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Thursday, August 29, 2002

Federated Shakes Things Up

by: Sean Hanna, Editor in Chief

Pittsburgh-based Federated Investors is folding its investment management unit in two. The consolidation, which is slated to be completed by the end of the year, eliminates the firm's global unit and leaves the manager with separate equity and fixed income units.

The announcement appears driven by the decision of Henry A. (Hank) Frantzen, 59, to retire in November. Frantzen oversaw the build out of Federated's international fund family, including the creation of 19 new funds, since he arrived in 1995. Frantzen's arrival marked the last time Federated reorganized the unit. He holds the title of executive vice president and chief investment officer of Federated Global Equity and Fixed Income.

Although lines of report are changing, the Keith M. "Kim" Schappert, president and chief executive officer of Federated's investment advisory companies, explained in a statement that that the firm is not planning to relocates its professional staff. Those investment professionals are now divided between New York and Pittsburgh offices.

"Our new structure positions Federated for global growth and fortifies the strong investment unit that already exists by better leveraging our resources and investment insights," Schappert said. "It further allows for sharing of information among investment personnel, ensuring high quality investment decisions for our portfolios, and leading to greater consistency with our investment performance and strategy across our equity and fixed-income units."

Tom Madden, vice chairman of investment management, will report to Schappert separately from both units. The fifty-seven year-old will serve as a market strategist and economic spokesperson for Federated as well as a senior advisor to Schappert regarding Federated's investment management business strategy and operational matters, according to the company.

To fill Frantzen's shoes the firm will divide the global chief investment officer duties between the heads of the two new units.

The new structure places two-year Federated veteran Stephen F. Auth, 46, in charge of Federated's domestic and international equity mutual fund, separate account and managed account products. He also takes the title of chief investment officer for the Federated Global Equity unit.

The firm also announced that James Gordon, Jr., 41, has joined the firm from J.P. Morgan Investment Management as director of quantitative analysis for the Global Equity. He reports to Auth and will focus on stock selection screens, research prioritization, risk analysis and performance attribution.

Even after hiring Gordon, Federated continues to seek a head of fundamental research to oversee domestic, international and global equity analysis.

Meanwhile, William D. Dawson, 53, takes the reigns as CIO of Federated Global Fixed-Income. Dawson has spent 27-year career with Federated and was most recently executive vice president and chief investment officer of domestic fixed-income fund investing.

The fixed income unit will manage roughly $164 billion of assets and have approximately 75 investment professionals in the municipal, government and prime money markets, as well as the corporate bond, municipal bond, mortgage-backed securities, government, government-agency bond, asset-backed securities and GIC markets.  

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