"Federated looking to snap up more money funds, says Donahue" writes Investment News. It says, "Just two months after it announced that it was acquiring SunTrust Banks Inc.'s $17 billion money market business, Federated Investors Inc. is on the prowl to buy more money funds. The fund company also is looking to purchase an international asset manager with a global distribution network, Chris Donahue, chief executive of Federated Investors, said in an interview.... Mr. Donahue said, the firm is casting a wide net." He told IN, "Everything that goes by, we are looking at." The article adds, "He declined to comment on whether the firm is bidding to buy Pioneer Investments from UniCredit SPA, which is reportedly up for sale. Despite the fact that money fund yields have been close to zero, Mr. Donahue thinks now is a good time to acquire money fund assets." Donahue also said, "We realize that because of the [fund] waivers, the economics are not as attractive as they should be, but when you are doing things over the course of decades for customers, you wait and see.... From our perspective, anyone who isn't in the top 25 on the money fund list is someone who can seriously consider turning their money fund business to us. Years ago, there used be 300 money fund managers; now there are less than 150." See also, Bond Buyer's "Basel May Be Threat to Money Funds", which says, "The Basel III bank capital requirements proposed earlier this month threaten to eviscerate the supply of eligible investments for tax-free money market funds -- an industry already struggling with a severe supply shortage. Bankers and analysts have argued that the proposed capital requirements would make it more expensive for banks to guarantee municipal debt."
