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Rating:A Pittsburgh Fund Shop is Set to Soar Not Rated 5.0 Email Routing List Email & Route  Print Print
Tuesday, October 14, 2008

A Pittsburgh Fund Shop is Set to Soar

Reported by Erin Kello

The current market crisis is bound to make winners out of some fund companies, so The MFWire has set out to find out which companies are at the head of the pack and what their winning strategies are.

On Friday Merrill Lynch analyst Cynthia Mayer said that Federated Investments is well positioned for current market conditions because of its defensive asset mix and the government's decision to support money market funds.

"We have a good mix of growth and stability," Federated spokeswoman Meghan McAndrew told The MFWire. "We also have a diversified revenue mix across products," she added.

When many fund shops were hunkering down amid the chaos that was September 2008, Federated was announcing its latest acquisition of Clover Capital, a value fund shop (see The MFWire, September 15, 2008).

Federated's large money-market family also got a boost last month when it made a deal with Putnam Investments to roll the Putnam Prime Market Fund into the Federated Prime Obligations Fund (see The MFWire, September 24, 2008).

In the past few years, Federated has made several acquisitions which fit into one of two categories: roll-up or center of excellence.

Federated will buy funds from companies that no longer want to be in the fund business and then roll their funds into existing Federated funds in roll -up acquisitions. In center of excellence acquisitions the company will buy a smaller fund shop that has a good business model, but limited distribution, and then increase its reach.

The addition of the Prudent Bear funds to the Federated family last July also gives the company a leg up in the bear market. The acquisition is expected to close by the end of the year, McAndrew said.  

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