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Federated Hermes' Q3 Equity AUM Hits Record High: Can Growth Last?
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Key Takeaways
Federated Hermes' equity AUM climbed 17% y/y to a record $110.5B in Q3.
Equity net sales reached $1.9B, driven by strong demand for quantitative MDT investment strategies.
Equity-related revenues rose nearly 20% to $161.8M, while market volatility and outflows pose risks.
Federated Hermes, Inc. (FHI - Free Report) has been witnessing solid momentum in its equity investment management business, supported by positive net inflows, strong demand for quantitative investment strategies and growing institutional participation. In the third quarter of 2026, the company's equity assets under management (AUM) reached a record $110.5 billion, increasing 17% year over year.
The improvement in equity assets has been a key driver of revenue growth. In the third quarter, Federated Hermes' total revenues increased 8% year over year to $507.3 million, primarily driven by higher average equity assets and contributions from the acquisition of FCP Fund Manager, L.P. Notably, equity assets accounted for 32% of the company's total revenues during the quarter, highlighting their importance in supporting overall profitability.
With improving equity inflows and an expanding investment product portfolio, the question remains whether FHI can sustain this growth momentum in the coming quarters.
What's Driving FHI's Equity AUM Growth?
Federated Hermes' equity business has benefited from improving investor demand and strong inflows into its investment strategies. In the third quarter, equity net sales totaled $1.9 billion, compared with net redemptions of $1.14 billion in the preceding quarter and $130 million in the year-ago period. Gross equity sales reached $8.53 billion, while redemptions totaled $6.62 billion.
The company witnessed robust demand for its MDT suite of quantitative investment solutions. The top-selling equity funds during the quarter included Federated Hermes MDT Large Cap Growth Fund, MDT Small Cap Core ETF, MDT All Cap Core Fund, MDT Large Cap Value Fund and U.S. Strategic Dividend ETF.
Notably, quantitative equity/MDT strategies accounted for $40.9 billion in AUM as of Sept. 30, 2026, while domestic Strategic Value Dividend strategies represented another $38.4 billion. These offerings provide a diversified range of investment solutions, supporting the company's ability to attract investors with varying investment objectives.
The company's growing exposure to higher-fee long-term assets is also encouraging. Average equity AUM increased to $112.1 billion from $92.4 billion in the year-ago quarter. Consequently, equity-related revenues rose nearly 20% year over year to $161.8 million in the third quarter, strengthening the company's earnings-generating capabilities.
Can Federated Hermes Sustain the Momentum?
FHI is well-positioned for growth, supported by its diversified equity offerings, quantitative investment capabilities and strong distribution network. Rising demand for MDT strategies and actively managed ETFs is expected to drive client acquisition and organic asset growth. The company recorded approximately $3 billion in equity net sales during the first nine months of 2026, reflecting sustained investor interest.
However, market volatility, potential outflows and declining money market balances may constrain near-term growth. Sustained equity inflows and strong investment performance will be the key to maintaining momentum.
How FHI Stacks Up Against Its Peers in Terms of AUM
BlackRock (BLK - Free Report) reported assets under management of $15.49 trillion as of Sept. 30, 2026, up 15% year over year. This was driven by robust client inflows and favorable market movements over the past year, strengthening the company's fee-generating asset base. In the third quarter, BlackRock recorded $205 billion in total net inflows, including $175 billion in long-term inflows and $31 billion in cash management inflows.
T. Rowe Price’s (TROW - Free Report) total AUM reached $1.86 trillion, up 5.4% year over year as of Sept. 30, 2026.
During the third quarter, T. Rowe Price recorded net client outflows of $28.3 billion, significantly wider than $7.9 billion in the year-ago period. Net market depreciation and income of $2.4 billion adversely impacted the company’s AUM.
FHI Price Performance & Zacks Rank
Over the past six months, FHI shares have gained 8.3% against the industry’s fall of 0.9%.
View the Zacks #1 Rank List
Image: Bigstock
Federated Hermes' Q3 Equity AUM Hits Record High: Can Growth Last?
Key Takeaways
Federated Hermes, Inc. (FHI - Free Report) has been witnessing solid momentum in its equity investment management business, supported by positive net inflows, strong demand for quantitative investment strategies and growing institutional participation. In the third quarter of 2026, the company's equity assets under management (AUM) reached a record $110.5 billion, increasing 17% year over year.
The improvement in equity assets has been a key driver of revenue growth. In the third quarter, Federated Hermes' total revenues increased 8% year over year to $507.3 million, primarily driven by higher average equity assets and contributions from the acquisition of FCP Fund Manager, L.P. Notably, equity assets accounted for 32% of the company's total revenues during the quarter, highlighting their importance in supporting overall profitability.
With improving equity inflows and an expanding investment product portfolio, the question remains whether FHI can sustain this growth momentum in the coming quarters.
What's Driving FHI's Equity AUM Growth?
Federated Hermes' equity business has benefited from improving investor demand and strong inflows into its investment strategies. In the third quarter, equity net sales totaled $1.9 billion, compared with net redemptions of $1.14 billion in the preceding quarter and $130 million in the year-ago period. Gross equity sales reached $8.53 billion, while redemptions totaled $6.62 billion.
The company witnessed robust demand for its MDT suite of quantitative investment solutions. The top-selling equity funds during the quarter included Federated Hermes MDT Large Cap Growth Fund, MDT Small Cap Core ETF, MDT All Cap Core Fund, MDT Large Cap Value Fund and U.S. Strategic Dividend ETF.
Notably, quantitative equity/MDT strategies accounted for $40.9 billion in AUM as of Sept. 30, 2026, while domestic Strategic Value Dividend strategies represented another $38.4 billion. These offerings provide a diversified range of investment solutions, supporting the company's ability to attract investors with varying investment objectives.
The company's growing exposure to higher-fee long-term assets is also encouraging. Average equity AUM increased to $112.1 billion from $92.4 billion in the year-ago quarter. Consequently, equity-related revenues rose nearly 20% year over year to $161.8 million in the third quarter, strengthening the company's earnings-generating capabilities.
Can Federated Hermes Sustain the Momentum?
FHI is well-positioned for growth, supported by its diversified equity offerings, quantitative investment capabilities and strong distribution network. Rising demand for MDT strategies and actively managed ETFs is expected to drive client acquisition and organic asset growth. The company recorded approximately $3 billion in equity net sales during the first nine months of 2026, reflecting sustained investor interest.
However, market volatility, potential outflows and declining money market balances may constrain near-term growth. Sustained equity inflows and strong investment performance will be the key to maintaining momentum.
How FHI Stacks Up Against Its Peers in Terms of AUM
BlackRock (BLK - Free Report) reported assets under management of $15.49 trillion as of Sept. 30, 2026, up 15% year over year. This was driven by robust client inflows and favorable market movements over the past year, strengthening the company's fee-generating asset base.
In the third quarter, BlackRock recorded $205 billion in total net inflows, including $175 billion in long-term inflows and $31 billion in cash management inflows.
T. Rowe Price’s (TROW - Free Report) total AUM reached $1.86 trillion, up 5.4% year over year as of Sept. 30, 2026.
During the third quarter, T. Rowe Price recorded net client outflows of $28.3 billion, significantly wider than $7.9 billion in the year-ago period. Net market depreciation and income of $2.4 billion adversely impacted the company’s AUM.
FHI Price Performance & Zacks Rank
Over the past six months, FHI shares have gained 8.3% against the industry’s fall of 0.9%.
Image Source: Zacks Investment Research
Currently, Federated Hermes carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.