PITTSBURGH, May 7, 2019 /PRNewswire/ -- Federated Investors,
Inc. (NYSE: FII) and The PNC Financial Services Group (NYSE: PNC)
today announced that they have reached a definitive agreement for
Federated to acquire certain components of PNC Capital Advisors
LLC's (PCA) investment-management business. The proposed
transaction includes the reorganization of PNC's family of
liquidity, equity and fixed-income mutual funds into corresponding
Federated mutual funds, the acquisition of a portion of PNC's
separate account and separately managed account business, and the
transition of a six-person international equity management team
from PNC to Federated.
Through the agreement, approximately $9
billion in assets from three PNC government and treasury
money market funds is expected to be transitioned through mutual
fund reorganizations. Further, approximately $2.7 billion in equity mutual fund assets and
$700 million in fixed-income mutual
fund assets would be reorganized from an additional 15 PNC funds
into 10 existing and three newly created Federated funds. The
existing Federated mutual funds have comparable investment
strategies. (See page 3 for a list of funds.)
Federated expects to transition three of PNC's fundamentally
driven international equity mutual funds into new Federated shell
portfolios created for the purpose of continuing the investment
operations and performance records of each mutual fund as part of
the Federated complex. The I, A and C share classes of the
$1.6 billion PNC International Equity
Fund have earned an overall 4-star rating from Morningstar
performance in the Foreign Large Growth category. The I and A share
classes of the $5.6 million PNC
International Growth Fund have an overall 4-star Morningstar rating
in the same Morningstar category.
The PNC team of portfolio managers and analysts responsible for
the strong leadership of these international equity funds has
agreed to join Federated and will continue managing the funds. The
Cleveland-based team, led by
Martin Schulz as senior vice
president and head of the international growth team, averages 13
years of industry experience and more than eight years working
together.
To aid in the transition of the investment assets related to
this transaction, Federated and PCA will encourage PCA's current
select equity, structured equity and international separate account
and separately managed account clients with approximately
$1.5 billion in assets to move to
Federated. As a long-time provider of customized investment
strategies, Federated has served institutional investors,
retirement plans, state and local governments and others for more
than four decades. The transferred separate account and separately
managed account clients can look to Federated to offer product
depth and breadth across a variety of mandates and portfolio
management teams that use a unique blend of tactical allocations
and multi-faceted risk management strategies to help navigate
ever-changing market conditions. Separate accounts offer comparable
performance and the same management teams that earned the Federated
fund performance referenced in the following disclosures. Federated
is a top-10 provider of separately managed accounts having nearly
20 years in the SMA business and offering our clients'
high-net-worth customers a range of investment options to help them
meet their financial goals.1
"PNC's institutional asset management business will now be
focused on its core strength: providing comprehensive outsourced
chief investment officer (OCIO) services and custom investment
solutions to help our clients run their businesses better," said
Michael P. Lyons, head of Corporate
& Institutional Banking and the Asset Management Group at The
PNC Financial Services Group. "PNC will continue to
proactively deliver value-added advice and solutions for our wealth
management and institutional clients, leveraging our bespoke
investment solutions and strong open architecture platform."
Post-closing, PCA will manage approximately $21 billion of custom liquidity and fixed-income
solutions to address the needs of PNC's corporate and institutional
clients, including corporations, healthcare organizations,
insurance companies, unions, higher education, government entities
and endowment, and foundations. The employees of PNC's liquidity
and taxable fixed-income teams will remain with PCA, focused on
managing separate accounts. PNC's Institutional Advisory Business
will continue to manage $26 billion
of OCIO assets on behalf of corporate and institutional
clients.
"We are pleased to be working with PNC on this transaction,"
said J. Christopher Donahue,
president and CEO of Federated Investors, Inc. "Federated is
committed to helping PNC's clients reach their financial goals by
providing solid product performance, a range of compelling
investment solutions and superior client service."
The transaction is expected to close in the fourth quarter of
2019. Federated will pay PNC an estimated total purchase price of
$52 million when the transaction is
completed. The transaction has been approved by the Board of
Directors of Federated Investors, Inc. The Federated Mutual Fund
Board of Trustees and the PNC Funds Board of Trustees will be asked
to consider the mutual fund reorganizations in the coming months.
Each mutual fund reorganization will be subject to the approval of
the Board of the Federated funds and the Board and shareholders of
the PNC funds involved in the reorganization. Consent of affected
clients with advisory accounts in PCA's separate account and
separately managed account business also will be sought in
connection with the transaction. Completion of these transactions
also is subject to certain regulatory approvals and other customary
conditions.
The proposed liquidity, equity and fixed-income product
transitions are shown below:
Liquidity Product Transitions
PNC
Funds
|
Net
Assets
(in
millions)*
|
Federated
Funds
|
Net
Assets
(in
millions)*
|
PNC Government Money
Market
Fund
|
$12,951
|
Federated Government
Obligations
Fund
|
$75,914
|
PNC Treasury Money
Market Fund
|
$1,758
|
Federated U.S. Treasury
Cash
Reserves Fund
|
$20,611
|
PNC Treasury Plus
Money Market
Fund
|
$424
|
Federated Treasury
Obligations
Fund
|
$38,303
|
*As of March 31, 2019;
Approximately $9 billion of liquidity
product assets are estimated to transition to Federated.
Equity and Fixed-income Fund Product Transitions
PNC
Funds
|
Net
Assets
(in
millions)*
|
Federated
Funds
|
Net
Assets
(in
millions)*
|
Share
Class
|
Overall
Morningstar
Rating
|
PNC International
Equity
|
$1,558
|
(New) Federated
International Equity
|
New
|
A
C
IS
R6
|
****†
****†
****†
****†
|
PNC Multi-Factor
Small
Cap Core
|
$382
|
Federated MDT
Small
Cap Core
|
$950
|
A
C
IS
R6
|
****
****
*****
*****
|
PNC Ultrashort
Bond
Fund
|
$359
|
Federated
Ultrashort
Bond Fund
|
$3,671
|
IS
|
****
|
PNC Small
Cap
|
$351
|
Federated MDT
Small
Cap Core
|
$950
|
A
C
IS
|
****
****
*****
|
PNC Total Return
Advantage
|
$207
|
Federated Total
Return
Bond
|
$8,209
|
IS
SS
|
****
***
|
PNC Multi-Factor
Small
Cap Growth
|
$141
|
Federated MDT
Small
Cap Growth
|
$791
|
A
C
IS
R6
|
***
***
***
***
|
PNC Multi-Factor
Large
Cap Value
|
$108
|
Federated MDT
Large
Cap Value
|
$1,165
|
A
C
IS
|
***
***
***
|
PNC Multi-Factor
Large
Cap Growth
|
$101
|
Federated MDT
Large
Cap Growth
|
$121
|
A
C
IS
|
****
***
****
|
PNC Tax Exempt
Limited
Maturity Bond
|
$93
|
Federated Short-
Intermediate Duration
Municipal Trust
|
$739
|
IS
SS
|
****
***
|
PNC Intermediate
Tax
Exempt Bond
|
$39
|
Federated
Intermediate
Municipal Trust
|
$70
|
IS
SS
|
***
***
|
PNC Multi-Factor
Small
Cap Value
|
$21
|
Federated MDT
Small
Cap Core Fund
|
$950
|
A
C
IS
|
****
****
*****
|
PNC Balanced
Allocation
|
$18
|
Federated MDT
Balanced
|
$154
|
A
C
IS
|
****
***
****
|
PNC Emerging
Markets
Equity
|
$12
|
(New) Federated
Emerging Markets
Equity
|
New
|
IS
|
—
|
PNC Multi-Factor All
Cap
|
$7
|
Federated MDT All
Cap
Core
|
$286
|
A
C
IS
|
****
****
*****
|
PNC International
Growth
|
$6
|
(New) Federated
International Growth
|
New
|
IS
|
****†
|
*As of March 31, 2019
†
Morningstar rankings are for current equivalent PNC fund share
class
The PNC Financial Services Group, Inc. is one of the
largest diversified financial services institutions in the United States, organized around its
customers and communities for strong relationships and local
delivery of retail and business banking including a full range of
lending products; specialized services for corporations and
government entities, including corporate banking, real estate
finance and asset-based lending; wealth management and asset
management. For information about PNC, visit
www.pnc.com.
Federated Investors, Inc. is a leading global
investment manager with $484.9
billion in assets under management as of March 31, 2019. Our investment solutions span 129
equity, fixed-income, alternative/private markets, multi-asset and
money market funds and a range of separately managed account
strategies. Providing comprehensive investment management to
approximately 9,500 institutions and intermediaries, our clients
include corporations, government entities, insurance companies,
foundations and endowments, banks and broker/dealers. Headquartered
in Pittsburgh, Federated's nearly
1,900 employees include those in New
York, Boston, London and several other offices worldwide. In
2018, Federated acquired a majority interest in Hermes Investment
Management, which provides world-class active management and
stewardship services. For more information, visit
FederatedInvestors.com.
###
1) Money Management Institute/Cerulli, Q4 2018
Certain statements in this press release, such as those related
to the structure of the transaction, asset transition levels,
future transaction prospects for Federated, and anticipated timing
for closing the transaction, constitute forward-looking statements,
which involve known and unknown risks, uncertainties and other
factors that may cause the actual results, levels of activity,
performance or achievements of the company, or industry results, to
be materially different from any future results, levels of
activity, performance or achievements expressed or implied by such
forward-looking statements. Other risks and uncertainties include
the possibility that Federated does not successfully complete the
acquisition or completes the transaction in a manner or timetable
different from that described above, as well as the risk factors
discussed in the company's annual and quarterly reports as filed
with the Securities and Exchange Commission. As a result, no
assurance can be given as to future results, levels of activity,
performance or achievements, and neither the company nor any other
person assumes responsibility for the accuracy and completeness of
such statements in the future.
Morningstar Category identifies funds based on their actual
investment styles as measured by their underlying portfolio
holdings over the past three years. If the fund is less than three
years old, the category is based on the life of the fund. ©2019
Morningstar, Inc. All Rights Reserved. The information contained
herein: (1) is proprietary to Morningstar; (2) may not be copied or
distributed; and (3) is not warranted to be accurate, complete or
timely. Neither Morningstar nor its content providers are
responsible for any damages or losses arising from any use of this
information. Past performance is no guarantee of future results.
The Morningstar Rating™ for funds, or "star rating", is calculated
for managed products (including mutual funds, variable annuity and
variable life subaccounts, exchange-traded funds, closed-end funds,
and separate accounts) with at least a three-year history.
Exchange-traded funds and open-ended mutual funds are considered a
single population for comparative purposes. It is calculated based
on a Morningstar Risk-Adjusted Return measure that accounts for
variation in a managed product's monthly excess performance,
placing more emphasis on downward variations and rewarding
consistent performance. The top 10% of products in each product
category receive 5 stars, the next 22.5% receive 4 stars, the next
35% receive 3 stars, the next 22.5% receive 2 stars, and the bottom
10% receive 1 star. The Overall Morningstar Rating for a managed
product is derived from a weighted average of the performance
figures associated with its three-, five-, and 10-year (if
applicable) Morningstar Rating metrics. The weights are: 100%
three-year rating for 36-59 months of total returns, 60% five-year
rating/40% three-year rating for 60-119 months of total returns,
and 50% 10-year rating/30% five-year rating/20% three-year rating
for 120 or more months of total returns. While the 10-year overall
star rating formula seems to give the most weight to the 10-year
period, the most recent three-year period actually has the greatest
impact because it is included in all three rating periods. Ratings
do not take sales charges into account. PNC International Equity
Fund was rated against the following numbers of U.S.-domiciled
Foreign Large Growth funds over the following time periods. Ratings
are for I, A and C Shares; other classes may have different
performance characteristics. For the 3-, 5- and 10-year periods
ended 3/31/19, the fund's I, A and C shares received 4, 4 and 4
stars and was rated among 373, 314 and 228 funds, respectively. The
PNC International Growth Fund was rated against the following
numbers of U.S.-domiciled Foreign Large Growth funds over the
following time periods. Ratings are for I and A shares; other
classes may have different performance characteristics. For the
3-year period ended 3/31/19, the fund's I and A shares received 4
and 4 stars and was rated among 373 and 373 funds, respectively.
Past performance is no guarantee of future results.
Federated MDT Small Cap Core Fund was rated against the
following numbers of U.S.-domiciled Small Blend funds over the
following time periods. Ratings are for A, C, Institutional and R6
Shares; other classes may have different performance
characteristics. For the 3-, 5- and 10-year periods ended 3/31/19,
the fund's A Shares received 4, 5 and 3 stars, the fund's C Shares
received, 4, 4 and 3 stars, the fund's Institutional Shares
received 5, 5 and 4 stars, and the fund's R6 Shares received 5, 5
and 4 stars, and was rated among 634, 519 and 382 funds,
respectively. Past performance is no guarantee of future
results.
Federated Ultrashort Bond Fund was rated against the following
numbers of U.S.-domiciled Ultrashort Bond funds over the following
time periods. Ratings are for Institutional Shares; other classes
may have different performance characteristics. For the 3-, 5- and
10-year periods ended 3/31/19, the fund's Institutional Shares
received 4, 4 and 4 stars, and was rated among 151, 131 and 59
funds, respectively. Past performance is no guarantee of future
results.
Federated Total Return Bond Fund was rated against the following
numbers of U.S.-domiciled Intermediate-Term Bond funds over the
following time periods. Ratings are for Institutional Shares and
Service Shares; other classes may have different performance
characteristics. For the 3-, 5- and 10-year periods ended 3/31/19,
the fund's Institutional Shares received 4, 4 and 3 stars, and the
fund's Service Shares received 4, 3 and 3 stars and was rated among
901, 769 and 564 funds, respectively. Past performance is no
guarantee of future results.
Federated MDT Small Cap Growth Fund was rated against the
following numbers of U.S.-domiciled Small Growth funds over the
following time periods. Ratings are for A, C, Institutional and R6
Shares; other classes may have different performance
characteristics. For the 3-, 5- and 10-year periods ended 3/31/19,
the fund's A Shares received 3, 4 and 3 stars, the fund's C Shares
received, 3, 4 and 3 stars, the fund's Institutional Shares
received 3, 4 and 3 stars, and the fund's R6 Shares received 3, 4
and 3 stars, and was rated among 588, 522 and 392 funds,
respectively. Past performance is no guarantee of future
results.
Federated MDT Large Cap Value Fund was rated against the
following numbers of U.S.-domiciled Large Value funds over the
following time periods. Ratings are for A, C and Institutional
Shares; other classes may have different performance
characteristics. For the 3-, 5- and 10-year periods ended 3/31/19,
the fund's A Shares received 3, 3 and 3 stars, the fund's C Shares
received 3, 2 and 3 stars, and the fund's Institutional Shares
received 3, 4 and 4 stars, and was rated among 1,096, 939 and 691
funds, respectively. Past performance is no guarantee of future
results.
Federated MDT Large Cap Growth Fund was rated against the
following numbers of U.S.-domiciled Large Blend funds over the
following time periods. Ratings are for A, C and Institutional
Shares; other classes may have different performance
characteristics. For the 3-, 5- and 10-year periods ended 3/31/19,
the fund's A Shares received 5, 4 and 3 stars, the fund's C Shares
received, 5, 3 and 3 stars and the fund's Institutional Shares
received 5, 4 and 3 stars and was rated among 1,256, 1,114 and 805
funds, respectively. Past performance is no guarantee of future
results.
Federated Short-Intermediate Duration Municipal Trust was rated
against the following numbers of U.S.-domiciled Municipal National
Short funds over the following time periods. Ratings are for
Institutional Shares and Service Shares; other classes may have
different performance characteristics. For the 3-, 5- and 10-year
periods ended 3/31/19, the fund's Institutional Shares received 4,
4 and 4 stars, and the fund's Service Shares received 3, 3 and 3
stars and was rated among 180, 165 and 112 funds, respectively.
Past performance is no guarantee of future results.
Federated Intermediate Municipal Trust was rated against the
following numbers of U.S.-domiciled Municipal National Intermediate
funds over the following time periods. Ratings are for
Institutional Shares and Service Shares; other classes may have
different performance characteristics. For the 3-, 5- and 10-year
periods ended 3/31/19, the fund's Institutional Shares received 3,
3 and 3 stars, and the fund's Service Shares received 3, 3 and 3
stars and was rated among 258, 227 and 149 funds, respectively.
Past performance is no guarantee of future results.
Federated MDT Balanced Fund was rated against the following
numbers of U.S.-domiciled Allocation—50% to 70% Equity funds over
the following time periods. Ratings are for A, C, and Institutional
Shares; other classes may have different performance
characteristics. For the 3-, 5- and 10-year periods ended 3/31/19,
the fund's A Shares received 4, 4 and 3 stars, the fund's C Shares
received 4, 3 and 2 stars, the fund's Institutional Shares received
4, 4 and 3 stars, and was rated among 690, 601 and 439 funds,
respectively. Past performance is no guarantee of future
results.
Federated MDT All Cap Core Fund was rated against the following
numbers of U.S.-domiciled Large Value funds over the following time
periods. Ratings are for A, C, and Institutional Shares; other
classes may have different performance characteristics. For the 3-,
5- and 10-year periods ended 3/31/19, the fund's A Shares received
5, 4 and 4 stars, the fund's C Shares received, 5, 4 and 3 stars,
and the fund's Institutional Shares received 5, 5 and 4 stars, and
was rated among 1,096, 939 and 691 funds, respectively. Past
performance is no guarantee of future results.
Federated Securities Corp. is distributor of the Federated
funds.
A prospectus/proxy statement for the funds with respect to the
proposed transaction and other relevant documents, concerning the
planned transaction will be filed with the United States Securities
and Exchange Commission (the SEC). The SEC has not approved or
disapproved these fund securities or passed upon the adequacy of
the fund's prospectus/proxy statement. Any representation to the
contrary is a criminal offense. Additional information
regarding the interests of participants in the solicitation of
proxies in connection with the proposed fund prospectus/proxy
statement will be included in, or incorporated into the
prospectus/proxy statement that the funds intend to file with the
SEC. The foregoing does not constitute an offering of any
securities for sale. We may not sell any of the subject fund
securities until the prospectus/proxy statement filed with the SEC
is effective. This press release mentions certain reorganizations,
which, if approved by fund shareholders, would be conducted
pursuant to an agreement and plan of reorganization. The joint
proxy statement/prospectus will constitute neither an offer to sell
securities, nor will it constitute a solicitation of an offer to
buy securities, in any state where such offer or sale is not
permitted.
INVESTORS ARE URGED TO READ THE FUND PROSPECTUS/PROXY STATEMENT,
AND OTHER DOCUMENTS WHEN FILED WITH THE SEC IN CONNECTION WITH THE
PLANNED TRANSACTION, OR INCORPORATED BY REFERENCE INTO THE FUND'S
PROSPECTUS/PROXY STATEMENT, BECAUSE THEY CONTAIN IMPORTANT
INFORMATION ABOUT THE FUND TRANSACTION AND RELATED MATTERS.
Investors should consider the investment objectives, risks, and
charges and expenses of any fund listed before investing. A fund's
summary prospectus and prospectus should be read carefully before
investing. When filed, these documents will be available free of
charge on the SEC's website at www.sec.gov.
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SOURCE Federated Investors, Inc.