Liquidity

Cash remains a competitive asset class for investors seeking diversification through lower-risk, more-liquid assets. At Federated Hermes, cash gets the royal treatment through commitment and experience built over 50 years of managing liquidity.¹

¹ Federated Hermes Inc. (FHI) has been running institutional money market portfolios since 1974.

High-quality liquidity solutions​​

Liquidity is one of our core capabilities, alongside equity, fixed income and stewardship. We manage US$578.8bn2 in liquidity assets globally, offering a range of sterling-, euro- and dollar-denominated short-term and standard money market funds as well as bespoke solutions for institutional investors. Our clients include multi-national corporates, pension funds, local government organisations and wealth managers.

2 As at 31/03/2024.

Overview and investment approach

We seek to provide liquidity, the stability of principal and a competitive yield – driven by a relative value approach across the yield curve, across different sectors and across different security types.

We seek to:

liquidity-investment approach-infographic

Key pieces

Liquidity management overview
Disciplined management by a money market leader
Understanding Federated Hermes' liquidity management

Why Federated Hermes liquidity management?

We are one of the industry’s largest liquidity managers. Cash management is a core focus, fuelled by our commitment to the innovation of liquidity products.

We have an established and thorough credit process that includes ESG analysis to compile a select approved credit list.

The UK portfolio management team has over 20 years’ average experience managing liquidity assets.

Investment philosophy and process

Liquidity solutions at-a-glance

* These strategies are run by our US-based Liquidity Management Team. ** This strategy is run by our US-based International Fixed Income Group.

For illustrative purposes only and should not be used as indicative of Federated Hermes products at any given point in time. Actual liquidity, risk potential and yield potential of Federated Hermes’ products will vary. The illustration represents a simplified profile of liquidity solutions offered by Federated Hermes, which implies and assumes typical terms, appropriate diversification of holdings and normal market conditions. Not all strategies are available in all jurisdictions.

¹ Weighted Average Maturity (WAM): The average of all the maturities of securities in a portfolio, weighted proportionally to each security’s position size in the portfolio. Typically, the longer the WAM, the greater the MMFs’ sensitivity to changes in interest rate changes.

² Average Effective Duration (AED): Effective duration is a measure of a security’s price sensitivity to a change in interest rates, taking into consideration the security’s time to maturity of the security and the effect on expected future cash flows. The Average Effective Duration is an average of a effective durations of securities in a portfolio, weighted proportionally to each security’s position size in the portfolio.

ESG in liquidity

Integrating environmental, social and governance (ESG) issues into the investment management process has evolved with the market’s recognition of how an institution’s long-term strategic focus on corporate sustainability can enhance its risk-return profile. Lessons learned from the recent past also underline the importance of identifying and avoiding risky corporate management structures and/or ill-focused strategic priorities.

Despite the relevance of ESG considerations for investors, the money market space is particularly challenging when it comes to integrating ESG data into the investment process in a non-exclusionary way.

Federated Hermes believes the combination of deep ESG analysis and impactful engagement can make genuine ESG integration possible. We combine ESG analysis on an issuer level with direct engagement with corporate entities, global banks and other issuing institutions.

Unleash the potential of our liquidity solutions

Connect with us to find out more:

Mark Coppell

Director – Head of Institutional Sales, Asia ex-Japan