Federated Hermes

Providing world-class active investment management and engagement services to more than 11,000 institutions and intermediaries, their clients include corporations, government entities, insurance companies, foundations and endowments, banks and broker/dealers. Headquartered in Pittsburgh, Federated Hermes’ more than 1,900 employees include those in London, New York, Boston and several other offices worldwide.

Hermes employs a proprietary multi-faceted model (The Alpha Model) that is applied across the investment universe of over 5000 global companies. The model is built on fundamental company analysis that provides statistical evidence to predict which companies are most attractive and likely to outperform over a three-year period. The Alpha model focuses on changes in trading multiple, the ability to increase earnings power and the ability to generate shareholder return by concentrating on six fundamental factors: valuation, sentiment, profitability, growth, corporate behaviour and capital structure. Each company is then scored and ranked against sector peers to ensure sector biases are removed. 

The second part of the investment process introduces an environmental, social and governance (ESG) scoring system (QESG Score) that uncovers a stock's exposure to a wide range of industry-specific ESG risk factors and how each company manages through them. Companies that show a positive trend towards management of ESG issues score higher and are favored. 

The Alpha Model Score and QESG Score of each company are then combined through a portfolio optimizer that also considers portfolio constraints and risk/return trade-off — resulting in an optimal portfolio of 70 to 100 stocks.