The demand for mutual funds in Germany is growing and Federated Investors has gained a toe-hold in that market. Federated, the Pittsburgh-based mutual fund firm, has entered into a joint venture agreement with a German insurance company, LVM-Versicherungen, to sell retail mutual funds in Germany and in portions of Austria, Switzerland and Liechtenstein. The joint venture, which will be under the auspices of a new company based in Frankfurt, Federated Asset Management GmbH, also will provide institutional money management services.

Under the terms of the agreement, LVM will provide distribution through more than 2,300 salespeople while Federated will manage assets. The deal calls for Federated and LVM to split profits and expenses equally, said John McGonigle, executive vice president of Federated. LVM already has agreed to invest approximately $900 million in separate accounts which the insurance firm manages, in Federated GmbH. The precise number and nature of the mutual funds to be offered has not been established, McGonigle said.

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