Federated Folds 2-Star Mutual Fund

Federated Investors is looking to fold a 2-Star rated fund into a 4-Star rated fund.

A special shareholders meeting will be held on March 11, 2013 to approve or disapprove a proposed a merger of the Federated Capital Appreciation Fund into the Federated Equity Income Fund, according to a Securities and Exchange Commission filing.

The $844 million Capital Appreciation Fund gained 9.05% year-to-date through November 30 compared to the S&P 500’s gain of 14.96%, according to Morningstar. The fund is managed by James Grefenstete and was launched in January 1996.

According to a Morningstar report, the fund has struggled to keep pace in recent years, posting bottom-decile results for the trailing three-year period through Dec. 18.