UPDATE 1-Federated Investors profit jumps 34 pct on higher fees

Thu Jan 24, 2013 4:39pm EST

* Q4 net income 44 cents per share vs Wall St view of 40 cents

* Customers added $15 billion to money markets

* Total assets under management $379.8 billion

Jan 24 (Reuters) - Federated Investors Inc, one of the largest managers of U.S. money market funds, said its fourth-quarter profit jumped 34 percent as higher yields in the bond market bolstered fees.

Net income at Pittsburgh-based Federated totaled $49.6 million, or 44 cents per share, compared with $36.9 million, or 36 cents per share, a year earlier, the company said in a statement on Thursday.

With rates on short-term bonds so low, Federated and other money market fund managers have been forced to waive some of their management fees to prevent fund yields from turning negative. But in the fourth quarter, a slight uptick in rates allowed Federated to garner more fees than a year earlier.

Fee waivers erased $15.5 million from Federated's pre-tax profit in the fourth quarter, down 41 percent from $26.1 million in the same period a year earlier.

Customers added a net $685 million to Federated's stock and bond funds and $15.1 billion to its money funds and related short-term accounts. Assets under management totaled $379.8 billion at the end of the quarter.

Ahead of the results, shares of Federated closed down 0.4 percent at $22.92 on the New York Stock Exchange on Thursday. The shares have gained 13 percent so far this year, outpacing a 5 percent gain for the Standard & Poor's 500 Index.

Federated is the third-largest manager of money market funds, trailing only Fidelity Investments and JPMorgan Chase & Co.

A couple walks along the rough surf during sunset at Oahu's North Shore, December 26, 2013. REUTERS/Kevin Lamarque

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