Another story to call out would have been — would be the SMID product run out of London with $150 million worth of positive flows in the first quarter as well. And as I mentioned, there are a dozen funds with positives, but it’s very hard to work against those large negatives of Kaufmann and Strategic Value Dividend.
Thomas Donahue: And I would add that when you look at the last couple of quarters in growth, we’ve had — as a category, we’ve had meaningful but diminishing net redemptions. We still had them in Q1. But in the early part of Q2, driven by the strength of MDT, we actually have positive net flows in growth as a category.
Kenneth Lee: Got you. Very, very helpful color there. That’s all I had. Thanks, again.
Operator: Your next question for today is from Dan Fannon with Jefferies.
Daniel Fannon: Thanks. Good morning.
Christopher Donahue: Good morning.
Daniel Fannon: You mentioned several alternative products that you have in the market. I was just curious what the previous fund sizes were for the ones that are kind of in second or third generation? And how you would think about the potential targets for these funds versus what you did previously?
Christopher Donahue: Well, we — just to comment on the one we already closed was the PEC V, and that was an increase from prior. It was in the $600 million range. And now we’re starting to get organized on PEC VI. The Horizon Fund is larger at $1 billion plus, though I don’t have the number in front of me for the prior one. This was the third iteration of that. So in general, they’ve gone up.
Thomas Donahue: And it’s been a tough year, even 18 months of raising money in private markets, private equity, in particular. So that’s just an additional comment. I don’t have the numbers either.
Daniel Fannon: Understood. And just a follow-up on the modeling question. So the tax rate, I think you’re guiding to 26% to 28%. You haven’t been there in several years. I guess, what’s driving that higher as we think about the rest of this year?
Thomas Donahue: Yes. We don’t get to deduct or we have a valuation allowance in foreign subsidiary. So that’s where we used to be able to deduct losses and we can’t do that anymore before we get a higher tax rate.
Daniel Fannon: Understood. Okay, thank you.
Operator: Your next question is from John Dunn with Evercore.
John Dunn: Thank you. You guys — you touched on strategic value dividend and quant. But could you contextualize like the equity flow outlook?
Christopher Donahue: So equity always goes in ups and downs. And we are looking for, as I mentioned, a lot bigger, better things coming out of the MDT franchise. And as I tried to plant the seeds a rebound in the Kaufmann enterprise. And if you look historically at Kaufmann, when it has had some tough going, its spring back is really a beautiful thing to behold. And Strat Val is going to continue to do what it does in terms of its investment activities. So those are the principal ones. Now that’s why we mentioned about having a dozen others that keep that are positive that give us other opportunities for growth on the equity side as well. In terms of the FAs, when you ask about context, the FAs by and large, and this is obviously the business where we’re calling on RIAs, broker-dealers, et cetera.
There’s a little debate in between the FA generally and the client. The client is perfectly happy at 5%. The FA wants to get into the market. And we’re seeing more movement into the market. And I don’t be thinking this as an avalanche or a catalyst or all that. But when we have $265 million of positive flows in Ultrashorts coming off bigger negatives. And when we see more interest in Microshorts and when we hear the FAs talking about moving duration into one, three months or one, three year duration products, we’re beginning to see more movement. This is not a total risk on trade. But it sets the stage for getting closer. And when you look at the performance and the sales response on MDT, we’re getting more newer clients into those mandates.
And we think that is a good thing in terms of seed corn for the future as well.
John Dunn: Right. And then maybe like the puts and takes on the fixed income side. Total Return Bond is doing great but.
Christopher Donahue: Well, as we mentioned, the flows have been very solid, and that’s why I mentioned about the Ultrashorts coming in, they’re sort of an in-between product. And what we present to clients is a solution both out the yield curve and out the risk parameters and our people present solutions to clients, and they’re very well able to compete with people who want to go all passive or things like that. And that’s why we continue to have what amounts to robust sales in fixed income for exactly that reason. And remember that there’s a huge fraction of our business, maybe half, maybe a little less than half, that’s basically retirement-oriented. And the intermediaries are coming up with solutions for those clients over the long term that involve fixed income.
And so we’ve seen the assets move up and we would certainly see that continuing. And one that’s sort of a hidden jewel at this point in the cycle is the high yield, excellent long-term records a big franchise here at Federated Hermes, a great marketplace reception. And that one goes in ebbs and flows as well based on the nature of the clients going risk on. So we have a lot of buckets ready for when it starts raining money in other areas as well.
John Dunn: Thanks very much.
Operator: We have reached the end of the question-and-answer session and I will now turn the call over to Ray Hanley for closing remarks.
Raymond Hanley: Thank you, Holly. That concludes our call. Thank you for joining us today.
Operator: This concludes today’s conference and you may disconnect your lines at this time. Thank you for your participation.
