Asset manager Federated Hermes leverages Singapore HQ to target Asia’s wealth market  

SINGAPORE – Federated Hermes, a global asset management firm, is leveraging its Asia headquarters in Singapore to target wealth management clients and family offices in the region.

The New York-listed firm is excited about the growth opportunities, notably in cash management, here and in the region, where it also has offices in Sydney and Tokyo.

Federated Hermes managed US$830 billion (S$1.12 trillion) in assets as at Dec 31, 2024, mostly in money market assets. It has 19 employees in the Republic, making Singapore its fifth-largest office globally, and the second largest outside the United States and after London. It manages a private equity team from the city-state.

“Singapore is a really excellent location to start. It is a worthy window on China, and I think it’s a worthy place from which to do continued business in Australia,” Federated Hermes chief executive Christopher Donahue told The Straits Times during a recent visit.

Money market funds are an important and attractive haven for investors in times of nervous markets, said Mr Donahue, who is also chairman and president of the firm. 

These funds – a type of mutual fund that invests in cash, cash equivalents and short-term debt securities – are a safe and reliable option for those looking to preserve capital while generating modest returns, he added.

They allow investors to have “dry powder”, or readily available funds, that can be quickly deployed when investment opportunities arise, he said.

They also offer portfolio diversification, helping to mitigate risks associated with market fluctuations.

Investors with cash in money market funds may feel less worried about market volatility, as their funds are relatively safe and easily accessible, Mr Donahue said.

Globally, the amount invested in these funds have risen above US$7 trillion, he said. Investors still seem to be comfortable with these short-term investments, especially as the US Federal Reserve has recently scaled back expectations of rate cuts. 

The firm’s head of distribution for Asia-Pacific, Mr Jim Roland, moved from London to Singapore in 2024 to oversee the firm’s sales and distribution efforts across Asia-Pacific. 

Mr Roland hired former Goldman Sachs banker, Ms Calista Ng, to cultivate family offices and private wealth clients.

Federated Hermes is mulling over setting up an office in Hong Kong as it expands its family office and private wealth-management business in China and the region. 

Mr Donahue predicts Asia will account for 40 per cent of the global financial flows in the next five years, up from the current 25 per cent, as Europe’s share declines.

Driving the region’s economic activities will be factors such as high savings rates, a growing middle class and the transfer of wealth from the older generation to the younger ones.

“That means money’s in motion,” Mr Donahue said. “My father used to say if it’s raining money, get your buckets out.”

Mr Donahue’s father, John, founded Federated Investors in 1955 with two high school classmates.

In 2018, the younger Donahue led the company to acquire a 60 per cent stake in the United Kingdom’s Hermes Fund Managers from BT Pension Scheme – a move which gave the US investment manager a footprint in Europe and Asia. 

Hermes was a pioneer in environmental, social and governance (ESG) integration and impact investing. At Federated Hermes, stewardship arm EOS is a leading service provider, engaging companies on ESG matters.

This allows its clients, which include many of the world’s biggest pension funds, to be more active owners of their assets. EOS advises more than US$2.1 trillion in assets to deliver corporate engagement and proxy voting services under its stewardship offering. 

Federated Investors changed its name to Federated Hermes in February 2020, and bought the remaining stake in Hermes in 2021. 

On Jan 30, Federated Hermes reported total managed assets hit a record US$830 billion on Dec 31, 2024, up 10 per cent from Dec 31, 2023.

More than US$630 billion of its assets under management were in liquidity assets. The rest were in equities, fixed income, alternative and private markets as well as multi-assets.

Mr Donahue said Federated Hermes’ record assets at year end were driven by “another quarter of money market asset increases, as all segments of our liquidity products offered exceptional cash management resources, as well as opportunities for attractive returns in balanced client portfolios”.

Its clients include corporations, government entities, insurance companies, foundations and endowments, banks and brokers.

Research house Morningstar ranked the firm among the top 7 per cent equity fund managers, top 9 per cent money market fund managers and top 10 per cent fixed-income fund managers on Dec 31, 2024, based on United States fund flows rankings.