Key Highlights

  • EPS came to $1.50, compared with $1.34, on Net Income of $111.9 million.
  • Total managed Assets were $884.4 billion, up 2% year over year.
  • Equity assets reached a record $110.5 billion, up 17% from a year earlier.
  • Money market assets dropped 4% from June to $649.9 billion.
  • The board declared a Dividend of $0.38 per share.

Earnings rise 12% on higher Equity assets

Federated Hermes (NYSE:FHI) is a global active Investment manager based in Pittsburgh. It reported third quarter 2026 results on October 29, 2026. EPS was $1.50 versus $1.34, while net income was $111.9 million compared with $104.1 million, representing a calculated increase of about 7.5% in net income and about 12% in EPS.

Revenue rose $37.9 million, or 8%, mainly because of higher average equity assets and the second quarter 2026 Acquisition of FCP Fund Manager. Operating expenses increased $14.0 million, or 4%, driven by an $8.5 million rise in distribution expenses tied to higher average Money Market fund assets and a $7.1 million increase in compensation.

Operating income climbed 18% to $153.3 million from $129.5 million. On a calculated basis, that implies an Operating Margin of about 30.2%, compared with 27.6% a year earlier. Investment income declined to $2.0 million from $14.1 million.

CEO Christopher Donahue said the company generated positive net equity sales during the quarter, including across its MDT quantitative suite, and that assets in MDT institutional separate accounts and subadvised accounts reached record levels.

Managed assets by category

Total managed assets were $884.4 billion, up $13.2 billion, or 2%, from a year earlier but down $27.2 billion, or 3%, from June 30, 2026. Average managed assets for the quarter were $897.7 billion, 4% higher than a year ago.

Equity assets reached a record $110.5 billion, up 17% from $94.7 billion. Fixed-income assets were $99.4 billion, down 2% year over year, while alternative and private markets assets rose 14% to $21.7 billion.

Money market assets totaled $649.9 billion, down $27.0 billion, or 4%, from June 30. Money market fund assets were $486.3 billion, down 3% for the quarter.

Revenue mix and net equity sales

In the third quarter, Long-Term Assets generated 50% of revenue, split into 32% from equity, 10% from fixed income and 8% from alternative and private markets and multi-asset strategies. Money market assets supplied 49% of revenue, and sources other than managed assets contributed the remaining 1%.

Equity net sales were positive $1.9 billion in the quarter, compared with net redemptions of $130 million a year earlier. For the first nine months of 2026, Revenue increased 13% to $1.49 billion, and EPS was $4.15, up from $3.75.

Mix shift on a calculated basis

Equity assets make up about 12.5% of total managed assets, while money market assets account for about 73.5%. Equity assets grew 17% year over year, far faster than the 2% growth in total assets, so the mix is gradually shifting toward higher-fee products.

Balance sheet, Buybacks and dividend

Cash and other investments were $580.3 million at September 30, 2026, down from $724.3 million at December 31, 2025, while long-term Debt stood at $348.6 million. Intangible assets, including goodwill, rose to $1.50 billion from $1.18 billion.

During the quarter, the company bought back 992,312 shares of class B common stock for $57.4 million, an average of about $57.84 per share on a calculated basis. The board declared a $0.38 per share dividend, payable on November 13, 2026 to shareholders of record on November 6, 2026. Observers will likely track money market asset trends after the sequential decline, the pace of net equity sales and the integration of the acquisition.