Lehman Bros. Holding to sell its nine money market funds


NEW YORK -- Lehman Brothers Holding Inc. is getting out of the U.S. mutual fund business.

Lehman last week said it agreed to sell its nine money market funds to Federated Investors for an undisclosed amount. The funds, which jointly oversee about $5 billion in assets, are designed for institutions and wealthy investors.

The move comes about six months after Lehman, the No. 4 U.S. securities firm in terms of capital, sold its sole U.S.-registered equity mutual fund to AMT Capital Advisers Inc. and closed its "offshore" fund business.

Once the money fund transaction is completed, Lehman said it will no longer manage any proprietary mutual funds for individual investors.

Lehman is leaving the mutual fund business at the same time other leading brokerage firms, including Merrill Lynch & Co. and Morgan Stanley Group Inc., are taking steps to bolster their fund businesses and grow their assets under management through acquisitions.

Merrill is in the process of acquiring Los Angeles-based Hotchkis and Wiley, and Morgan Stanley is close to completing its purchase of Van Kampen/American Capital.

Brokerage firms are increasing their asset management businesses to benefit from the stable revenue these businesses generate and to offset big swings in profits when underwriting or trading revenue sinks.

The acquisition of the Lehman funds represents Federated's latest step to bolster its position in the $850 billion money-market fund business.

Federated ranks No. 5 in the U.S. terms of managing money fund assets with about $44 billion, according to IBC's Money Market Insight, a monthly newsletter that tracks the money fund business.

Pub Date: 9/15/96

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