Federated Investors has launched the Federated Managed Volatility Fund, a liquid alternative product that seeks to provide total return while managing the fund's annualised volatility.
The fund joins Federated's USD2 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 USD650 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 annualised volatility level for the fund of approximately 10 pe rcent.
"The Federated Managed Volatility Fund extends our liquid alternative strategy to the public and should appeal to investors seeking steadier performance throughout market cycles," says 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 USD1,500 is required for A and C share classes, with subsequent investments of USD100. A minimum initial investment of USD1 million is required for IS shares, with no minimum subsequent investment amount.
