To achieve this, we have undergone considerable change – and this transformation has been driven by an intense focus on delivering strong risk-adjusted performance for clients and positive outcomes for society and the environment.
We embarked on an exciting new chapter of our evolution in April 2018, when Federated Investors, Inc, one of the largest investment managers in the US with $459.9bn assets under management, announced an agreement to acquire a majority interest in Hermes from the BT Pension Scheme (BTPS).
For us, the transaction serves as a growth opportunity, joining with Federated to form a truly global asset manager – dedicated to active management – with mutually beneficial capabilities that leverage both Federated’s extensive network of financial intermediaries in the US and our own fast-growing client base in the UK, continental Europe and Asia.
Furthermore, we have a mutual commitment to shared values in meeting client needs, thereby ensuring that we continue to be dedicated to our role as a responsible steward of investments.
In July 2018, Federated completed the acquisition, at a cost of £246m. BTPS retained a 29.5% interest in Hermes, and a 10.5% interest in Hermes was placed into an employee benefit trust by BTPS for the benefit of certain members of Hermes’ management and other employees.
In the same year, Federated filed for the Federated Hermes SDG Engagement Equity Fund with the SEC – a 40 Act version of our SDG Engagement Fund – which marked the beginning of our distribution in the US through Federated.
High conviction, active investment strategies
In the past decade, the investment industry has been increasingly challenged by the rapid growth of passive vehicles, particularly exchange-traded funds.
During this time, our commitment to active investing has never wavered: we combine high-conviction investment with ESG analysis and active ownership across all of our strategies.
In recent years, we have diversified our business by developing a broad and deep fixed-income platform, providing specialist capabilities across the spectrum of the asset class – from corporate bonds and synthetic instruments to loans and asset-backed securities. This platform has been built to help investors respond dynamically to opportunities throughout market cycles.
In addition, we established a thematic franchise – spearheaded by Hermes Impact Opportunities and Hermes SDG Engagement Equity, and with further products in the pipeline. Both of these public-equity impact strategies focus on investments connected to the Sustainable Development Goals (SDGs). By respectively seeing impact and working with companies to deliver positive change tomorrow, these distinct capabilities show that sustainable investing remains core to our identity and purpose.