UPDATE 1-NY Fed halves number of managers for agency MBS

(Adds details)

NEW YORK Aug 17 (Reuters) - The New York Federal Reserve said on Monday that it is reducing the number of external investment managers for its agency mortgage-backed securities purchase program to two from four as it has developed internal expertise in those markets.

The New York Fed will retain BlackRock Inc as the primary provider of risk and analytics support and Wellington Management Company for trading, settlement and as a secondary provider of risk and analytics support.

Goldman Sachs and Pacific Investment Management Company (PIMCO) were the other two managers providing investment management services for the program, according to the New York Fed's vendor agreements.

The regional central bank, which acts as an operational arm of the Federal Reserve, said the changes are not performance related.

The Fed first announced its program to buy agency mortgage-backed securities to support the housing market in November, and has since bought $741.6 billion. The Fed has said it could buy up to $1.25 trillion.

"The agency MBS program has matured since it began in January, and the New York Fed has had time to further develop its internal analytical and operational expertise in this area," the New York Fed said in a statement.

The Fed's markets group has grown from 230 in early 2007 and is expected to reach 400 people by the end of 2009.