Federated Hermes, Inc. (NYSE:FHI) Q2 2023 Earnings Conference Call July 28, 2023 9:00 AM ET

Company Participants

Raymond Hanley - President, Federated Investors Management Company

Chris Donahue - President and CEO

Tom Donahue - CFO

Debbie Cunningham - CIO of Money Markets

Saker Nusseibeh - CEO, Federated Hermes Limited

Conference Call Participants

Daniel Fannon - Jefferies

Patrick Davitt - Autonomous Research

Mike Brown - KBW

Brian Bedell - Deutsche Bank

John Dunn - Evercore ISI

Ken Worthington - JPMorgan

Operator

Good morning, everybody, and welcome to Federated Hermes, Inc. Q2 2023 Analyst Call and Webcast. [Operator Instructions] Please note, this conference is being recorded.

I will now turn the conference over to your host, Raymond Hanley, President of Federated Investors Management Company. Raymond, over to you.

Raymond Hanley

Good morning, and welcome. Thanks for joining us today. Leading today's call will be Chris Donahue, CEO and President of Federated Hermes; and Tom Donahue, Chief Financial Officer. And joining us for the Q&A are Saker Nusseibeh, who is the CEO of Federated Hermes Limited; and Debbie Cunningham, our Chief Investment Officer for the 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?

Chris Donahue

Thank you, Ray, and good morning all.

I will review Federated Hermes business performance, and Tom will comment on our financial results. Looking first at equities. Assets were down $637 million to $83 billion due largely to net redemptions of $828 million, partially offset by market gains of about $115 million.

Even so, we saw Q2 positive net sales in 15 equity strategies, including Asia ex-Japan, MDT's large-cap growth, MDT Mid-Cap Growth and international leaders. Now the strategic value dividend domestic strategy had Q2 net redemptions of $700 million compared to net sales of $727 million in the first quarter. As we have talked about before, this strategy is outcome-driven and is benchmark-agnostic. It seeks a high and rising stream of dividend income from high-quality companies.

Over the last 10 years ended June 30, it has returned on average 7.4%. To make the point, the strategy returned 8.5% in 2022 compared to a loss of over 18% from the S&P 500 and thereby ranked in the top 1% of its Morningstar assigned category of large cap value for this 2022 performance. Year-to-date, however, through June of '23, it has a negative return of 5.3% compared to the S&P 16.9% gain, and that ranked it in the 99th percentile of its assigned category.