Speaking with InvestorDaily, Jim Roland, Federated Hermes’ head of Asia-Pacific distribution, said the firm has long recognised an opportunity to expand into Australia’s exciting wealth management sector.
“You’ve got a really healthy, vibrant, dynamic wealth ecosystem, and from my perspective, we’d really be missing out not to see if we can take what we have as a firm – both in terms of our investment management capabilities and our sales capabilities – to face off against wealth clients,” he said.
Although Roland couldn’t disclose the specific details of the product to come, he did reveal that at the moment, Federated Hermes is testing the market in Australia, engaging financial advisers, platforms and rating agencies to gauge interest.
“We’ve put out teasers and begun the launch process, which we hope to complete within the next three to four weeks,” the executive said.
Globally, Federated Hermes offers money market funds in US dollar, Euro, and sterling and is now exploring similar products in APAC currencies, including Australian dollar, Singapore dollar, Hong Kong dollar, and potentially Japanese yen in the future.
Roland described the firm’s liquidity solutions as “credible” on a global scale, with the firm having launched in 1955.
“I think it’s fair to say that we’ve got a credible offering when it comes to liquidity solutions globally,” Roland said.
However, given money market funds are interest rate-sensitive business, with inflows when rates are high and outflows when rates fall, Federated Hermes has developed out-of-the-curve solutions to capture assets in a declining rate environment.
“Unsurprisingly, we’ve become pretty clever over the years at developing solutions that exist just further out-the-curve to be in a position to capture those assets when interest rates fall,” Roland said.
This “out-of-the-curve” approach includes the cash-plus space, products that are private credit-adjacent while maintaining strong liquidity, where Federated Hermes is aiming to expand.
“That’s the area in which we’re sort of looking to launch it. And it exists in this space that is sort of private credit adjacent, and also liquid or more attractive liquidity profile, and is called a derivative of our cash business, in a way that it’s cash plus,” Roland said.
While he could not share specific product details, he noted that Federated Hermes is drawn to Australia following a rebound in the wealth ecosystem, where financial adviser numbers have fallen from a peak of 29,000 to around 12,000–13,000 after major local banks exited the advice sector post-Hayne royal commission, creating opportunities for international players to enter the market.
“There’s significant wealth in Australia,” he said. “I think we’re pretty good at working with wealth clients, and because you’ve got this strong wealth ecosystem [in Australia], it jumped off the page to me a bit, and we’d be missing a trick to not at least look into it.”
The firm expanded its Australian and APAC distribution team 12 months ago with the appointment of Elizabeth White as associate director of business development, Australia. Since then, it has been identifying opportunities within the local wealth ecosystem with the view of growing the team further.
“It’s been a really encouraging 12 months since she started, as we’ve taken that feedback, and we do feel that we’ve got quite good products to bring to that marketplace,” Roland said.
On private credit in particular, he said investors now appear to be examining the nuances of the asset class and seeking answers to critical questions about liquidity within the ecosystem – answers Federated Hermes is interested in providing.
“I think investors are looking for private credit-flavoured stuff that gives them a bit more reassurance on some of these liquidity issues, in response to queries that have been raised over the last couple of months,” he said.
“We think we’re in a pretty good position to hopefully help solve some of that in the Australian marketplace.”
He also drove home the firm’s considerable size and credibility, with US$845.7 billion in assets under management. In particular, he noted its collaborations with asset managers including UBS, as well as stewardship services provided to Australian super funds, including Aware Super, Cbus, Colonial First State, HESTA, and Hostplus.
As the firm enters the Australian wholesale market, Roland said it hopes to forge genuine partnerships with regional financial institutions and local wealth managers.
