Federated Investors, Inc. Reports Fourth Quarter and Full-Year 2019 Earnings

PITTSBURGH, Jan. 30, 2020 /PRNewswire/ -- Federated Investors, Inc. (NYSE: FII), a leading global investment manager, today reported earnings per diluted share (EPS) for Q4 2019 of $0.81, compared to $0.61 for the same quarter last year, on net income of $82.1 million for Q4 2019, compared to $61.5 million for Q4 2018. Full-year 2019 EPS was $2.69, compared to $2.18 for 2018 on net income of $272.3 million for 2019, compared to $220.3 million for 2018. Federated's full-year 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 2018 acquisition of a majority interest in Hermes Fund Managers Limited (Hermes).

Federated's total managed assets were $575.9 billion at Dec. 31, 2019, up $116.0 billion or 25% from $459.9 billion at Dec. 31, 2018 and up $48.7 billion or 9% from $527.2 billion at Sept. 30, 2019. Average managed assets for Q4 2019 were $550.1 billion, up $106.4 billion or 24% from $443.7 billion reported for Q4 2018 and up $32.1 billion or 6% from $518.0 billion reported for Q3 2019.

"Federated reached new records across all three major asset classes—equity, fixed income and money market—with the latter increasing by $94 billion in 2019 as Federated's diverse lineup of liquidity products offered competitive yields for investors seeking cash-management solutions," said J. Christopher Donahue, president and chief executive officer. "Federated also saw strong sales in the Federated Kaufmann Small Cap Fund, the Hermes Global Equity ESG Fund and a range of other Hermes products."

As announced earlier this month, Federated will change its name to Federated Hermes, Inc., and the company will change its NYSE ticker symbol from FII to FHI. The name change will be effective Jan. 31, 2020, and shares of Federated stock will begin trading on the NYSE under the FHI ticker symbol on Feb. 3, 2020. Also, on Feb. 3, Federated Hermes will launch a multi-faceted campaign to reintroduce the combined company to the investing public. The campaign showcases the combined company as a global leader in active, responsible investing and details its capabilities across asset classes. These changes will come a little more than 18 months after Federated's July 2018 acquisition of a majority interest in London-based Hermes, which operates Hermes Investment Management, a pioneer of integrated ESG investing.

Federated's board of directors declared a quarterly dividend of $0.27 per share. The dividend is payable on Feb. 14, 2020 to shareholders of record as of Feb. 7, 2020. During Q4 2019, Federated purchased 421,052 shares of Federated class B common stock for $11.7 million, bringing the total shares of Class B common stock purchased in 2019 to 614,077 shares for $15.7 million.

Federated's equity assets were a record $89.0 billion at Dec. 31, 2019, up $16.5 billion or 23% from $72.5 billion at Dec. 31, 2018 and up $8.2 billion or 10% from $80.8 billion at Sept. 30, 2019. Top-selling equity funds on a net basis during Q4 2019

were Federated Kaufmann Small Cap Fund, Hermes Global Equity ESG Fund, Hermes Global Emerging Markets Fund, Hermes SDG Engagement Equity Fund and Hermes US SMID Equity Fund.

Federated's fixed-income assets were a record $69.0 billion at Dec. 31, 2019, up $5.8 billion or 9% from $63.2 billion at Dec. 31, 2018 and up $3.2 billion or 5% from $65.8 billion at Sept. 30, 2019. Top-selling fixed-income funds on a net basis during Q4 2019 were Federated Ultrashort Bond Fund, Federated Institutional High Yield Bond Fund, Hermes SDG Engagement High Yield Credit Fund, Federated Total Return Bond Fund and Federated Municipal Ultrashort Fund.

Federated's money market assets were a record $395.5 billion at Dec. 31, 2019, up $93.7 billion or 31% from $301.8 billion at Dec. 31, 2018 and up $36.2 billion or 10% from $359.3 billion at Sept. 30, 2019. Money market mutual fund assets were $286.6 billion at Dec. 31, 2019, up $78.1 billion or 37% from $208.5 billion at Dec. 31, 2018 and up $25.4 billion or 10% from $261.2 billion at Sept. 30, 2019. Federated's money market separate account assets were $108.9 billion at Dec. 31, 2019, up $15.6 billion or 17% from $93.3 billion at Dec. 31, 2018 and up $10.8 billion or 11% from $98.1 billion at Sept. 30, 2019.

Financial Summary

Q4 2019 vs. Q4 2018

Revenue increased $50.8 million or 17% primarily due to higher average money market and equity assets and an increase in revenue from assets acquired from PNC Bank, N.A in Q4 2019 ("PNC Acquisition").

During Q4 2019, Federated derived 57% of its revenue from long-term assets (39% from equity assets, 13% from fixed-income assets and 5% from alternative/private markets and multi-asset), 42% from money market assets, and 1% from sources other than managed assets.

Operating expenses increased $36.0 million or 16% 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 $15.0 million primarily due to an increase in the market value of investments primarily held by consolidated investment companies and an increase in private equity carried interest income on assets managed by a nonconsolidated entity.

Q4 2019 vs. Q3 2019

Revenue increased $17.7 million or 5% primarily due to higher average money market assets and the PNC Acquisition.

Operating expenses increased by $4.2 million or 2% primarily due to an increase in distribution expenses associated with higher average money market fund assets.

2019 vs. 2018

Revenue increased $191.2 million or 17% primarily due to higher average money market assets and the consolidation of Hermes' revenue for the full year in 2019 as compared to half of the year in 2018. These increases were partially offset by a decrease in revenue from lower average domestic equity and multi-asset assets and a change in the mix of average domestic fixed-income assets.

During 2019, Federated derived 59% of its revenue from long-term assets (40% from equity assets, 14% from fixed-income assets and 5% from alternative/private markets and multi-asset), 40% from money market assets, and 1% from sources other than managed assets.

Operating expenses increased by $173.6 million or 22% primarily due to Hermes' expenses being included for the full year in 2019 as compared to half of the year in 2018 and an increase in distribution expenses associated with higher average money market fund assets.

Nonoperating income (expenses), net increased $51.5 million primarily due to the FX Forward Loss recorded in 2018, an increase in private equity carried interest income on assets managed by a nonconsolidated entity, and an increase in the market value of investments primarily held by consolidated investment companies.

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 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 Jan. 31, 2020. Investors are invited to listen to Federated's earnings teleconference by calling 844-369-8770 (domestic) or 862-298-0840 (international) prior to the 9 a.m. start time. The call may also be accessed in real time via the About section of FederatedInvestors.com. A replay will be available from approximately 12:30 p.m. Eastern on Jan. 31, 2020 until Feb. 7, 2020 by calling 877-481-4010 (domestic) or 919-882-2331 (international) and entering access code 57109. An online replay will be available via FederatedInvestors.com for one year.

Federated Investors, Inc. is a leading global investment manager with $575.9 billion in assets under management as of Dec. 31, 2019. Our investment solutions span 135 equity, fixed-income, alternative/private markets, multi-asset and money market funds 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 London, New York, Boston 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 12% of fixed-income fund managers¹. Federated also ranks as the 12th-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 as of Dec. 31, 2019. Based on assets under management in U.S. open-end funds.
2) Money Management Institute/Cerulli Associates, Q3 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.

*Unaudited Condensed Consolidated Statements of Income*
(in thousands, except per share data)
	Quarter Ended				% Change Q4 2018 to Q4 2019		Quarter Ended		% Change Q3 2019 to Q4 2019
	Dec. 31, 2019		Dec. 31, 2018				Sept. 30, 2019
Revenue
Investment advisory fees, net	$	243,631	$	213,990	14	%	$	232,106	5	%
Administrative service fees, net	69,568		52,022		34		64,216		8
Other service fees, net	44,826		41,204		9		44,018		2
Total Revenue	358,025		307,216		17		340,340		5

Operating Expenses
Compensation and related	111,436		99,153		12		112,247		(1)
Distribution	92,950		73,482		26		88,082		6
Systems and communications	14,731		11,528		28		13,353		10
Professional service fees	12,269		10,461		17		10,678		15
Office and occupancy	11,643		10,384		12		10,855		7
Advertising and promotional	4,785		5,174		(8)		4,102		17
Travel and related	4,180		4,627		(10)		4,158		1
Other	3,240		4,453		(27)		7,558		(57)
Total Operating Expenses	255,234		219,262		16		251,033		2
Operating Income	102,791		87,954		17		89,307		15

Nonoperating Income (Expenses)
Investment income (loss), net	4,737		(1,666)		384		444		NM
Debt expense	(1,066)		(1,522)		(30)		(1,239)		(14)
Other, net	5,209		(2,972)		275		8,264		(37)
Total Nonoperating Income (Expenses), net	8,880		(6,160)		244		7,469		19
Income before income taxes	111,671		81,794		37		96,776		15
Income tax provision	26,582		20,162		32		23,191		15
Net income including the noncontrolling interests in subsidiaries	85,089		61,632		38		73,585		16
Less: Net income attributable to the noncontrolling interests in subsidiaries	2,982		96		NM		623		379
Net Income	$	82,107	$	61,536	33	%	$	72,962	13	%

Amounts Attributable to Federated Investors, Inc.
Earnings Per Share¹
Basic and diluted	$	0.81	$	0.61	33	%	$	0.72	13	%
Weighted-Average Shares Outstanding
Basic and diluted	97,403		96,758				97,306
Dividends Declared Per Share	$	0.27	$	0.27			$	0.27

Unvested share-based awards that receive non-forfeitable dividend rights are deemed participating securities and are required to be considered in the computation of earnings per share under the "two-class method." As such, total net income of $2.9 million, $2.3 million and $2.8 million available to unvested restricted Federated shareholders for the quarterly periods ended Dec. 31, 2019, Dec. 31, 2018 and Sept. 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.

*Unaudited Condensed Consolidated Statements of Income*
(in thousands, except per share data)
	Year Ended
	Dec. 31, 2019		Dec. 31, 2018		% Change
Revenue
Investment advisory fees, net	$	907,605	$	773,418	17	%
Administrative service fees, net	245,887		199,269		23
Other service fees, net	173,402		162,990		6
Total Revenue	1,326,894		1,135,677		17

Operating Expenses
Compensation and related	442,147		354,765		25
Distribution	340,663		287,580		18
Systems and communications	52,988		39,925		33
Office and occupancy	44,926		34,622		30
Professional service fees	43,714		42,903		2
Advertising and promotional	17,774		16,141		10
Travel and related	16,645		15,594		7
Other	20,110		13,867		45
Total Operating Expenses	978,967		805,397		22
Operating Income	347,927		330,280		5

Nonoperating Income (Expenses)
Investment income, net	9,416		1,628		478
Debt expense	(5,037)		(5,885)		(14)
Other, net	12,965		(29,849)		143
Total Nonoperating Income (Expenses), net	17,344		(34,106)		151
Income before income taxes	365,271		296,174		23
Income tax provision	88,146		73,875		19
Net income including the noncontrolling interests in subsidiaries	277,125		222,299		25
Less: Net income attributable to the noncontrolling interests in subsidiaries	4,786		2,002		139
Net Income	$	272,339	$	220,297	24	%

Amounts Attributable to Federated Investors, Inc.
Earnings Per Share¹
Basic and diluted	$	2.69	$	2.18	23	%
Weighted-Average Shares Outstanding
Basic and diluted	97,259		96,949
Dividends Declared Per Share	$	1.08	$	1.06

Unvested share-based awards that receive non-forfeitable dividend rights are deemed participating securities and are required to be considered in the computation of earnings per share under the "two-class method." As such, total net income of $10.2 million and $8.6 million available to unvested restricted shareholders for the years ended Dec. 31, 2019 and Dec. 31, 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.

*Unaudited Condensed Consolidated Balance Sheets*
(in thousands)	Dec. 31, 2019		Dec. 31, 2018
Assets
Cash and other investments	$	340,635	$	190,490
Other current assets	120,649		113,611
Intangible assets, net, including goodwill	1,220,762		1,149,247
Other long-term assets	198,085		90,335
Total Assets	$	1,880,131	$	1,543,683

Liabilities, Redeemable Noncontrolling Interests and Equity
Current liabilities	$	230,713	$	181,180
Long-term debt	100,000		135,000
Other long-term liabilities	296,052		187,869
Redeemable noncontrolling interests	212,086		182,513
Equity excluding treasury stock	1,322,312		1,144,458
Treasury stock	(281,032)		(287,337)
Total Liabilities, Redeemable Noncontrolling Interests and Equity	$	1,880,131	$	1,543,683

*Unaudited Changes in Long-Term Assets - By Asset Class*
(in millions)	Quarter Ended						Year Ended
	Dec. 31, 2019		Sept. 30, 2019		Dec. 31, 2018		Dec. 31, 2019		Dec. 31, 2018
Equity
Beginning assets	$	80,750	$	81,999	$	84,143	$	72,497	$	62,816
Sales¹	5,092		5,182		4,274		20,222		13,955
Redemptions¹	(5,080)		(6,384)		(6,777)		(21,794)		(22,401)
Net sales (redemptions)¹	12		(1,202)		(2,503)		(1,572)		(8,446)
Net exchanges	(12)		(11)		(180)		181		(116)
Acquisition-related	2,244		0		0		2,244		24,700
Impact of foreign exchange²	667		(577)		0		(28)		0
Market gains and (losses)³	5,350		541		(8,963)		15,689		(6,457)
Ending assets	$	89,011	$	80,750	$	72,497	$	89,011	$	72,497

Fixed Income
Beginning assets	$	65,824	$	65,052	$	65,369	$	63,158	$	64,160
Sales¹	6,010		4,805		5,330		21,424		20,156
Redemptions¹	(4,603)		(5,418)		(7,424)		(21,543)		(23,370)
Net sales (redemptions)¹	1,407		(613)		(2,094)		(119)		(3,214)
Net exchanges	6		10		214		(208)		136
Acquisition-related	450		0		0		450		2,732
Impact of foreign exchange²	184		(107)		0		60		0
Market gains and (losses)³	1,152		1,482		(331)		5,682		(656)
Ending assets	$	69,023	$	65,824	$	63,158	$	69,023	$	63,158

Alternative / Private Markets⁴
Beginning assets	$	17,156	$	17,917	$	18,621	$	18,318	$	366
Sales¹	426		384		437		1,443		1,250
Redemptions¹	(486)		(813)		(530)		(2,459)		(1,315)
Net redemptions¹	(60)		(429)		(93)		(1,016)		(65)
Net exchanges	(1)		(61)		1		(65)		(2)
Acquisition-related	0		0		0		0		18,509
Impact of foreign exchange²	1,302		(560)		0		694		0
Market gains and (losses)³	(295)		289		(211)		171		(490)
Ending assets	$	18,102	$	17,156	$	18,318	$	18,102	$	18,318

Multi-asset
Beginning assets	$	4,140	$	4,213	$	4,790	$	4,093	$	5,014
Sales¹	85		65		119		332		493
Redemptions¹	(206)		(218)		(369)		(893)		(1,044)
Net redemptions¹	(121)		(153)		(250)		(561)		(551)
Net exchanges	(4)		57		(23)		55		(21)
Acquisition-related	11		0		0		11		45
Market gains and (losses)³	173		23		(424)		601		(394)
Ending assets	$	4,199	$	4,140	$	4,093	$	4,199	$	4,093

Total Long-term Assets⁴
Beginning assets	$	167,870	$	169,181	$	172,923	$	158,066	$	132,356
Sales¹	11,613		10,436		10,160		43,421		35,854
Redemptions¹	(10,375)		(12,833)		(15,100)		(46,689)		(48,130)
Net sales (redemptions)¹	1,238		(2,397)		(4,940)		(3,268)		(12,276)
Net exchanges	(11)		(5)		12		(37)		(3)
Acquisition-related	2,705		0		0		2,705		45,986
Impact of foreign exchange²	2,153		(1,244)		0		726		0
Market gains and (losses)³	6,380		2,335		$	(9,929)	22,143		(7,997)
Ending assets	$	180,335	$	167,870	$	158,066	$	180,335	$	158,066

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 2019.
4)	Ending assets includes $8.2 billion, $8.0 billion and $8.3 billion at Dec. 31, 2019, Sept. 30, 2019 and Dec. 31, 2018, respectively, of assets managed by a nonconsolidated entity, Hermes GPE LLP, in which Hermes holds an equity method investment.

*Unaudited Changes in Long-Term Assets - By Asset Class and Product Type*
(in millions)
	Quarter Ended
	Dec. 31, 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	$	42,575	$	38,175	$	42,329	$	23,495	$	10,826	$	6,330	$	3,952	$	188	$	99,682	$	68,188
Sales	3,252		1,840		4,464		1,546		367		59		82		3		8,165		3,448
Redemptions	(3,023)		(2,057)		(3,604)		(999)		(470)		(16)		(199)		(7)		(7,296)		(3,079)
Net sales (redemptions)	229		(217)		860		547		(103)		43		(117)		(4)		869		369
Net exchanges	(12)		0		86		(80)		(1)		0		(4)		0		69		(80)
Acquisition-related	2,191		53		450		0		0		0		11		0		2,652		53
Impact of foreign exchange³	387		280		167		17		810		492		0		0		1,364		789
Market gains and (losses)⁴	2,742		2,608		331		821		(143)		(152)		158		15		3,088		3,292
Ending assets	$	48,112	$	40,899	$	44,223	$	24,800	$	11,389	$	6,713	$	4,000	$	199	$	107,724	$	72,611

	Year Ended
	Dec. 31, 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	12,380		7,842		16,730		4,694		1,062		381		317		15		30,489		12,932
Redemptions	(11,757)		(10,037)		(16,311)		(5,232)		(1,721)		(738)		(864)		(29)		(30,653)		(16,036)
Net sales (redemptions)	623		(2,195)		419		(538)		(659)		(357)		(547)		(14)		(164)		(3,104)
Net exchanges	181		0		(98)		(110)		(65)		0		55		0		73		(110)
Acquisition-related	2,191		53		450		0		0		0		11		0		2,652		53
Impact of foreign exchange³	54		(82)		72		(12)		430		264		0		0		556		170
Market gains and (losses)⁴	8,479		7,210		2,890		2,792		318		(147)		561		40		12,248		9,895
Ending assets	$	48,112	$	40,899	$	44,223	$	24,800	$	11,389	$	6,713	$	4,000	$	199	$	107,724	$	72,611

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 $8.2 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.

*Unaudited Changes in Long-Term Assets - By Product Type*
(in millions)

	Quarter Ended						Year Ended
	Dec. 31, 2019		Sept. 30, 2019		Dec. 31, 2018		Dec. 31, 2019		Dec. 31, 2018

Total Fund Assets¹
Beginning assets	$	99,682	$	100,946	$	101,437	$	92,359	$	79,301
Sales	8,165		6,900		7,868		30,489		26,601
Redemptions	(7,296)		(7,986)		(10,375)		(30,653)		(32,361)
Net sales (redemptions)	869		(1,086)		(2,507)		(164)		(5,760)
Net exchanges	69		0		13		73		0
Acquisition-related	2,652		0		0		2,652		23,564
Impact of foreign exchange²	1,364		(725)		0		556		0
Market gains and (losses)³	3,088		547		(6,584)		12,248		(4,746)
Ending assets	$	107,724	$	99,682	$	92,359	$	107,724	$	92,359

Total Separate Accounts Assets⁴
Beginning assets	$	68,188	$	68,235	$	71,486	$	65,707	$	53,055
Sales⁵	3,448		3,536		2,292		12,932		9,253
Redemptions⁵	(3,079)		(4,847)		(4,725)		(16,036)		(15,769)
Net sales (redemptions)⁵	369		(1,311)		(2,433)		(3,104)		(6,516)
Net exchanges	(80)		(5)		(1)		(110)		(3)
Acquisition-related	53		0		0		53		22,422
Impact of foreign exchange²	789		(519)		0		170		0
Market gains and (losses)³	3,292		1,788		(3,345)		9,895		(3,251)
Ending assets	$	72,611	$	68,188	$	65,707	$	72,611	$	65,707

Total Long-term Assets^1,4
Beginning assets	$	167,870	$	169,181	$	172,923	$	158,066	$	132,356
Sales⁵	11,613		10,436		10,160		43,421		35,854
Redemptions⁵	(10,375)		(12,833)		(15,100)		(46,689)		(48,130)
Net sales (redemptions)⁵	1,238		(2,397)		(4,940)		(3,268)		(12,276)
Net exchanges	(11)		(5)		12		(37)		(3)
Acquisition-related	2,705		0		0		2,705		45,986
Impact of foreign exchange²	2,153		(1,244)		0		726		0
Market gains and (losses)³	6,380		2,335		(9,929)		22,143		(7,997)
Ending assets	$	180,335	$	167,870	$	158,066	$	180,335	$	158,066

1)	Includes $8.2 billion, $8.0 billion and $8.3 billion at Dec. 31, 2019, Sept. 30, 2019 and Dec. 31, 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 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.

*Unaudited Managed Assets* (in millions)	Dec. 31, 2019		Sept. 30, 2019		June 30, 2019		March 31, 2019		Dec. 31, 2018
By Asset Class
Equity	$	89,011	$	80,750	$	81,999	$	80,245	$	72,497
Fixed-income	69,023		65,824		65,052		64,107		63,158
Alternative / private markets¹	18,102		17,156		17,917		17,854		18,318
Multi-asset	4,199		4,140		4,213		4,259		4,093
Total long-term assets	180,335		167,870		169,181		166,465		158,066
Money market	395,539		359,292		333,066		318,413		301,794
Total Managed Assets	$	575,874	$	527,162	$	502,247	$	484,878	$	459,860

By Product Type
Funds:
Equity	$	48,112	$	42,575	$	43,443	$	42,057	$	36,584
Fixed-income	44,223		42,329		42,084		41,189		40,490
Alternative / private markets¹	11,389		10,826		11,400		11,164		11,365
Multi-asset	4,000		3,952		4,019		4,072		3,920
Total long-term assets	107,724		99,682		100,946		98,482		92,359
Money market	286,612		261,215		231,321		214,764		208,480
Total Fund Assets	$	394,336	$	360,897	$	332,267	$	313,246	$	300,839
Separate Accounts:
Equity	$	40,899	$	38,175	$	38,556	$	38,188	$	35,913
Fixed-income	24,800		23,495		22,968		22,918		22,668
Alternative / private markets	6,713		6,330		6,517		6,690		6,953
Multi-asset	199		188		194		187		173
Total long-term assets	72,611		68,188		68,235		67,983		65,707
Money market	108,927		98,077		101,745		103,649		93,314
Total Separate Account Assets	$	181,538	$	166,265	$	169,980	$	171,632	$	159,021
Total Managed Assets	$	575,874	$	527,162	$	502,247	$	484,878	$	459,860

1)	Includes $8.2 billion, $8.0 billion, $8.4 billion, $8.1 billion, and $8.3 billion at Dec. 31, 2019, Sept. 30, 2019, June 30, 2019, March 31, 2019, and Dec. 31, 2018, respectively, of assets managed by a nonconsolidated entity, Hermes GPE LLP, in which Hermes holds an equity method investment.

*Unaudited Average Managed Assets*	Quarter Ended
(in millions)	Dec. 31, 2019		Sept. 30, 2019		June 30, 2019		March 31, 2019		Dec. 31, 2018
By Asset Class
Equity	$	84,448	$	82,027	$	80,819	$	77,554	$	78,084
Fixed-income	67,602		65,074		64,913		64,167		63,881
Alternative / private markets¹	17,838		17,407		17,772		18,311		18,410
Multi-asset	4,149		4,167		4,225		4,225		4,449
Total long-term assets	174,037		168,675		167,729		164,257		164,824
Money market	376,029		349,313		325,527		311,150		278,885
Total Avg. Managed Assets	$	550,066	$	517,988	$	493,256	$	475,407	$	443,709
By Product Type
Funds:
Equity	$	44,984	$	43,077	$	42,571	$	40,217	$	39,871
Fixed-income	43,304		41,958		41,652		41,095		41,088
Alternative / private markets¹	11,283		11,035		11,146		11,545		11,351
Multi-asset	3,956		3,978		4,034		4,042		4,268
Total long-term assets	103,527		100,048		99,403		96,899		96,578
Money market	274,116		249,846		222,282		209,260		194,009
Total Avg. Fund Assets	$	377,643	$	349,894	$	321,685	$	306,159	$	290,587
Separate Accounts:
Equity	$	39,464	$	38,950	$	38,248	$	37,337	$	38,213
Fixed-income	24,298		23,116		23,261		23,072		22,793
Alternative / private markets	6,555		6,372		6,626		6,766		7,059
Multi-asset	193		189		191		183		181
Total long-term assets	70,510		68,627		68,326		67,358		68,246
Money market	101,913		99,467		103,245		101,890		84,876
Total Avg. Separate Account Assets	$	172,423	$	168,094	$	171,571	$	169,248	$	153,122
Total Avg. Managed Assets	$	550,066	$	517,988	$	493,256	$	475,407	$	443,709

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

*Unaudited Average Managed Assets*	Year Ended
(in millions)	Dec. 31, 2019		Dec. 31, 2018
By Asset Class
Equity	$	81,212	$	70,680
Fixed-income	65,375		63,454
Alternative / private markets¹	17,896		9,397
Multi-asset	4,192		4,764
Total long-term assets	168,675		148,295
Money market	340,505		267,093
Total Avg. Managed Assets	$	509,180	$	415,388
By Product Type
Funds:
Equity	$	42,712	$	36,984
Fixed-income	41,938		40,952
Alternative / private markets¹	11,317		5,784
Multi-asset	4,003		4,554
Total long-term assets	99,970		88,274
Money market	238,876		182,828
Total Avg. Fund Assets	$	338,846	$	271,102
Separate Accounts:
Equity	$	38,500	$	33,696
Fixed-income	23,437		22,502
Alternative / private markets	6,579		3,613
Multi-asset	189		210
Total long-term assets	68,705		60,021
Money market	101,629		84,265
Total Avg. Separate Account Assets	$	170,334	$	144,286
Total Avg. Managed Assets	$	509,180	$	415,388

1)	The average balance includes $8.2 billion and $4.1 billion for the years ended Dec. 31, 2019 and 2018, respectively, of assets managed by a nonconsolidated entity, Hermes GPE LLP, in which Hermes holds an equity method investment.

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