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Federated Hermes Launches New Active ETF

Federated Hermes, Inc. has recently made a significant move in the investment world with the launch of its Federated Hermes Enhanced Income ETF (CBOE: PAYR). The ETF aims to cater to investors who are particularly focused on generating solid monthly income from their investments. Utilizing a unique strategy that combines high-quality dividend stocks with an options overlay, this ETF positions itself to provide not only consistent cash flows but also potential for capital appreciation.

A Dual Strategy for Income Seekers

The goal of the Federated Hermes Enhanced Income ETF is twofold: generate a reliable stream of current income while also allowing for capital growth. John B. Fisher, the president and CEO of Federated Advisory Companies, emphasized that this ETF can fulfill various roles within an investor's portfolio. By diversifying income sources, it offers an alternative for those looking to modify their bond allocations as they approach retirement. This is particularly crucial given that many investors require a sustainable income during their retirement years.

The Right Team Behind the ETF

The success of the Enhanced Income ETF can largely be credited to the expertise of its management teams. Dana Meissner, CFA, FRM, CAIA, and Damian McIntyre, CFA, FRM, CAIA from the Multi-Asset Investment Team, along with Daniel Peris, Ph.D., CFA, and others from the Strategic Value Dividend Team, bring extensive experience from various financial landscapes. This collective background is expected to enhance the ETF's performance and stability in diverse market conditions.

Market Efficiency as a Core Feature

Another significant advantage of the Federated Hermes Enhanced Income ETF is its structure designed for tax efficiency and liquidity. As Brandon Clark, the ETF business director at Federated Hermes stated, this ETF provides risk-conscious investors with flexible access combined with the benefits of a more efficient tax framework. In a market environment where investors are increasingly leaning toward ETFs, the launch of this product aims to cater to their growing demands.

Rising Interest in ETFs

The interest in Exchange-Traded Funds (ETFs) continues to balloon, and Federated Hermes is committed to leveraging this trend. By extending their lineup to include various ETF strategies, they ensure that investors have access to multiple avenues for growth and income. As of September 30, 2025, Federated Hermes manages a robust $1.2 billion in ETF assets, making it a formidable player in the investment space. This new launch adds to an already diverse portfolio of active ETFs which includes several notable funds such as MDT Market Neutral ETF and Total Return Bond ETF.

Important Considerations for Investors

As with all investment opportunities, potential investors are urged to carefully evaluate the ETF's investment objectives, risks involved, and associated costs before proceeding. ETFs, while beneficial, do carry risks that can lead to fluctuations in value. Moreover, the withholding of dividends is a reality that investors need to consider as dividends are not guaranteed.

In summary, the launch of the Federated Hermes Enhanced Income ETF not only underscores the company's commitment to active investing but also reflects a strategic effort to meet the evolving needs of today's investors. With a focus on generating high monthly distributions and offering potential for growth, it stands out as a compelling option for income-oriented investors, especially those approaching retirement.