Federated Investors is committed to expanding in equities despite a three-year bear market, President and Chief Executive Officer Christopher Donahue told Reuters following its earnings report yesterday.

The Pittsburgh-based firm, which runs more than 135 stock, bond and money market mutual funds and separately managed accounts, said first-quarter profit fell 7% to $48.7 million, or 43 cents a share, from $52.3 million, or 44 cents a share, in first-quarter 2002.

According to Donahue, "investors are buying more conservative offerings, such as the Capital Appreciation Fund, the Market Opportunity Fund and the Federated Kaufman Fund.

"We have been accelerating our commitment to the equity area, and we are using this pause in the marketplace as an opportunity to bring on more people overall," Donahue said of the equity expansion. He noted the company has hired executives, new fund managers and analysts.

Federated, with its money market and conservative equity funds, finds itself in a relatively more stable financial position compared to its closest competitors.

One such example is Boston-based Putnam, a unit of insurance broker Marsh & McLennan Cos. Inc. Putnam has been struggling to turn around its once-hot growth stock funds. First-quarter operating income dropped 41% to $103 million, from $175 million a year earlier, Putnam announced yesterday. Revenue tumbled 25% to $445 million, from $594 million.

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