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Monday, November 21, 2016

Federated Acquires a $431MM Trio of Funds

News summary by MFWire's editors

Federated announced the acquisition of three Hancock Horizon mutual funds.

David Lundgren
Hancock Horizon Investments
Senior Vice President and Managing Director
$431 million in assets will be transitioned from Horizon funds to Federated funds with similar investment objectives. $144 million will move from the Hancock Horizon Value Fund to the Federated MDT Stock Trust, $131 million will move from the Hancock Horizon Growth Fund, and $156 million will move from the Hancock Horizon Core Bond Fund to the Federated Total Return Bond Fund. Terms and pricing of the deal were not disclosed.

Aside from the three funds acquired by Federated, Horizon has an additional ten mutual funds focused on niche asset classes. These funds are not included in the deal with Federated.

David Lundgren, chief investment officer at Horizon Advisers, explains that these funds were sold to Federated because the three specific asset classes are undergoing significant pressure on fees as a result of the DoL's fiduciary regulation.

"It's becoming harder for smaller families to play in the space," Lundgren tells MFWire.

However, the firm remains committed to its remaining ten funds, and there will be no personnel changes at Horizon associated with the deal.

MFWire spoke with Joe Machi, director of alliances at Federated, who says that the companies have a long-standing history of working together. Hancock Whitney, the parent company of Hancock Horizon Investments, has been a customer of Federated's for over ten years.

Machi notes that Federated is constantly in conversation with firms that are looking for alternatives to having their own proprietary funds. He notes that it is a natural fit for intermediary distributed products, but considers non-intermediary assets as well.

"In the industry, we are the most experienced in these types of transactions," says Machi. "When people are looking to do these types of transactions, we're a natural call for them."

The boards of directors of Federated Investors, the Federated funds and the Hancock Horizon funds have all approved the transactions. Pending shareholder approval in January 2017, the transactions will be completed in the second half of the month.


Edited by: Katy Golvala

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