EX-99.1 2 a991-2019q3earningspressre.htm PRESS RELEASE Exhibit

Exhibit 99.1
image011a24.jpg

Federated Investors, Inc. Reports Third Quarter 2019 Earnings
•
Q3 2019 EPS of $0.72 compared to $0.59 for Q3 2018
•
Managed assets reach a record $527.2 billion
•
Board declares $0.27 per share quarterly dividend
(PITTSBURGH, Pa., Oct. 24, 2019) — Federated Investors, Inc. (NYSE: FII), a leading global investment manager, today reported earnings per diluted share (EPS) of $0.72 for Q3 2019, compared to $0.59 for the same quarter last year, on net income of $73.0 million for Q3 2019, compared to $59.6 million for Q3 2018. Federated reported YTD 2019 EPS of $1.88, compared to $1.57 for the same period in 2018, on YTD 2019 net income of $190.2 million, compared to $158.8 million for the same period in 2018. Federated's YTD 2018 results included a $27.2 million pre-tax net expense, representing $0.21 per diluted share net of tax, primarily related to two foreign currency forward derivative instruments (FX Forward Loss) entered into in connection with Federated's Q3 2018 acquisition of a majority interest in Hermes Fund Managers Limited (Hermes).
Federated's total managed assets were a record $527.2 billion at Sept. 30, 2019, up $90.0 billion or 21% from $437.2 billion at Sept. 30, 2018 and up $25.0 billion or 5% from $502.2 billion at June 30, 2019. Total average managed assets for Q3 2019 were $518.0 billion, up $84.1 billion or 19% from $433.9 billion reported for Q3 2018 and up $24.7 billion or 5% from $493.3 billion reported for Q2 2019.
"As the Federal Reserve cut rates twice in the quarter, investors sought Federated's range of ultrashort products and other fixed-income strategies, and our liquidity management solutions approached record highs," said J. Christopher Donahue, president and chief executive officer. "Federated also continued to see interest in the growth-focused Federated Kaufmann Small Cap Fund, as well as a range of Hermes equity strategies."
Federated's board of directors declared a quarterly dividend of $0.27 per share. The dividend is payable on Nov. 15, 2019 to shareholders of record as of Nov. 8, 2019. During Q3 2019, Federated purchased 79,592 shares of Federated class B common stock for $1.9 million.
Federated's equity assets were $80.8 billion at Sept. 30, 2019, down $3.3 billion or 4% from $84.1 billion at Sept. 30, 2018 and down $1.2 billion or 1% from $82.0 billion at June 30, 2019. Top-selling equity funds during Q3 2019 on a net basis were Federated Kaufmann Small Cap Fund; Hermes Global Emerging Markets Fund; Hermes SDG Engagement Equity Fund; Hermes Global Equity ESG Fund; and Federated MDT Small Cap Growth Fund.
Federated's fixed-income assets were a record $65.8 billion at Sept. 30, 2019, up $0.4 billion or 1% from $65.4 billion at Sept. 30, 2018 and up $0.7 billion or 1% from $65.1 billion at June 30, 2019. Top-selling fixed-income funds during Q3 2019 on a net basis were Federated Bond Fund; Federated Municipal Ultrashort Fund; Federated Institutional High Yield Bond Fund; Hermes Global High Yield Credit Fund; and Federated Government Ultrashort Duration Fund.
Money market assets were $359.3 billion at Sept. 30, 2019, up $95.1 billion or 36% from $264.2 billion at Sept. 30, 2018 and up $26.2 billion or 8% from $333.1 billion at June 30, 2019. Money market fund assets were $261.2 billion at Sept. 30, 2019, up $78.2 billion or 43% from $183.0 billion at Sept. 30, 2018 and up $29.9 billion or 13% from $231.3 billion at June 30, 2019.

MEDIA:
MEDIA:
ANALYSTS:
Ed Costello 412-288-7538
Meghan McAndrew 412-288-8103
Ray Hanley 412-288-1920
 
Federated Reports Q3 2019 Earnings
Page 2 of 12

Federated's money market separate account assets were $98.1 billion at Sept. 30, 2019, up $16.8 billion or 21% from $81.3 billion at Sept. 30, 2018 and down $3.6 billion or 4% from $101.7 billion at June 30, 2019.
Financial Summary
Q3 2019 vs. Q3 2018
Revenue increased $31.7 million or 10% primarily due to higher average money market assets. This increase in revenue was partially offset by a decrease in revenue from lower average equity assets.
During Q3 2019, Federated derived 58% of its revenue from long-term assets (40% from equity assets, 13% from fixed-income assets and 5% from alternative/private markets and multi-asset), 41% from money market assets, and 1% from sources other than managed assets.
Operating expenses increased $24.3 million or 11% primarily due to an increase in distribution expenses associated with higher average money market fund assets and an increase in compensation and related expenses.
Nonoperating income (expenses), net increased $5.6 million primarily due to an increase in private equity carried interest income on assets managed by a nonconsolidated entity.
Q3 2019 vs. Q2 2019
Revenue increased $18.9 million or 6% primarily due to higher average money market assets and an extra day of revenue in Q3 2019.
Operating expenses increased $14.5 million or 6% primarily due to an increase in distribution expenses associated with higher average money market fund assets and an increase in compensation and related expenses.
Nonoperating income (expenses), net increased $8.1 million primarily due to an increase in private equity carried interest income on assets managed by a nonconsolidated entity.
YTD 2019 vs. YTD 2018
Revenue increased $140.4 million or 17% primarily due to the consolidation of Hermes’ revenue (which included performance fees of $4.2 million in 2019) for three quarters in 2019 as compared to one quarter in 2018 and higher average money market assets. These increases were partially offset by a decrease in revenue from lower average equity and multi-asset assets and a change in the mix of average domestic fixed-income assets.
For the first nine months of 2019, Federated derived 60% of its revenue from long-term assets (41% from equity assets, 14% from fixed-income assets and 5% from alternative/private markets and multi-asset), 39% from money market assets, and 1% from sources other than managed assets.
Operating expenses increased $137.6 million or 23% primarily due to the consolidation of Hermes’ expenses for three quarters in 2019 as compared to one quarter in 2018 and an increase in distribution expenses associated with higher average money market fund assets.
Nonoperating income (expenses), net increased $36.4 million primarily due to the FX Forward Loss recorded in Q2 2018.
Federated's level of business activity and financial results are dependent upon many factors, including market conditions, investment performance and investor behavior. These factors and others, including asset levels and mix, product sales and redemptions, market appreciation or depreciation, revenues, fee waivers, expenses and regulatory changes, can significantly


 
Federated Reports Q3 2019 Earnings
Page 3 of 12

impact Federated's business activity levels and financial results. Risk factors and uncertainties that can influence Federated's financial results are discussed in the company's annual and quarterly reports as filed with the Securities and Exchange Commission (SEC).
Federated will host an earnings conference call at 9 a.m. Eastern on Oct. 25, 2019. Investors are invited to listen to Federated's earnings teleconference by calling 844-602-0380 (domestic) or 862-298-0970 (international) prior to the 9 a.m. start time. The call may also be accessed online in real time via the About section of FederatedInvestors.com. A replay will be available from approximately 12:30 p.m. Eastern on Oct. 25, 2019 until Nov. 1, 2019 by calling 877-481-4010 (domestic) or 919-882-2331 (international) and entering access code 54018. An online replay will be available via FederatedInvestors.com for one year.
Federated Investors, Inc. is a leading global investment manager with $527.2 billion in assets under management as of Sept. 30, 2019. Our investment solutions span 131 equity, fixed-income, alternative/private markets, multi-asset and liquidity management strategies, and a range of separately managed account strategies. Providing comprehensive investment management to more than 11,000 institutions and intermediaries, our clients include corporations, government entities, insurance companies, foundations and endowments, banks and broker/dealers. Headquartered in Pittsburgh, Federated’s nearly 1,900 employees include those in New York, Boston, London and several other offices worldwide. In 2018, Federated acquired a majority interest in Hermes Investment Management, which provides world-class active management and stewardship services.
Federated ranks in the top 6% of equity fund managers in the industry, the top 7% of money market fund managers and the top 11% of fixed-income fund managers1. Federated also ranks as the 10th-largest SMA manager2. Information regarding Hermes is available at Hermes-Investment.com. An analyst presentation that includes information about Hermes also is available. For more information, visit FederatedInvestors.com.
###
1) Strategic Insight, Sept. 30, 2019. Based on assets under management in open-end funds.
2) Money Management Institute/Cerulli, Q2 2019.
Federated Securities Corp. is distributor of the Federated funds.
Separately managed accounts are made available through Federated Global Investment Management Corp., Federated Investment Counseling, Federated MDTA LLC, Hermes Investment Management Limited and Hermes European Equities Limited, each a registered investment adviser.
Certain statements in this press release, such as those related to performance, investor preferences and demand, and asset flows and mix, constitute or may constitute forward-looking statements, which involve known and unknown risks, uncertainties and other factors that may cause the actual results, levels of activity, performance or achievements of the company, or industry results, to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. Other risks and uncertainties include the ability of the company to predict the level of fee waivers and expenses in future quarters, predict whether performance fees or carried interest will be earned and retained, sustain product demand, and asset flows and mix, which could vary significantly depending on various factors, such as market conditions, investment performance and investor behavior. Other risks and uncertainties include the risk factors discussed in the company's annual and quarterly reports as filed with the SEC. As a result, no assurance can be given as to future results, levels of activity, performance or achievements, and neither the company nor any other person assumes responsibility for the accuracy and completeness of such statements in the future.





.


 
Federated Reports Q3 2019 Earnings
Page 4 of 12

Unaudited Condensed Consolidated Statements of Income
(in thousands, except per share data)
 
 
 
 
 
 
 
Quarter Ended
% Change Q3 2018 to Q3 2019
 
Quarter Ended
% Change Q2 2019 to Q3 2019
 
Sept. 30, 2019
Sept. 30, 2018
 
June 30, 2019
Revenue
 
 
 
 
 
 
Investment advisory fees, net
$
232,106

$
217,036

7
 %
 
$
220,669

5
 %
Administrative service fees, net—affiliates
64,216

49,855

29

 
57,968

11

Other service fees, net
44,018

41,725

5

 
42,842

3

Total Revenue
340,340

308,616

10

 
321,479

6

 
 
 
 
 
 
 
Operating Expenses
 
 
 
 
 
 
Compensation and related
112,247

103,092

9

 
107,248

5

Distribution
88,082

72,153

22

 
82,000

7

Systems and communications
13,353

12,213

9

 
12,111

10

Office and occupancy
10,855

9,332

16

 
11,066

(2
)
Professional service fees
10,678

13,535

(21
)
 
10,281

4

Advertising and promotional
4,102

4,502

(9
)
 
4,697

(13
)
Travel and related
4,158

4,622

(10
)
 
4,459

(7
)
Other
7,558

7,269

4

 
4,677

62

Total Operating Expenses
251,033

226,718

11

 
236,539

6

Operating Income
89,307

81,898

9

 
84,940

5

 
 
 
 
 
 
 
Nonoperating Income (Expenses)
 
 
 
 
 
 
Investment income (loss), net
444

1,199

(63
)
 
1,526

(71
)
Debt expense
(1,239
)
(1,602
)
(23
)
 
(1,332
)
(7
)
Other, net
8,264

2,240

269

 
(832
)
NM

Total Nonoperating Income (Expenses), net
7,469

1,837

307

 
(638
)
NM

Income before income taxes
96,776

83,735

16

 
84,302

15

Income tax provision
23,191

21,741

7

 
20,462

13

Net income including the noncontrolling interests in subsidiaries
73,585

61,994

19

 
63,840

15

Less: Net income (loss) attributable to the noncontrolling interests in subsidiaries
623

2,386

(74
)
 
1,116

(44
)
Net Income
$
72,962

$
59,608

22
 %
 
$
62,724

16
 %
 
 
 
 
 
 
 
Amounts Attributable to Federated Investors, Inc.
 
 
 
 
 
 
Earnings Per Share1
 
 
 
 
 
 
Basic and diluted
$
0.72

$
0.59

22
 %
 
$
0.62

16
 %
Weighted-Average Shares Outstanding
 
 
 
 
 
 
Basic and diluted
97,306

96,664

 
 
97,330

 
Dividends Declared Per Share
$
0.27

$
0.27

 
 
$
0.27

 
1) Unvested share-based awards that receive non-forfeitable dividend rights are deemed participating securities and are required to be considered in the computation of basic earnings per share under the "two-class method." As such, total net income of $2.8 million, $2.4 million and $2.4 million available to unvested restricted Federated shareholders for the quarterly periods ended Sept. 30, 2019, Sept. 30, 2018 and June 30, 2019, respectively, was excluded from the computation of basic earnings per share. In addition to the amounts excluded from the basic earnings per share calculation, the computation of diluted earnings per share excludes net income available to unvested shareholders of a nonpublic consolidated subsidiary.



 
Federated Reports Q3 2019 Earnings
Page 5 of 12

Unaudited Condensed Consolidated Statements of Income
(in thousands, except per share data)
 
 
 
 
Nine Months Ended
 
 
Sept. 30, 2019
Sept. 30, 2018
% Change
Revenue
 
 
 
Investment advisory fees, net
$
663,974

$
559,429

19
 %
Administrative service fees, net—affiliates
176,319

147,248

20

Other service fees, net
128,576

121,784

6

Total Revenue
968,869

828,461

17

 
 
 
 
Operating Expenses
 
 
 
Compensation and related
330,712

255,613

29

Distribution
247,713

214,098

16

Systems and communications
38,258

28,397

35

Office and occupancy
33,283

24,238

37

Professional service fees
31,445

32,443

(3
)
Advertising and promotional
12,989

10,967

18

Travel and related
12,465

10,967

14

Other
16,868

9,412

79

Total Operating Expenses
723,733

586,135

23

Operating Income
245,136

242,326

1

 
 
 
 
Nonoperating Income (Expenses)
 
 
 
Investment income (loss), net
4,679

3,294

42

Debt expense
(3,971
)
(4,363
)
(9
)
Other, net
7,756

(26,877
)
129

Total Nonoperating Income (Expenses), net
8,464

(27,946
)
130

Income before income taxes
253,600

214,380

18

Income tax provision
61,564

53,713

15

Net income including the noncontrolling interests in subsidiaries
192,036

160,667

20

Less: Net income (loss) attributable to the noncontrolling interests in subsidiaries
1,804

1,906

(5
)
Net Income
$
190,232

$
158,761

20
 %
 
 
 
 
Amounts Attributable to Federated Investors, Inc.
 
 
 
Earnings Per Share1
 
 
 
Basic and diluted
$
1.88

$
1.57

20
 %
Weighted-Average Shares Outstanding
 
 
 
Basic
97,211

97,013

 
Diluted
97,211

97,014

 
Dividends Declared Per Share
$
0.81

$
0.79

 
1) Unvested share-based awards that receive non-forfeitable dividend rights are deemed participating securities and are required to be considered in the computation of basic earnings per share under the "two-class method." As such, total net income of $7.3 million and $6.3 million available to unvested restricted Federated shareholders for the nine months ended Sept. 30, 2019 and Sept. 30, 2018, respectively, was excluded from the computation of basic earnings per share. In addition to the amounts excluded from the basic earnings per share calculation, the computation of diluted earnings per share excludes net income available to unvested shareholders of a nonpublic consolidated subsidiary.



 
Federated Reports Q3 2019 Earnings
Page 6 of 12

Unaudited Condensed Consolidated Balance Sheets
 
 
(in thousands)
Sept. 30, 2019
Dec. 31, 2018
Assets
 
 
  Cash and other investments
$
309,005

$
190,490

  Other current assets
111,867

113,611

  Intangible assets, net, including goodwill
1,133,370

1,149,247

  Other long-term assets
199,729

90,335

  Total Assets
$
1,753,971

$
1,543,683

 
 
 
Liabilities, Redeemable Noncontrolling Interests and Equity
 
 
  Current liabilities
$
194,375

$
181,180

  Long-term debt
120,000

135,000

  Other long-term liabilities
289,607

187,869

  Redeemable noncontrolling interests
199,492

182,513

  Equity excluding treasury stock
1,229,969

1,144,458

  Treasury stock
(279,472
)
(287,337
)
  Total Liabilities, Redeemable Noncontrolling Interests and Equity
$
1,753,971

$
1,543,683




 
Federated Reports Q3 2019 Earnings
Page 7 of 12

Unaudited Changes in Long-Term Assets - By Asset Class
(in millions)
Quarter Ended
 
Nine Months Ended
 
Sept. 30, 2019
June 30, 2019
Sept. 30, 2018
 
Sept. 30, 2019
Sept. 30, 2018
Equity
 
 
 
 
 
 
Beginning assets
$
81,999

$
80,245

$
57,973

 
$
72,497

$
62,816

Sales1
5,182

4,812

3,757

 
15,130

9,681

Redemptions1
(6,384
)
(4,404
)
(5,288
)
 
(16,714
)
(15,624
)
Net sales (redemptions)1
(1,202
)
408

(1,531
)
 
(1,584
)
(5,943
)
Net exchanges
(11
)
191

(11
)
 
193

64

Acquisition-related
0

0

24,700

 
0

24,700

Impact of foreign exchange2
(577
)
4

0

 
(695
)
0

Market gains and (losses)3
541

1,151

3,012

 
10,339

2,506

Ending assets
$
80,750

$
81,999

$
84,143

 
$
80,750

$
84,143

 
 
 
 
 
 
 
Fixed Income
 
 
 
 
 
 
Beginning assets
$
65,052

$
64,107

$
61,435

 
$
63,158

$
64,160

Sales1
4,805

5,193

5,163

 
15,414

14,826

Redemptions1
(5,418
)
(5,181
)
(4,418
)
 
(16,940
)
(15,946
)
Net sales (redemptions)1
(613
)
12

745

 
(1,526
)
(1,120
)
Net exchanges
10

(191
)
2

 
(214
)
(78
)
Acquisition-related
0

0

2,732

 
0

2,732

Impact of foreign exchange2
(107
)
(25
)
0

 
(124
)
0

Market gains and (losses)3
1,482

1,149

455

 
4,530

(325
)
Ending assets
$
65,824

$
65,052

$
65,369

 
$
65,824

$
65,369

 
 
 
 
 
 
 
Alternative/Private Markets4
 
 
 
 
 
 
Beginning assets
$
17,917

$
17,854

$
292

 
$
18,318

$
366

Sales1
384

320

757

 
1,017

813

Redemptions1
(813
)
(302
)
(674
)
 
(1,973
)
(785
)
Net sales (redemptions)1
(429
)
18

83

 
(956
)
28

Net exchanges
(61
)
(1
)
(2
)
 
(64
)
(3
)
Acquisition-related
0

0

18,509

 
0

18,509

Impact of foreign exchange2
(560
)
(435
)
0

 
(608
)
0

Market gains and (losses)3
289

481

(261
)
 
466

(279
)
Ending assets
$
17,156

$
17,917

$
18,621

 
$
17,156

$
18,621

 
 
 
 
 
 
 
Multi-asset
 
 
 
 
 
 
Beginning assets
$
4,213

$
4,259

$
4,730

 
$
4,093

$
5,014

Sales1
65

78

120

 
247

374

Redemptions1
(218
)
(228
)
(211
)
 
(687
)
(675
)
Net sales (redemptions)1
(153
)
(150
)
(91
)
 
(440
)
(301
)
Net exchanges
57

0

4

 
59

2

Acquisition-related
0

0

45

 
0

45

Market gains and (losses)3
23

104

102

 
428

30

Ending assets
$
4,140

$
4,213

$
4,790

 
$
4,140

$
4,790

 
 
 
 
 
 
 
Total Long-term Assets4
 
 
 
 
 
 
Beginning assets
$
169,181

$
166,465

$
124,430

 
$
158,066

$
132,356

Sales1
10,436

10,403

9,797

 
31,808

25,694

Redemptions1
(12,833
)
(10,115
)
(10,591
)
 
(36,314
)
(33,030
)
Net sales (redemptions)1
(2,397
)
288

(794
)
 
(4,506
)
(7,336
)
Net exchanges
(5
)
(1
)
(7
)
 
(26
)
(15
)
Acquisition-related
0

0

45,986

 
0

45,986

Impact of foreign exchange2
(1,244
)
(456
)
0

 
(1,427
)
0

Market gains and (losses)3
2,335

2,885

3,308

 
15,763

1,932

Ending assets
$
167,870

$
169,181

$
172,923

 
$
167,870

$
172,923

1) For certain accounts, Sales and Redemptions are calculated as the remaining difference between beginning and ending assets after the calculation of total investment return.
2) Reflects the impact of translating non-U.S. dollar denominated AUM into U.S. dollars for reporting purposes. Reporting only contains foreign exchange separately beginning with Q1 2019, previously included in Market gains and (losses).
3) Reflects the approximate changes in the fair value of the securities held by the portfolios and, to a lesser extent, reinvested dividends, distributions, net investment income and the impact of changes in foreign exchange rates for periods prior to Q1 2019.
4)
Ending assets includes $8.0 billion, $8.4 billion, and $8.4 billion at Sept. 30, 2019, June 30, 2019, and Sept. 30, 2018, respectively, of assets managed by a nonconsolidated entity, Hermes GPE LLP, in which Hermes holds an equity method investment.


 
Federated Reports Q3 2019 Earnings
Page 8 of 12

Unaudited Changes in Long-Term Assets - By Asset Class and Product Type
(in millions) 
 
 
Quarter Ended
 
Sept. 30, 2019
 
Equity
Fixed Income
Alternative / Private Markets
Multi-asset
Total
 
Funds
Separate Accounts1
Funds
Separate Accounts1
Funds2
Separate Accounts1
Funds
Separate Accounts1
Funds2
Separate Accounts1
Beginning assets
$
43,443

$
38,556

$
42,084

$
22,968

$
11,400

$
6,517

$
4,019

$
194

$
100,946

$
68,235

Sales
2,669

2,513

3,971

834

200

184

60

5

6,900

3,536

Redemptions
(2,991
)
(3,393
)
(4,136
)
(1,282
)
(651
)
(162
)
(208
)
(10
)
(7,986
)
(4,847
)
Net sales (redemptions)
(322
)
(880
)
(165
)
(448
)
(451
)
22

(148
)
(5
)
(1,086
)
(1,311
)
Net exchanges
(11
)
0

15

(5
)
(61
)
0

57

0

0

(5
)
Impact of foreign exchange3
(291
)
(286
)
(81
)
(26
)
(353
)
(207
)
0

0

(725
)
(519
)
Market gains and (losses)4
(244
)
785

476

1,006

291

(2
)
24

(1
)
547

1,788

Ending assets
$
42,575

$
38,175

$
42,329

$
23,495

$
10,826

$
6,330

$
3,952

$
188

$
99,682

$
68,188

 
 
 
 
 
 
 
 
 
 
 
 
Nine Months Ended
 
Sept. 30, 2019
 
Equity
Fixed Income
Alternative / Private Markets
Multi-asset
Total
 
Funds
Separate Accounts1
Funds
Separate Accounts1
Funds2
Separate Accounts1
Funds
Separate Accounts1
Funds2
Separate Accounts1
Beginning assets
$
36,584

$
35,913

$
40,490

$
22,668

$
11,365

$
6,953

$
3,920

$
173

$
92,359

$
65,707

Sales
9,128

6,002

12,266

3,148

695

322

235

12

22,324

9,484

Redemptions
(8,734
)
(7,980
)
(12,707
)
(4,233
)
(1,251
)
(722
)
(665
)
(22
)
(23,357
)
(12,957
)
Net sales (redemptions)
394

(1,978
)
(441
)
(1,085
)
(556
)
(400
)
(430
)
(10
)
(1,033
)
(3,473
)
Net exchanges
193

0

(184
)
(30
)
(64
)
0

59

0

4

(30
)
Impact of foreign exchange3
(333
)
(362
)
(95
)
(29
)
(380
)
(228
)
0

0

(808
)
(619
)
Market gains and (losses)4
5,737

4,602

2,559

1,971

461

5

403

25

9,160

6,603

Ending assets
$
42,575

$
38,175

$
42,329

$
23,495

$
10,826

$
6,330

$
3,952

$
188

$
99,682

$
68,188

1)
Includes separately managed accounts, institutional accounts, sub-advised funds and other managed products. For certain accounts, Sales and Redemptions are calculated as the remaining difference between beginning and ending assets after the calculation of total investment return.
2)
Ending assets includes $8.0 billion of assets managed by a nonconsolidated entity, Hermes GPE LLP, in which Hermes holds an equity method investment.
3) Reflects the impact of translating non-U.S. dollar denominated AUM into U.S. dollars for reporting purposes.
4)
Reflects the approximate changes in the fair value of the securities held by the portfolios and, to a lesser extent, reinvested dividends, distributions and net investment income.




 
Federated Reports Q3 2019 Earnings
Page 9 of 12

Unaudited Changes in Long-Term Assets - By Product Type
 
 
 
(in millions) 
Quarter Ended
 
Nine Months Ended
 
Sept. 30, 2019
June 30, 2019
Sept. 30, 2018
 
Sept. 30, 2019
Sept. 30, 2018
Total Fund Assets1
 
 
 
 
 
 
Beginning assets
$
100,946

$
98,482

$
76,389

 
$
92,359

$
79,301

Sales
6,900

7,502

7,168

 
22,324

18,733

Redemptions
(7,986
)
(7,020
)
(7,405
)
 
(23,357
)
(21,986
)
Net sales (redemptions)
(1,086
)
482

(237
)
 
(1,033
)
(3,253
)
Net exchanges
0

(1
)
(4
)
 
4

(13
)
Acquisition-related
0

0

23,564

 
0

23,564

Impact of foreign exchange2
(725
)
(331
)
0

 
(808
)
0

Market gains and (losses)3
547

2,314

1,725

 
9,160

1,838

Ending assets
$
99,682

$
100,946

$
101,437

 
$
99,682

$
101,437

 
 
 
 
 
 
 
Total Separate Account Assets4
 
 
 
 
 
 
Beginning assets
$
68,235

$
67,983

$
48,041

 
$
65,707

$
53,055

Sales5
3,536

2,901

2,629

 
9,484

6,961

Redemptions5
(4,847
)
(3,095
)
(3,186
)
 
(12,957
)
(11,044
)
Net sales (redemptions)5
(1,311
)
(194
)
(557
)
 
(3,473
)
(4,083
)
Net exchanges
(5
)
0

(3
)
 
(30
)
(2
)
Acquisition-related
0

0

22,422

 
0

22,422

Impact of foreign exchange2
(519
)
(125
)
0

 
(619
)
0

Market gains and (losses)3
1,788

571

1,583

 
6,603

94

Ending assets
$
68,188

$
68,235

$
71,486

 
$
68,188

$
71,486

 
 
 
 
 
 
 
Total Long-term Assets1,4
 
 
 
 
 
 
Beginning assets
$
169,181

$
166,465

$
124,430

 
$
158,066

$
132,356

Sales5
10,436

10,403

9,797

 
31,808

25,694

Redemptions5
(12,833
)
(10,115
)
(10,591
)
 
(36,314
)
(33,030
)
Net sales (redemptions)5
(2,397
)
288

(794
)
 
(4,506
)
(7,336
)
Net exchanges
(5
)
(1
)
(7
)
 
(26
)
(15
)
Acquisition-related
0

0

45,986

 
0

45,986

Impact of foreign exchange2
(1,244
)
(456
)
0

 
(1,427
)
0

Market gains and (losses)3
2,335

2,885

3,308

 
15,763

1,932

Ending assets
$
167,870

$
169,181

$
172,923

 
$
167,870

$
172,923

1)
Includes $8.0 billion, $8.4 billion, and $8.4 billion at Sept. 30, 2019, June 30, 2019, and Sept. 30, 2018, respectively, of assets managed by a nonconsolidated entity, Hermes GPE LLP, in which Hermes holds an equity method investment.
2) Reflects the impact of translating non-U.S. dollar denominated AUM into U.S. dollars for reporting purposes. Reporting only contains foreign exchange separately beginning with Q1 2019, previously included in Market gains and (losses).
3) Reflects the approximate changes in the fair value of the securities held by the portfolios and, to a lesser extent, reinvested dividends, distributions, net investment income and the impact of changes in foreign exchange rates for periods prior to Q1 2019.
4) Includes separately managed accounts, institutional accounts, sub-advised funds and other managed products.
5)
For certain accounts, Sales and Redemptions are calculated as the remaining difference between beginning and ending assets after the calculation of total investment return.



 
Federated Reports Q3 2019 Earnings
Page 10 of 12

Unaudited Managed Assets
(in millions)
Sept. 30, 2019
June 30, 2019
March 31, 2019
Dec. 31, 2018
Sept. 30, 2018
By Asset Class
 
 
 
 
 
Equity
$
80,750

$
81,999

$
80,245

$
72,497

$
84,143

Fixed-income
65,824

65,052

64,107

63,158

65,369

Alternative / private markets1
17,156

17,917

17,854

18,318

18,621

Multi-asset
4,140

4,213

4,259

4,093

4,790

Total long-term assets
167,870

169,181

166,465

158,066

172,923

Money market
359,292

333,066

318,413

301,794

264,233

Total Managed Assets
$
527,162

$
502,247

$
484,878

$
459,860

$
437,156

 
 
 
 
 
 
By Product Type
 
 
 
 
 
Funds:
 
 
 
 
 
Equity
$
42,575

$
43,443

$
42,057

$
36,584

$
43,578

Fixed-income
42,329

42,084

41,189

40,490

41,817

Alternative / private markets1
10,826

11,400

11,164

11,365

11,457

Multi-asset
3,952

4,019

4,072

3,920

4,585

Total long-term assets
99,682

100,946

98,482

92,359

101,437

Money market
261,215

231,321

214,764

208,480

182,966

Total Fund Assets
$
360,897

$
332,267

$
313,246

$
300,839

$
284,403

Separate Accounts:
 
 
 
 
 
Equity
$
38,175

$
38,556

$
38,188

$
35,913

$
40,565

Fixed-income
23,495

22,968

22,918

22,668

23,552

Alternative / private markets
6,330

6,517

6,690

6,953

7,164

Multi-asset
188

194

187

173

205

Total long-term assets
68,188

68,235

67,983

65,707

71,486

Money market
98,077

101,745

103,649

93,314

81,267

Total Separate Account Assets
$
166,265

$
169,980

$
171,632

$
159,021

$
152,753

Total Managed Assets
$
527,162

$
502,247

$
484,878

$
459,860

$
437,156

1) Includes $8.0 billion, $8.4 billion, $8.1 billion, $8.3 billion and $8.4 billion at Sept. 30, 2019, June 30, 2019, March 31, 2019, Dec. 31, 2018 and Sept. 30, 2018, respectively, of assets managed by a nonconsolidated entity, Hermes GPE LLP, in which Hermes holds an equity method investment.



 
Federated Reports Q3 2019 Earnings
Page 11 of 12

Unaudited Average Managed Assets
Quarter Ended
(in millions)
Sept. 30, 2019
June 30, 2019
March 31, 2019
Dec. 31, 2018
Sept. 30, 2018
By Asset Class
 
 
 
 
 
Equity
$
82,027

$
80,819

$
77,554

$
78,084

$
84,262

Fixed-income
65,074

64,913

64,167

63,881

64,750

Alternative / private markets1
17,407

17,772

18,311

18,410

18,504

Multi-asset
4,167

4,225

4,225

4,449

4,805

Total long-term assets
168,675

167,729

164,257

164,824

172,321

Money market
349,313

325,527

311,150

278,885

261,571

Total Avg. Managed Assets
$
517,988

$
493,256

$
475,407

$
443,709

$
433,892

 
 
 
 
 
 
By Product Type
 
 
 
 
 
Funds:
 
 
 
 
 
Equity
$
43,077

$
42,571

$
40,217

$
39,871

$
43,473

Fixed-income
41,958

41,652

41,095

41,088

41,501

Alternative / private markets1
11,035

11,146

11,545

11,351

11,109

Multi-asset
3,978

4,034

4,042

4,268

4,598

Total long-term assets
100,048

99,403

96,899

96,578

100,681

Money market
249,846

222,282

209,260

194,009

179,562

Total Avg. Fund Assets
$
349,894

$
321,685

$
306,159

$
290,587

$
280,243

Separate Accounts:
 
 
 
 
 
Equity
$
38,950

$
38,248

$
37,337

$
38,213

$
40,789

Fixed-income
23,116

23,261

23,072

22,793

23,249

Alternative / private markets
6,372

6,626

6,766

7,059

7,395

Multi-asset
189

191

183

181

207

Total long-term assets
68,627

68,326

67,358

68,246

71,640

Money market
99,467

103,245

101,890

84,876

82,009

Total Avg. Separate Account Assets
$
168,094

$
171,571

$
169,248

$
153,122

$
153,649

Total Avg. Managed Assets
$
517,988

$
493,256

$
475,407

$
443,709

$
433,892

1) The average balance includes $8.1 billion, $8.1 billion, $8.4 billion, $8.3 billion and $8.2 billion for the quarters ended Sept. 30, 2019, June 30, 2019, March 31, 2019, Dec. 31, 2018 and Sept. 30, 2018 respectively, of assets managed by a nonconsolidated entity, Hermes GPE LLP, in which Hermes holds an equity method investment.



 
Federated Reports Q3 2019 Earnings
Page 12 of 12

Unaudited Average Managed Assets
 
Nine Months Ended
(in millions)
 
Sept. 30, 2019
 
Sept. 30, 2018
By Asset Class
 
 
 
 
Equity
 
$
80,133

 
$
68,212

Fixed-income
 
64,718

 
63,312

Alternative / private markets1
 
17,830

 
6,393

Multi-asset
 
4,206

 
4,869

Total long-term assets
 
166,887

 
142,786

Money market
 
328,664

 
263,162

Total Avg. Managed Assets
 
$
495,551

 
$
405,948

 
 
 
 
 
By Product Type
 
 
 
 
Funds:
 
 
 
 
Equity
 
$
41,955

 
$
36,022

Fixed-income
 
41,568

 
40,907

Alternative / private markets1
 
11,243

 
3,928

Multi-asset
 
4,018

 
4,650

Total long-term assets
 
98,784

 
85,507

Money market
 
227,130

 
179,100

Total Avg. Fund Assets
 
$
325,914

 
$
264,607

Separate Accounts:
 
 
 
 
Equity
 
$
38,178

 
$
32,190

Fixed-income
 
23,150

 
22,405

Alternative / private markets
 
6,587

 
2,465

Multi-asset
 
188

 
219

Total long-term assets
 
68,103

 
57,279

Money market
 
101,534

 
84,062

Total Avg. Separate Account Assets
 
$
169,637

 
$
141,341

Total Avg. Managed Assets
 
$
495,551

 
$
405,948

1) The average balance includes $8.2 billion and $2.7 billion for the nine months ended Sept. 30, 2019 and 2018, respectively, of assets managed by a nonconsolidated entity, Hermes GPE LLP, in which Hermes holds an equity method investment.