FEDERATED HERMES, INC. Expands Federated's line of liquid alternative strategies
Complements $2 billion alternative and objective-based product line
(PITTSBURGH, Pa., Jan. 8, 2015) - Federated Investors, Inc. (NYSE: FII), one of the nation's largest investment managers, today announced the launch of the Federated Managed Volatility Fund, a liquid alternative product that seeks to provide total return while managing the fund's annualized volatility. The fund joins Federated's
$2 billion alternative and objective-based product line, which includes Federated Absolute Return Fund, Federated Managed Risk Fund and Federated Prudent Bear Fund.
Federated Managed Volatility Fund is managed by a team of portfolio managers led by Michael T. Dieschbourg, who heads Federated's alternatives/managed-risk investment group. The new product follows the growth of the
$650 million Federated Managed Volatility Fund II, a variable annuity product which has been sold through insurance companies for three years and which has a similar investment objective and strategy.
The new fund invests in equity and fixed-income securities that have potential for total return while managing volatility. The fund seeks to invest in stocks of mature, mid- to large-cap value companies with high dividend yields that are likely to maintain and increase their dividends, as well as a diversified mix of bond sectors with high current yields. The managers will use S&P 500 futures contracts to target an annualized volatility level for the fund of approximately 10 percent.
"The Federated Managed Volatility Fund extends our liquid alternative strategy to the public and should appeal to investors seeking steadier performance throughout market cycles," said Stephen F. Auth, chief investment officer for equities at Federated. "Outcome-based strategies are becoming an important diversification tool for investors who measure their portfolio performance not just against standard market indices, but also in terms of their own long-term goals."
Federated Managed Volatility Fund will be marketed in A, C and IS share classes through broker/dealers, bank broker/dealers and other financial intermediaries. A minimum investment of $1,500 is required for A and C share classes with subsequent investments of $100. A minimum initial investment of $1 million is required for IS shares, with no minimum subsequent investment amount.
Federated Investors, Inc. is one of the largest investment managers in the United States, managing $352.3 billion in assets as of Sept. 30, 2014. With 132 funds and a variety of separately managed account options, Federated provides comprehensive investment management to more than 7,700 institutions and intermediaries including
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Ed Costello 412-288-7538 | Meghan McAndrew 412-288-8103 | Ray Hanley 412-288-1920 |
corporations, government entities, insurance companies, foundations and endowments, banks and broker/dealers. For more information, visit FederatedInvestors.com.
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Federated Securities Corp. is distributor of the Federated funds.
Investors should carefully consider the fund's investment objectives, risks, charges and expenses before investing. To obtain a summary prospectus or prospectus containing this and other information, contact us or visit FederatedInvestors.com. Please carefully read the summary prospectus or prospectus before investing.
Mutual funds are subject to risks and fluctuate in value. Diversification does not assure a profit nor protect against loss.
High yield, lower‐rated securities generally entail greater market, credit and liquidity risks than investment grade securities and may include higher volatility and higher risk of default.
Bond prices are sensitive to changes in interest rates and a rise in interest rates can cause a decline in their prices.
There are no guarantees that dividend paying stocks will continue to pay dividends. In addition, dividend paying stocks may not experience the same capital appreciation potential as non‐dividend paying stocks.
Volatility is a statistical measurement of the frequency and level of changes in the value of an asset, index or instrument without regard to the direction of those changes. Volatility may result from rapid and dramatic price swings.
There can be no guarantee that the Fund will maintain its target annualized volatility. Furthermore, while the volatility management portion of the strategy seeks enhanced returns with more consistent volatility levels over time, attaining and maintaining the target volatility does not ensure that the Fund will deliver enhanced returns. The Fund's managed volatility strategy may expose the Fund to losses (some of which may be sudden) that it would not have otherwise been exposed if the Fund's investment program consisted only of holding securities directly. For example, the value of the Long S&P 500
Futures Positions (which generally will be up to 60% of the Fund's net asset value) may decline in value due to a decline in the level of the S&P 500, while the value of the Short S&P 500 Futures Position (which generally will be up to 40% of the Fund's net asset value) may decline in value due to an increase in the level of the S&P 500. The Fund will use Short S&P
500 Futures Positions to hedge the Fund's long equity exposure. The Fund's losses on a Short S&P 500 Futures Position could theoretically be unlimited as there is no limit as to how high the S&P 500 can appreciate in value. However, such losses would tend to be offset by the appreciation of the Fund's equity holdings. The use by the Fund of Short S&P 500 Futures Positions to hedge the Fund's long exposure and manage volatility within a target may not be successful. Additionally, the Long S&P 500 Futures Positions are not being held to hedge the value of the Fund's direct investments in equity securities and, as a result, these futures contracts may decline in value at the same time as the Fund's direct investments in equity securities. The Fund's managed volatility strategy also exposes shareholders to leverage risk and the risks of investing in derivative contracts.
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