Federated Managed Volatility Fund II

As of 01-31-2015


  • Pursues current income and long-term growth of income.
  • Seeks to manage portfolio volatility by using equity index futures, targeting an annualized fund volatility of approximately 10%.
  • Provides a highly diversified approach to income.
  • Invests in high yielding stocks of undervalued mid- to large-cap companies that are likely to maintain and increase their dividends.
  • Invests in diversified bond sectors that include U.S. government, investment-grade corporate and mortgage-backed, high-yield corporate, and international developed and emerging market.
  • Balances income opportunities and risk across markets and sectors through active management.

Key Investment Team


Fund Number(s)   333
CUSIP   313916108
Benchmark   40% Russell 1000 Value Index/20% Barclays High Yield 2% Issuer Capped Index/20% Barclays Emerging Markets USD Aggregate Index/20% Barclays Mortgage-Backed Securities Index
Performance Inception Date   02-10-1994
Fiscal Year-End   12-31

Morningstar Ratings™

disclosures »
    Funds in Category
Overall 575
3 Year 575
5 Year 469
10 Year 253
Based on risk adjusted total return. The overall rating is derived from a weighted average of the fund’s three-, five-, and ten-year average annual returns, as applicable.

Morningstar Category & Style

disclosures »
Category Conservative Allocation

Related Information

The fund’s use of derivative instruments involves risks different from, or possibly greater than, the risks associated with investing directly in securities and other traditional instruments.

There can be no guarantee that the fund will maintain its target annualized volatility. Furthermore, while the volatility management portion of the strategy seeks enhanced returns with more consistent volatility levels over time, attaining and maintaining the target volatility does not ensure that the fund will deliver enhanced returns. The fund’s managed volatility strategy may expose the fund to losses (some of which may be sudden) to which it would not have otherwise been exposed if the fund’s investment program consisted only of holding securities directly. For example, the value of the Long S&P 500 Futures Positions (which generally will be up to 60% of the fund’s net asset value) may decline in value due to a decline in the level of the S&P 500, while the value of the Short S&P 500 Futures Position (which generally will be up to 40% of the fund’s net asset value) may decline in value due to an increase in the level of the S&P 500. The fund will use Short S&P 500 Futures Positions to hedge the fund’s long equity exposure. The fund’s losses on a Short S&P 500 Futures Position could theoretically be unlimited as there is no limit as to how high the S&P 500 can appreciate in value. However, such losses would tend to be offset by the appreciation of the fund’s equity holdings. The use by the fund of Short S&P 500 Futures Positions to hedge the fund’s long exposure and manage volatility within a target may not be successful. Additionally, the Long S&P 500 Futures Positions are not being held to hedge the value of the fund’s direct investments in equity securities and, as a result, these futures contracts may decline in value at the same time as the fund’s direct investments in equity securities.

Diversification does not assure a profit nor protect against loss.

There are no guarantees that dividend-paying stocks will continue to pay dividends. In addition, dividend-paying stocks may not experience the same capital appreciation potential as non-dividend-paying stocks.

Effective December 2, 2011, the fund's name was changed from Federated Capital Income Fund II to Federated Managed Volatility Fund II and the Adviser will use derivative contracts, including stock index futures to target an annualized volatility level for the Fund of approximately 10%. However, the actual or realized volatility for any particular period may be materially higher or lower depending on market conditions.

Volatility is a statistical measurement of the frequency and level of changes in the value of an asset, index or instrument without regard to the direction of those changes. Volatility may result from rapid and dramatic price swings. There can be no guarantee that the Fund will maintain its annualized volatility target. Furthermore, while the volatility management seeks competitive returns with more consistent volatility of returns, the attainment and maintenance of the target volatility does not ensure that the Fund will deliver competitive returns.

Bond prices are sensitive to changes in interest rates, and a rise in interest rates can cause a decline in their prices.

International investing involves special risks including currency risk, increased volatility, political risks, and differences in auditing and other financial standards. Prices of emerging-market and frontier-market securities can be significantly more volatile than the prices of securities in developed countries, and currency risk and political risks are accentuated in emerging markets.

High-yield, lower-rated securities generally entail greater market, credit/default and liquidity risks and may be more volatile than investment-grade securities.

Fund shares are available exclusively as a funding vehicle for life insurance companies writing variable life insurance policies and variable annuity contracts.  If you are an individual investor, contact your financial advisor or insurance company for more information on these products.

Investors should carefully consider the fund's investment objectives, risks, charges and expenses before investing. To obtain a summary prospectus or prospectus containing this and other information, contact us or view the prospectus provided on this website. Please carefully read the summary prospectus or prospectus before investing.

"Category" product classifications noted at the top are Federated's internal classifications.

For additional information, including definitions of related terms and indexes, see the Financial Glossary and Benchmark Index Glossary.

Federated Securities Corp., Distributor
Not FDIC Insured May Lose Value No Bank Guarantee
Copyright © 2015 Federated Investors, Inc.

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