Federated Hermes Total Return Bond Fund Service Shares (FTRFX)

Overview

The fund is designed to achieve its investment objective by primarily focusing on investment-grade, fixed-income securities that are denominated in U.S. dollars. It aims to provide investors with stable returns by carefully selecting bonds that meet its criteria for creditworthiness and investment quality. While the core of its portfolio is made up of these safer, investment-grade securities, the fund also seeks to enhance returns by diversifying a portion of its investments into higher-yielding opportunities.

Products and Services

• Investment-Grade Fixed-Income Securities

  The bulk of the fund's investments are in U.S. dollar denominated, investment-grade fixed-income securities. These are bonds issued by entities with a high credit rating, implying a lower risk of default. The focus on investment-grade securities is aimed at providing a stable income stream to investors while preserving capital.

• High-Yield Fixed-Income Securities

  To potentially increase the fund's yield, a portion of its portfolio may be allocated to high-yield fixed-income securities. These are bonds that carry a lower credit rating compared to investment-grade bonds, and therefore offer higher interest rates to compensate for the increased risk. This strategy allows investors to access a broader range of fixed-income opportunities with a potentially higher return.

• Non-U.S. Dollar Denominated and Emerging Market Fixed-Income Securities

  The fund also looks beyond the U.S. by investing in fixed-income securities denominated in foreign currencies, including those from emerging markets. These investments can offer higher yields and diversification benefits. However, to manage the additional risks such as currency fluctuations and geopolitical issues, the fund limits its exposure to non-U.S. dollar denominated and emerging market securities to a maximum of 20% of its total assets, with a normal operational range of not exceeding 10% of the fund’s assets.

• Foreign Currencies

  In addition to fixed-income securities, the fund may also hold positions in foreign currencies as part of its strategy to invest in non-U.S. dollar denominated securities. This allows the fund to gain exposure to foreign exchange movements and enhance its potential for returns. The maximum exposure to foreign currencies and non-U.S. dollar denominated fixed-income securities combined is capped at 20% of the fund's total assets, maintaining a conservative approach to currency risk.