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Federated Hermes: 2021 Outlook

December 29, 2020
EXECUTIVE SUMMARY
• As the Covid-19 vaccine distribution widens, the recovery should accelerate as pent-up demand is unleashed among consumers, by far the largest segment of the economy. Growth may struggle a few months before reaching this inflection point.
  • A gradual return to normalcy over the course of next year should feed animal spirits and lift equity markets to new highs. We’ve set respective S&P 500 price targets of 4,500 and 5,000 for 2021 and 2022.
  • The recent tilt toward value stocks, which tend to perform best early in a recovery, is taking hold. Small caps should continue to benefit for similar reasons in 2021, and international stocks offer the potential for relative outperformance.
  • Because rates likely will remain low, we believe the best fixed income opportunities should come from credit—investment-grade and high-yield corporate bonds, and emerging-market securities.

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RISK: There are risks involved with investing, including loss of principal. Current and future portfolio holdings are subject to risks as well. Diversification may not protect against market risk. There is no assurance the goals of the strategies discussed will be met. International investments may involve risk of capital loss from unfavorable fluctuation in currency values, from difference in generally accepted accounting in principles or from economic or political instability in other nations. Emerging markets involve heightened risks related to the same factors as well as increased volatility and lower trading volume. Bonds and bond funds will decrease in value as interest rates rise. These and other risks are described more fully in the fund’s prospectus. CREDIT RISK: The issuer of a fixed income security may not be able to make interest and principal payments when due. The lower the credit rating of a security, the greater the risk of default on its obligation.

Investors should consider the investment objectives, risks, charges and expenses of the Fund carefully before investing. This and other information is contained in the Fund’s prospectus and summary prospectus, which may be obtained online or by calling 1-888-507-2798.

Please read the prospectus carefully before investing.