Federated Opens Bond Fund to Retail Investors

Published August 01, 2001, 1:00 a.m. EDT

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Asset Growth Prompts Firm to Seek New Market

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Federated Investors of Pittsburgh today started selling its Federated Total Return Bond Fund to retail investors through financial intermediaries, the company announced. The multi-sector fixed-income fund was previously only available to institutional investors.

The fund's solid performance is the main reason for opening it up to retail investors, according to a company representative. The fund yielded a return of 11.3% in 2000 and 3.5% for the first half of this year, according to Morningstar. The fund's three-year return was ranked 24 out of 221 in Lipper's intermediate investment-grade debt category, according to Federated.

In addition, Federated has opened the fund to retail investors because of demand from that market segment, according to the representative.

Sometimes funds open to new market segments in an effort to boost lagging assets, but that is not the case with this fund; assets have nearly doubled since last year. As of June 30, 2000, total assets under management in the fund were $234.5 million. At the end of June this year they had jumped to $459.5 million.

The fund, which uses the Lehman Brothers Aggregate Bond Index as a benchmark, invests in seven bond sectors: U.S. Treasuries, U.S. agencies, mortgage and asset-backed securities, and high-quality, international and junk bonds. A minimum initial investment of $1500 is required for Class A-, B-, and C-shares and $250 for retirement plans. The fund will now be marketed through broker/dealers and financial planners, according to the company.