through April before decreasing in Q2 and Q3. Our estimate of money market mutual fund market share including sub-advised funds was about 6.6% at the end of Q3, down from 6.7% at the end of Q2. Turning to digital assets, we continue active collaboration with financial institutions and technology providers to explore digital distribution. Our focus is liquidity. where our efforts are designed to enhance flexibility and accessibility while preserving the core structure and utility of money market funds. During the third quarter, our arrangement with Prometheum, Inc. was announced. We're working with Prometheum, a market infrastructure provider for crypto assets, to expand the reach of tokenized securities through their SEC-registered FINRA member broker-dealer market infrastructure. Prometheum will make our tokenized products available to broker-dealers and RIAs through its correspondent clearing platform. This follows the launch of our money market management digital treasury fund, which is expected to support both traditional and on-chain distribution. We have also selectively engaged with regulated digital asset intermediaries, including participation in the BNY Goldman Domestic Initiative involving mirrored tokenization. Also, the ArchEx Initiative to offer tokenized access to a USITS money fund in the UK. Our arrangement with Conduit Digital Holdings to support the launch of Conduit's tokenized money market fund in the APAC region with the Conduit Fund Investing and one of our offshore money market funds. We are engaged in digital asset development discussions with other intermediaries as well. Looking at recent asset totals, that was a few days ago, managed assets were approximately 890 billion, including 654 billion in money markets, 112 billion in equities, 98 billion in fixed income, 23 billion in alternative private markets and 3 billion in multi-asset. Money market mutual fund assets were 489 billion. Money market fund assets have ranged from 485 to 493 billion during October with average asset levels of 489 billion. Tom?