As the Q2 earnings season comes to a close, it’s time to take stock of this quarter’s best and worst performers in the custody bank industry, including Federated Hermes (NYSE: FHI) and its peers.
Custody banks safeguard financial assets and provide services like settlement, accounting, and regulatory compliance for institutional investors. Growth opportunities stem from increasing global assets under custody, demand for data analytics, and blockchain technology adoption for settlement efficiency. Challenges include fee pressure from large clients, substantial technology investment requirements, and competition from both traditional players and fintech firms entering the space.
The 16 custody bank stocks we track reported a strong Q2. As a group, revenues beat analysts’ consensus estimates by 3.2%.
In light of this news, share prices of the companies have held steady as they are up 5% on average since the latest earnings results.
Federated Hermes (NYSE: FHI)
With roots dating back to 1955 and a pioneering role in money market funds, Federated Hermes (NYSE: FHI) is an investment management firm that offers a wide range of funds and strategies for institutional and individual investors.
Federated Hermes reported revenues of $502.8 million, up 18.3% year on year. This print exceeded analysts’ expectations by 2.3%. Overall, it was a very strong quarter for the company with a solid beat of analysts’ AUM estimates and a beat of analysts’ EPS estimates.
"In addition to reaching record high equity assets in the second quarter, we achieved record gross sales across the range of our MDT suite of quantitative investment solutions, reaching all-time highs in MDT institutional separate accounts and SMAs (separately managed accounts). We also saw net positive MDT sales for the 14th consecutive quarter," said J. Christopher Donahue, president and chief executive officer.
Interestingly, the stock is up 6.7% since reporting and currently trades at $63.48.
Best Q2: Hamilton Lane (NASDAQ: HLNE)
With over $100 billion in assets under management and supervision, Hamilton Lane (NASDAQ: HLNE) is an investment management firm that specializes in private markets, offering advisory services and fund solutions to institutional and private wealth investors.
Hamilton Lane reported revenues of $275.3 million, up 56.5% year on year, outperforming analysts’ expectations by 21%. The business had an incredible quarter with a beat of analysts’ EPS estimates and a solid beat of analysts’ AUM estimates.
Hamilton Lane pulled off the biggest analyst estimate beat of the whole group. The market seems happy with the results as the stock is up 13.1% since reporting. It currently trades at $107.32.
Is now the time to buy Hamilton Lane? Access our full analysis of the earnings results here, it’s free.
Weakest Q2: StepStone Group (NASDAQ: STEP)
Operating as both an advisor and asset manager with over $100 billion in assets under management, StepStone Group (NASDAQ: STEP) is an investment firm that provides clients with access to private market investments across private equity, real estate, private debt, and infrastructure.
StepStone Group reported revenues of $300.6 million, up 26.6% year on year, falling short of analysts’ expectations by 3.9%. It was a softer quarter as it posted a significant miss of analysts’ EBITDA estimates and a significant miss of analysts’ AUM estimates.
StepStone Group delivered the weakest performance against analyst estimates among its peers. Interestingly, the stock is up 3.2% since the results and currently trades at $51.97.
Read our full analysis of StepStone Group’s results here.
Franklin Resources (NYSE: BEN)
Operating under the widely recognized Franklin Templeton brand since 1947, Franklin Resources (NYSE: BEN) is a global investment management organization that offers financial services and solutions to individuals, institutions, and wealth advisors worldwide.
Franklin Resources reported revenues of $2.36 billion, up 14.3% year on year. This number surpassed analysts’ expectations by 1.9%. Overall, it was a strong quarter as it also put up an impressive beat of analysts’ AUM estimates and a beat of analysts’ EPS estimates.
The stock is up 2.7% since reporting and currently trades at $34.08.
Read our full, actionable report on Franklin Resources here, it’s free.
Invesco (NYSE: IVZ)
With roots dating back to 1935 when it pioneered the first mutual fund with an objective of capital growth, Invesco (NYSE: IVZ) is a global asset management firm that offers investment solutions across equities, fixed income, alternatives, and multi-asset strategies.
Invesco reported revenues of $1.33 billion, up 20.3% year on year. This print was in line with analysts’ expectations. Overall, it was a satisfactory quarter as it also logged an impressive beat of analysts’ EBITDA estimates.
The stock is up 7.4% since reporting and currently trades at $32.33.
Read our full, actionable report on Invesco here, it’s free.
Market Update
Over the past year, investors have been forced to repeatedly answer the same question: what is the market’s biggest risk? The answer has changed several times, and each shift has reshaped market leadership.
Late in 2025 and early 2026, artificial intelligence became the market’s primary uncertainty. Investors questioned whether AI would erode software pricing power and weaken competitive moats as AI made it easier to replicate once-differentiated products.
By the spring, technology took a back seat to geopolitics. The U.S. conflict with Iran briefly became the market’s dominant narrative, raising concerns about oil prices, inflation, and global growth. But as energy markets remained orderly and fears of a prolonged supply disruption faded, investors quickly turned their focus back to fundamentals.
Want to invest in winners with rock-solid fundamentals? Check out our 9 Best Market-Beating Stocks and add them to your watchlist. These companies are poised for growth regardless of the political or macroeconomic climate.
