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.

Liquidity is one of our core capabilities, alongside equity, fixed income and stewardship. We manage US$586.6bn² 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.

² As at 30/06/2024.

High-quality liquidity solutions

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:

Why Federated Hermes Liquidity Management

Expertise at scale

We are one of the industry's largest liquidity managers and driven by a commitment to innovation in the field.

A tried and tested investment process

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

In-depth industry experience

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

Investment philosophy and process

Credit research

Credit research is the foundation of our investment process. Our experienced team assesses capitalisation, liquidity, qualitative considerations, profitability and agency ratings. We then use proprietary decision tools to determine an internal credit rating.

ESG

We integrate environmental, social and governance (ESG) factors into an intensive credit review process in a non-exclusionary way.

ESG Dashboard

We synthesize key metrics into a proprietary ESG Dashboard, which provides a concise assessment of a company’s exposures to material ESG risks.

Portfolio

Our portfolio managers construct portfolios based on an approved-issuer database while considering relative-value analysis, average maturity targets and liquidity management.

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.

Liquidity solutions at-a-glance

Strategies

Short Duration Bond

Investing across the yield curve

* 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.

Key pieces

Liquidity management overview

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Disciplined management by a money market leader

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Understanding Federated Hermes' liquidity management

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Short Term Investments Committee

Market insights and investment views

The Short Term Investments Committee is a collection of investment professionals with in-depth experience investing across the 0-3-year part of the yield curve. On a monthly basis, the committee meets to provide insights, strategize and discuss investment opportunities.

Unlock the potential of our liquidity solutions

Connect with us to find out more:

Tara Dougherty

Director - Liquidity Solutions, UK & Ireland

[email protected]

Kenny Turnbull

Manager - Business Development, Money Markets

[email protected]

BD014803

Investments

Our capabilities provide the key.

Solutions across the spectrum

EOS Stewardship