Massachusetts to replace long-time bond fund manager

July 19 Thu Jul 19, 2012 1:18pm EDT

July 19 (Reuters) - Massachusetts is replacing its long-time investment and bond fund manager in a move that is expected to save nearly $8.2 million over three years, state Treasurer Steven Grossman said on Thursday.

Federated Investors will take over management of the Massachusetts Municipal Depository Trust, which handles cash portfolio and bond fund management services for the state, several authorities and about 290 municipalities in Massachusetts.

Grossman's office and a team of other municipal officials selected Federated in a competitive bid process.

The decision displaces Fidelity Investments subsidiary Pyramis Global Advisors, which had provided the services for the entire 35-year history of the trust, Grossman said in a statement.

After taking office in 2011, Grossman began putting the treasury department's contracts out to bid.