Federated Investors, Inc.
), in an attempt to expand its services in Chile, entered into an
agreement with RJ Delta Fund Management to acquire its marketing
services. RJ Delta is an Argentina-based subsidiary of
Raymond James Financial, Inc.
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RJ Delta will promote six Federated Investors' products as
approved by Comision Clasificadora de Riesgo. The products are
Federated Emerging Market Debt Fund, Federated InterContinental
Fund, Federated Institutional High Yield Bond Fund, Federated
International Leaders Fund, Federated Strategic Value Dividend
Fund and Federated Prime Value Obligations Fund.
Implications of the Latest Move
The aforementioned agreement will no doubt enable the company to
capitalize on RJ Delta's client base comprising leading pension
funds, institutional investors and institutional wealth managers.
However, the investment capacity of institutional investors and
wealth managers are highly dependent on the performance of the
domestic economy. Unfortunately, the Chilean economy has not been
performing well over the last few years. As per a Bloomberg
report, in Jan 2014, the country's gross domestic product growth
was the slowest in the past four years.
Hence, it is less likely for Federated Investors to benefit from
institutional as well as wealth managers. However, as mentioned
in the press release, RJ Delta will primarily promote Federated
Investors' funds in the country's pension market worth $200
The pension funds, characterized by assured but low rate of
return, are usually preferred by risk-averse individuals such as
pensioners. The pension funds usually have ample capital to
invest as the demand for these funds is not directly related to
the economic pace of growth. In fact, the demand for these funds
may rise with increase in market volatility.
Therefore, if Federated Investors continues to focus in these
funds, utilizing RJ Delta's expertise and connectivity in the
country's extensive pension market, we expect it to significantly
Federated currently carries a Zacks Rank #3 (Hold).
Stocks That Warrant a Look
Some better-ranked investment managers include
Waddell & Reed Financial, Inc.
Fortress Investment Group LLC
). Both these stocks sport a Zacks Rank #1 (Strong Buy).