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The international business of Federated Hermes (formerly Hermes Investment Management)

PRI reporting framework 2020

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Peering questions

OO LE 01. Breakdown of listed equity investments by passive and active strategies

LE 01.1. Provide a breakdown of your internally managed listed equities by passive, active - quantitative (quant), active - fundamental and active - other strategies.

Percentage of internally managed listed equities
0 Passive
21.8 Active - quantitative (quant)
78.2 Active - fundamental and active - other
Total 100%

LE 01.2. Additional information. [Optional]

Our global equities strategies use a systematic model to first identify the most attractive stocks and create an optimised portfolio that aims to maximise risk-adjusted returns. The team then performs a bottom-up "sense check" to ensure the model has accurately assessed the nuances of each potential investment.


OO LE 02. Reporting on strategies that are <10% of actively managed listed equities (Not Applicable)


OO FI 01. Breakdown of fixed income investments by passive and active strategies

FI 01.1. Provide a breakdown of your internally managed fixed income securities by active and passive strategies

SSA
0 Passive
0 Active - quantitative (quant)
100 Active - fundamental and active - other
Total 100%
Corporate (financial)
0 Passive
0 Active - quantitative (quant)
100 Active - fundamental and active - other
Total 100%
Corporate (non-financial)
0 Passive
0 Active - quantitative (quant)
100 Active - fundamental and active - other
Total 100%
Securitised
0 Passive
0 Active - quantitative (quant)
100 Active - fundamental and active - other
Total 100%

FI 01.2. Additional information. [Optional]


OO FI 02. Reporting on strategies that are <10% of actively managed fixed income (Not Applicable)


OO FI 03. Fixed income breakdown by market and credit quality

Update: this indicator has changed from "Mandatory to report, voluntary to disclose" to "Mandatory". Your response to this indicator will be published in the Public Transparency Report. This change is to enable improved analysis and peering.

FI 03.1. Indicate the approximate (+/- 5%) breakdown of your SSA investments, by developed markets and emerging markets.

SSA
95 Developed markets
5 Emerging markets
Total 100%
Indicate the approximate (+/- 5%) breakdown of your corporate and securitised investments by investment grade or high-yield securities.
Type
Investment grade (+/- 5%)
High-yield (+/- 5%)
Total internally managed
Corporate (financial)
100%
Corporate (non-financial)
100%
Securitised
100%

FI 03.3. Additional information. [Optional]

If you are invested in private debt and reporting on ratings is not relevant for you, please indicate below


OO SAM 01. Breakdown of externally managed investments by passive and active strategies (Not Applicable)


OO PE 01. Breakdown of private equity investments by strategy (Not Applicable)


OO PE 02. Typical level of ownership in private equity investments (Not Applicable)


OO PR 01. Breakdown of property investments

PR 01.1. Indicate the level of ownership you typically hold in your property investments.

PR 01.2. Provide a breakdown of your organisations allocation to Real Estate Investment Trusts (REITs) or similar

PR 01.3. Additional information. [Optional]

 

Our real estate franchise offers client-focused property investment solutions through segregated and pooled structures, seeking to maximise risk-adjusted returns. Our real estate capability is one of the largest real estate managers in the UK, with £7.9 billion of assets under management (GAV as at 31 December 2019) in both UK and international portfolios.

We are organised along client-focused investment and asset management specialisms, supported by a central team providing robust risk management oversight, research and corporate finance support. We also work in partnership with our related companies, MEPC and Argent, combining our expertise in conjunction with these specialist platforms to deliver our client offering. The investment process adopts a top-down portfolio risk management and bottom-up property selection to target assets that are highly competitive within their local marketplaces and which have sustainable income streams.

We believe it is imperative to understand how occupiers assess property in order to fully assess risk. We believe that a responsible, sustainable approach to real estate investment management is the only strategy that both protects and enhances the value of our clients’ assets, now and into the future. Therefore our principles of Responsible Property Investment (RPI) are fully integrated within our investment process.


OO PR 02. Breakdown of property assets by management

PR 02.1. Provide a breakdown of your organisation’s property assets based on who manages the assets.

Property assets managed by

Breakdown of your property assets (by number)
Managed directly by your organisation
Managed via third-party property managers appointed by you
Managed by other investors or their property managers
Managed by tenant(s) with operational control
Total 100%

PR 02.2. Additional information. [Optional]

The Real Estate team has built a best-in-class asset management capability, led by Chris Taylor,  Head of Real Estate and Private Markets, and supported by several experienced asset managers. This capability allows the team to control decision making and drive client performance. They are responsible for the day-to-day asset management of the properties, including executing business plans and managing the value creation and value protection of the assets. The asset managers are responsible for driving performance, ensuring that lease renewals are actioned in a timely manner, vacancies are let, refurbishments carried out, that the property strategy meets the needs of the target tenants, and implementing our environmental and health and safety programme.

All day-to-day property management, including rent and debt collection, is dealt with by external property management agents. The performance of property manager agents - and any other agents appointed for work on activities such as rent reviews, lease renewals, transactions property maintenance, health and safety issues, and environmental issues - is closely monitored by our internal asset managers.

A small part of our international portfolio is managed through joint venture funds and as indirect investments. We also have a small proportion of assets with leases that give management control to the occupiers, including FRI leases in the UK and triple net leases in the US.


OO PR 03. Largest property types

PR 03.1. Indicate up to three of your largest property types by AUM.

Types

Main property types (by AUM)

Largest property type
Second largest property type
Third largest property type

PR 03.2. Additional information.


OO INF 01. Breakdown of infrastructure investments (Not Applicable)


OO INF 02. Breakdown of infrastructure assets by management (Not Applicable)


OO INF 03. Largest infrastructure sectors (Not Applicable)


OO HF 01. Breakdown of hedge funds investments by strategies (Not Applicable)


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