In this article, we're going to take a closer look at Federated Mutual Funds, also known as Federated Funds. The Federated family 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 in 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 $502 billion in assets under management (September 2019). Federated offers investors nearly 135 domestic and international equities, fixed income, and money market mutual funds.
Federated supports their clients through a network of 6,100 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 401(k) 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, SunTrust Banks, Hilliard-Lyon and Rochdale Atlas. In 2003, Federated was added to Standard and Poor's 500 Index.
Fee Structure and Returns
Morningstar ratings indicate the expense ratios for mutual funds at Federated range from Above Average for their domestic stock funds (1.30%) to Average for their municipal bond funds (0.85%). Federated offers investors a fairly nice choice of asset classes, with taxable bond funds (28.85%), and domestic stocks (43.59%) 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 (32.60%) and no-load mutual funds (67.40%). As of September 2019, the average return on the family of funds at Federated was 5.26% 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. None of the three funds carry a front load meaning all money is put to work right away. That said, below is a list of the top rated mutual funds from Federated:
Federated Instl High Yield Bond Instl (FIHBX)
Assets: $6.8 million
Category: US Fund High Yield Bond
Specialty: None
Top Three Holdings: Hub International Limited 7%, Jaguar Holding Co II/Pharmaceutical Product Development LLC 6.38%, ALTICE FRANCE S.A 7.38%
Load: None
Minimum Investment: $1 million
Expense Ratio: 0.50%
5-Year Average Return: 5.72%
Federated High-Yield Strategy (FHYSX)
Assets: $43.2 million
Category: US Fund High Yield Bond
Specialty: None
Top Three Holdings: High Yield Bond Portfolio, Bank of America (Repo), USD
Load: None
Minimum Investment: $0
Expense Ratio: 0.030%
5-Year Average Return: 6.21%
Federated Kauffman Small Cap (FKASX)
Assets: $3.5 billion
Category: Small Growth
Specialty: None
Top Three Holdings: argenx SE ADR, argenx, Azul SA ADR
Load: None
Minimum Investment: $1,500
Expense Ratio: 1.37%
5-Year Average Return: 17.62%
Additional Resources
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