Federated Mutual Funds

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In this publication, we're going to take a closer look at Federated Mutual Funds, also known as Federated Funds. The Federated family of mutual funds is known for producing top performing mutual funds, which are aimed at the institutional as well as the individual investor. Let's see if that holds true for this review.

Federated Family of Funds

Federated Investors has been servicing the financial community since 1955, and serves investors both in the United States and around the world. Federated is one of the top ten mutual fund families, with approximately $360 billion in assets under management (May 2011). Federated offers investors nearly 150 domestic and international equity, fixed income, and money market mutual funds.

Additional Resources

Federated supports their clients through a network of 5,000 financial intermediaries and institutions. They also field a team of 150 investment experts. Through this network of professionals, Federated can also provide customized account management services to high-net-worth individuals. Federated offers a well rounded portfolio of solutions including 401k plans, Roth and traditional IRAs, and "bundled" retirement plans.

In recent years, Federated acquired over $19 billion in assets from Alliance Capital Management, $265 million in assets from Banknorth Investment Advisors, $6.7 billion from MDT Advisors, as well as assets of Prudent Bear Funds, Clover Capital Management, and Rochdale Atlas. In 2003, Federated was added to Standard and Poor's 500 Index.

Federated Funds Fee Structure and Returns

Morningstar ratings indicate that the expense ratios for mutual funds at Federated range from Above Average for their international stock funds (1.74%) to Average for their municipal bond funds (0.90%). Federated offers investors a fairly nice choice of asset classes, with taxable bond funds (45%), and domestic stocks (34%) comprising most of that mix.

The minimum individual investment is $1,500, although some institutional funds have minimum investment requirements as high as $1,000,000. Like PIMCO Mutual Funds, Federated offers investors a mix of load funds (58%) and no-load mutual funds (42%). As of the end of April 2011, the average return on the family of funds at Federated was 3.88% over the last five years.

Top Rated Federated Mutual Funds

The top rated mutual funds at Federated offer investors a nice mix of government bond funds, international stocks, and a conservative securities portfolio. One of the three funds carry a front load of 5.50%, meaning not all of your money is put to work right away. That being said, below is a list of the top rated mutual funds from Federated:

Federated Interm Govt / Corp Instl (FGCIX) - with over $33 million in assets, this short term bond fund specializes in securities carrying an average bond rating of BBB. Top holdings include U.S. Treasury Notes (2.375%), Federated Prime Value Obligations, and FNMA (2.75%). The expense ratio of this no-load mutual fund is 0.30%. The minimum investment is $1 million, and the average return over the last five years is 6.74%. (May 2011)
Federated Adjustable Rate Secs Instl (FEUGX) - with over $1 billion in assets, this ultra-short bond fund specializes in high-quality government and corporate bonds. Top holdings for this fund include bonds from Bank of America N.A., (0.250%) and Fannie Mae. The expense ratio for this mutual fund is 0.63%, and the minimum investment for this no load fund is $1 million. The average return of the fund over the last five years is 3.90%. (May 2011)
Federated International Leaders A (FGFAX ) - with assets of over $387 million, this fund concentrates on Foreign large blend stocks in the financial services, consumer cyclical, and industrials sectors of the economy. Top holdings include Daimler AG, Adecco SA, and Michael Page International PLC. The fund carries a front load of 5.50%. The expense ratio is 1.65%, and the minimum investment for this fund is $1,500. The fund's average return over the past five years is 5.63%. (May 2011)

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