Federated Investors, Inc. (NYSE:FII) Q1 2018 Earnings Conference Call - Final Transcript
Apr 27, 2018 • 09:00 am ET
Greetings and welcome to the Federated Investors First Quarter 2018 Conference Call. [Operator Instructions]
It is now my pleasure to introduce your host, Ray Hanley. Please go ahead, sir.
Good morning and welcome. Leading today's call will be Chris Donahue, Federated CEO and President; and Tom Donahue, Chief Financial Officer. And participating in the Q&A is Debbie Cunningham, our Chief Investment Officer for the money markets. During today's call, we may make forward-looking statements and we want to note that Federated's actual results may be materially different than the results implied by such statements. Please review the risk disclosures in our SEC filings. No assurance can be given as to future results and Federated assumes no duty to update any of these forward-looking statements. Chris?
J. Christopher Donahue
Thank you, Ray and good morning, all. I will briefly review Federated's business performance and Tom will comment on our financial results. Looking first at equities. We closed the quarter with $64 billion of assets, down about $4 billion from year-end due to net outflows and market decreases. Gross sales of equity funds and separate accounts on a combined basis increased by $731 million or 28%, over the prior quarter.
Our small-cap funds have been strong performers and have directed solid flows. We believe they are well-positioned for further growth. MDT Small Cap Core, with its top 1% Morningstar category ranking for the trailing three and five years at the end of Q1 had positive net sales of $153 million to reach $520 million in assets at quarter-end.
MDT Small Cap Growth had top-decile performance for the trailing three and five years at the end of the first quarter and posted positive net sales of $82 million to reach just about $400 million in assets at quarter-end. The Kaufmann Small Cap Growth Fund, with its top-decile performance for the trailing one, three and five years at the end of the first quarter had positive net sales of $89 million to reach $1.1 billion at quarter-end. Other funds with positive net sales in the first quarter included our Muni & Stock Advantage Fund, MDT Mid Cap Growth and International Leaders.
As regards Strategic Value Dividend, this strategy's objective is to provide a high and growing dividend income stream from high-quality companies. The domestic fund's 12 months distribution yield of 3.84% ranked in the second percentile of its Morningstar category at year-end. This fund had a return of minus 6.5% in the first quarter as the January rate spike combined with no exposure to tech and consumer discretionary impacted absolute and relative performance.
However, looking at quarterly returns from inception through the end of 2017, the fund has been at the top or bottom quartile, just about every quarter with about the same number of quarters in each. This pattern continued in Q1 with the fund in the top 2% for its March one-month record and at the bottom of the category for the full quarter.
Now using Morningstar data for the trailing three years at the end