Federated Hermes seeking shareholder approval related to the Federated Hermes MDT Large Cap Growth ETF
Rhea-AI Summary
Federated Hermes, Inc. (NYSE: FHI) announced that the Board of Trustees of Federated Hermes ETF Trust has approved a change in the fundamental policy for the Federated Hermes MDT Large Cap Growth ETF (NYSE: FLCG). The proposed change would shift the fund from a diversified to a non-diversified company, subject to shareholder approval. The record date for majority shareholder consent is set for Aug. 19, 2024, with determination on Aug. 23, 2024.
The change aims to provide greater flexibility in executing the fund's investment strategy, particularly when individual issuer weightings in the Russell 1000® Growth Index exceed diversification limits. If approved, the change is expected to be effective on Aug. 26, 2024. Federated Hermes, with $782.7 billion in assets under management as of June 30, 2024, is seeking this change to enhance long-term strategy execution without substantially affecting the fund's principal investment strategies.
Positive
- Potential for greater flexibility in investment strategy execution
- Expected shareholder approval due to large majority held by fund adviser affiliate
- No substantial change to fund's principal investment strategies anticipated
Negative
- Shift from diversified to non-diversified status may increase concentration risk
- Potential for increased volatility due to reduced diversification requirements
News Market Reaction
On the day this news was published, FHI declined 1.66%, reflecting a mild negative market reaction.
Data tracked by StockTitan Argus on the day of publication.
As an affiliate of the Fund's adviser currently holds a large majority of the Fund's shares and is expected to continue to hold a majority as of the record date, it is expected that the proposed change will be approved by written consent in lieu of a shareholder meeting and that no proxy or solicitation will be necessary. If approved in this manner, the change is expected to be effective on Aug. 26, 2024.
The Fund pursues its principal investment strategy, in part, by seeking to approximate exposure to companies listed in the Russell 1000® Growth Index (the "Index") in relation to their index weightings, although the Fund is not designed to track the overall composition or returns of the Index and the investment adviser actively manages the Fund's investment strategy. The proposed change to the Fund's diversification classification is intended to provide the Fund with greater long-term flexibility in executing its investment strategy, in particular at times when the weightings of individual issuers in the Index exceed the diversification limits under the Investment Company Act of 1940. The change in the fundamental policy is not expected to substantially affect the Fund's principal investment strategies.
Investors can view fund and portfolio information in the Products section of FederatedHermes.com/us.
Federated Hermes, Inc. (NYSE: FHI) is a global leader in active, responsible investment management, with
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Certain statements in this press release, such as those related to the manner and timing of shareholder approval, the intended purpose behind the fundamental policy change, the Fund's investment strategies, and the intended effect of the fundamental policy change on the Fund's principal investment strategies, constitute or may constitute forward-looking statements, which involve known and unknown risks, uncertainties and other factors that may cause the actual results, levels of activity, performance or achievements of the Fund to be materially different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements. Any forward-looking statement, and the Fund's level of business activity and financial results, are inherently subject to significant business, market, economic, competitive, regulatory and other risks and uncertainties, many of which are difficult to predict and beyond the Fund's and its investment adviser's control. Risks and uncertainties could vary significantly depending on various factors, such as market conditions, investment performance and investor behavior. Other risks and uncertainties include the risk factors discussed in the Fund's registration statement, including its prospectus and statement of additional information, as filed with the Securities and Exchange Commission. As a result, no assurance can be given as to future results, levels of activity, performance or achievements, and none of the Fund, its investment adviser, or any other person assumes responsibility for the accuracy and completeness, or updating, of such statements in the future.
For more complete information, visit FederatedHermes.com/us or contact your investment professional for summary prospectuses or prospectuses. You should consider the fund's investment objectives, risks, charges and expenses carefully before you invest. Information about these and other important subjects is in the fund's summary prospectus or prospectus, which you should read carefully before investing. Prospectuses are available by calling Federated Hermes at 1-800-341-7400 or by visiting FederatedHermes.com/us.
Fund shares are bought and sold on an exchange at market price (not NAV) and are not individually redeemed from the Fund. However, shares may be redeemed at NAV directly by certain authorized broker-dealers (Authorized Participants) in very large creation/redemption units. Investors purchasing and selling at market price may pay brokerage commissions which will reduce returns. Market price returns are based on the official closing price of an ETF share or, if the official closing price isn't available, the midpoint between the national best bid and national best offer ("NBBO") as of the time the ETF calculates the current NAV per share. NAVs are calculated using prices as of 4 p.m. Eastern Time.
Federated Securities Corp., Distributor
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SOURCE Federated Hermes, Inc.
FAQ
What change is Federated Hermes seeking for the MDT Large Cap Growth ETF (FLCG)?
When is the record date for shareholder consent on the FLCG fund change?
If approved, when will the FLCG fund policy change take effect?
How much assets under management does Federated Hermes (FHI) have as of June 30, 2024?
