Analysts were off by one penny in their estimates of Federated Investors' second quarter earnings. The Pittsburgh, Pennsylvania-based company reported net income of $37.8 billion, or $0.35 per diluted share. Analysts had expected the fund firm to report $0.45 per share, excluding $6.6 million, or $0.09 per share charge related to legal and regulatory issues.

Quarter-end assets under management were $204.7 billion, up 14 percent from $179.0 billion at the end of the first quarter.

The company attributed the boost in AUM to "significant organic growth of Federated's money market assets across distribution channels and the conversion of managed assets totaling $0.8 billion in Q1 2005 and $18.5 billion in Q2 2005 related to Federated's acquisition of Alliance Capital Management L.P.'s cash management assets."

By asset class, both equity and fixed income funds experienced net redemptions. Equity and fixed income assets totaled $45.8 billion, or 22 percent of total assets.

By channel, mutual fund assets totaled $182.7 billion and separate account assets totaled $22.0 billion. Fund assets increased 17.3 percent quarter-over-quarter, fueled by a $26.9 billion or 24.5 percent increase in money market funds.

Investment advisory fees totaled $138.9 million, up three percent from $134.9 million the quarter before.  

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