Federated Hermes launches active ETF targeting high monthly distributions
MWN-AI** Summary
Federated Hermes, a prominent player in active investment management, has announced the launch of its Federated Hermes Enhanced Income ETF (CBOE: PAYR) on October 8, 2025. This newly introduced ETF aims to provide investors with high monthly distributions, appealing particularly to income-focused investors such as those nearing retirement. The ETF's investment strategy combines high-dividend-paying common stocks with an active options overlay, allowing it to generate income from both dividends and net premiums from call spread writing.
The ETF is designed to meet varying market conditions while delivering a consistent cash flow. Its primary objective is to offer high current income, while also pursuing capital appreciation. The expertise behind this fund comes from seasoned investment teams within Federated Hermes, specifically the Multi-Asset Investment Team and the Strategic Value Dividend Team. This experience positions the ETF to effectively balance income generation and risk management.
Brandon Clark, ETF Business Director at Federated Hermes, emphasized the importance of meeting investor demand for diverse and efficient investment vehicles. The launch of the Enhanced Income ETF is part of the firm's strategy to expand its ETF lineup, which already includes various active ETFs targeting different investment goals.
As of September 30, 2025, Federated Hermes manages over $1.2 billion in ETF assets, demonstrating its commitment to providing investors with innovative strategies. Investors are encouraged to evaluate the ETF's investment objectives, risks, and costs before investing, as market dynamics can lead to variability in monthly distributions. The ETF structure offers tax efficiency and liquidity advantages, key factors for investors seeking stable income amid fluctuating market conditions.
MWN-AI** Analysis
Federated Hermes has recently launched the Enhanced Income ETF (CBOE: PAYR), a strategic move that taps into the growing demand for high monthly distributions and active management in the ETF space. This new offering aims to provide investors with consistent cash flow while pursuing capital appreciation, making it particularly attractive for income-oriented investors, especially those nearing retirement.
The ETF's dual strategy combines investments in high-dividend-paying stocks with an options overlay that includes call spread writing, potentially enhancing income generation. This approach aligns with a growing trend among investors seeking alternatives to traditional fixed-income products, especially in a rising interest rate environment where bond yields may be less appealing.
Given the extensive experience of Federated Hermes’ investment teams, which manage this ETF, investors can have confidence in the strategy’s execution. The management team’s dual focus on dividend growth potential alongside risk management should resonate with risk-conscious investors looking for income without sacrificing capital stability.
Moreover, as the ETF market continues to expand, PAYR benefits from the tax efficiencies typically inherent in ETFs. This structural advantage can be especially beneficial for income-seeking investors, who may wish to minimize their tax burdens from distributions.
However, potential investors should be cautious of the inherent risks. The reliance on equity markets means that share prices may fluctuate, leading to month-to-month variations in distributions. Additionally, there’s the potential for returns to be less stable than traditional dividend stocks due to the active management of options strategies.
In conclusion, the Federated Hermes Enhanced Income ETF could serve as a compelling addition to income-oriented portfolios, providing diversification and monthly cash flow while requiring careful consideration of the risks involved. Investors must weigh their risk tolerance and investment goals before diving into this innovative fund.
**MWN-AI Summary and Analysis is based on asking OpenAI to summarize and analyze this news release.
PR Newswire
- Federated Hermes Enhanced Income ETF leverages experience of tenured investment teams
- Federated Hermes strategically expands ETF lineup to meet client interests and objectives in a wide range of market conditions
PITTSBURGH , Oct. 8, 2025 /PRNewswire/ -- Federated Hermes, Inc. (NYSE: FHI), a global leader in active investing, today introduced Federated Hermes Enhanced Income ETF (CBOE: PAYR), which seeks to deliver to investors distributions from both its underlying equity holdings and net premiums received from call spread writing.
Designed to help meet the needs of investors seeking a relatively consistent monthly cash flow and a disciplined approach to managing risk, Federated Hermes Enhanced Income ETF may be a compelling option for income-oriented investors, particularly those in or near retirement, with appropriate risk tolerance. It seeks to deliver high current income with a secondary objective of capital appreciation, pursuing its investment objective by investing primarily in high-dividend-paying common stocks with dividend growth potential along with an options overlay strategy.
"Combining a high-quality-dividend portfolio with an actively managed options overlay, Federated Hermes Enhanced Income ETF can serve multiple roles in a portfolio," said John B. Fisher , president and chief executive officer of Federated Advisory Companies. "It provides the opportunity to diversify an enhanced income allocation or to replace a portion of the bond sleeve for investors shifting their allocations as they near retirement."
The portfolio managers represent two of Federated Hermes' most tenured and experienced investment teams: Dana Meissner , CFA, FRM, CAIA and Damian McIntyre, CFA, FRM, CAIA from the Multi-Asset Investment Team and Daniel Peris, Ph.D., CFA; Deborah Bickerstaff ; Michael Tucker ; and Jared Hoff from the Strategic Value Dividend Team.
"As interest in ETFs continues to grow, we are dedicated to meeting investor demand by offering ETF versions of our flagship strategies," said Brandon Clark , ETF business director at Federated Hermes. "Federated Hermes Enhanced Income ETF offers risk-conscious, high-cash flow-seeking investors access to the ETF vehicle's tax efficiency, transparency, liquidity and ease of use."
As of Sept. 30, 2025 , Federated Hermes manages more than $1.2 billion in ETF assets. In addition to the newest ETF, Federated Hermes' active ETFs include:
- MDT Market Neutral ETF (NYSE: MKTN)
- MDT Large Cap Core ETF (NYSE: FLCC)
- MDT Large Cap Growth ETF (NYSE: FLCG)
- MDT Large Cap Value ETF (NYSE: FLCV)
- MDT Small Cap Core ETF (NYSE: FSCC)
- Short Duration Corporate ETF (NYSE: FCSH)
- Short Duration High Yield ETD (NYSE: FHYS)
- Total Return Bond ETF (NYSE: FTRB)
- U.S. Strategic Dividend ETF (NYSE: FDV)
Federated Hermes, Inc. (NYSE: FHI) is a global leader in active investment management, with $845.7 billion in assets under management, as of June 30, 2025 . We deliver investment solutions that help investors target a broad range of outcomes and provide equity, fixed-income, alternative/private markets, multi-asset and liquidity management strategies to more than 10,000 institutions and intermediaries worldwide. Our clients include corporations, government entities, insurance companies, foundations and endowments, banks and broker/dealers. Headquartered in Pittsburgh , Federated Hermes has more than 2,000 employees in London , New York , Boston and offices worldwide. For more information, visit FederatedHermes.com/us .
Investors should carefully consider the ETF's investment objectives, risks, charges and expenses before investing. To obtain a summary prospectus or prospectus containing this and other information, contact us at 1-800-341-7400 or visit FederatedHermes.com/us. Please carefully read the summary prospectus or the prospectus before investing.
ETFs are subject to risks and fluctuate in value.
Diversification does not assure a profit nor protect against loss
There are no guarantees that dividend-paying stocks will continue to pay dividends. In addition, dividend-paying stocks may not experience the same capital appreciation potential as non-dividend-paying stocks.
The value of equity securities in the fund's portfolio will fluctuate and, as a result, the fund's share price may decline. Equity securities may decline in value because of an increase in interest rates or changes in the stock market.
The fund's use of derivative instruments involves risks different from, or possibly greater than, the risks associated with investing directly in securities and other traditional instruments.
The fund is a new fund that recently commenced operations. New funds have limited operating histories for investors to evaluate and new funds may not attract sufficient assets to achieve investment and trading efficiencies.
While stocks have higher return potential, they may be more volatile than bonds.
Writing option contracts can result in losses that exceed the seller's initial premium collected and may lead to additional turnover and higher tax liability.
ETFs are generally more tax efficient than traditional mutual funds due to their structure. When investors redeem shares, ETFs can do so in-kind, meaning they exchange shares for underlying assets without triggering capital gains taxes for remaining investors. ETFs often distribute fewer capital gains to investors compared to mutual funds, leading to lower tax liabilities.
As part of the fund's investment objective, the fund seeks to distribute current monthly income. As a result of market, interest rate and other circumstances, the amounts of such distributions may vary widely from month to month and in some months no distribution may be paid at all. There is no assurance that the fund will make a distribution in any given month. Distributions in excess of the fund's current and accumulated earnings and profits will be treated as a return of capital and a significant portion of the fund's distributions at any point in time may consist of return of capital. A return of capital distribution generally will not be taxable currently but will reduce the shareholder's cost basis and will result in a higher capital gain or lower capital loss when those fund shares on which the distribution was received are sold.
ETF 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. Shares may trade at a premium or discount to their NAV in the secondary market. Brokerage commissions 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 the end of regular trading on the New York Stock Exchange (normally 4:00 PM Eastern Time ).
Federated Securities Corp.is Distributor of the Federated Hermes Funds.
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SOURCE Federated Hermes, Inc.
FAQ**
How does the new Federated Hermes Enhanced Income ETF compare to existing products like the Federated Hermes MDT Small Cap Core ETF (FSCC) in terms of income generation and risk management?
What specific strategies does the Federated Hermes Enhanced Income ETF employ to achieve its goal of high monthly distributions, particularly in comparison to the Federated Hermes MDT Small Cap Core ETF (FSCC)?
Can you elaborate on the differences in risk profiles between the Federated Hermes Enhanced Income ETF and the Federated Hermes MDT Small Cap Core ETF (FSCC), especially for income-oriented investors?
What investor demographics does Federated Hermes specifically target with the Enhanced Income ETF that might differ from the audience for the Federated Hermes MDT Small Cap Core ETF (FSCC)?
**MWN-AI FAQ is based on asking OpenAI questions about Federated Hermes Total Return Bond ETF (NYSE: FTRB).
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