Federated Investors is ready to open a funds Thursday morning that is designed to take advantage of changes in how the federal government taxes dividends. The Federated Muni and Stock Advantage Fund will invest in both tax-exempt municipal bonds and dividend paying stocks.

"New legislation lowers the tax rate on certain stock dividends to 15 percent, which previously had been taxed at marginal rates as high as 38.6 percent," explained Keith M. "Kim" Schappert, president. "This product offers the new tax benefits of these qualifying stocks with the tax-exempt municipal bonds, giving investors the ability to capitalize upon the new tax law by generating tax-advantaged income, while also retaining an opportunity for capital appreciation."

The fund will come in A, B, and C share classes with a minimum investment of $1,500 is required for all share classes with subsequent investments of $100. For retirement plans the minimum initial investment is $250 with subsequent investments of at least $100.

John L. Nichol will lead the portfolio manager team running the fund. Also on the team are Mary Jo Ochson, senior vice president and senior portfolio manager, John W. Harris, vice president and portfolio manager and R.J. Gallo, assistant vice president and portfolio manager.

The fund will be benchmarked to the Russell 1000 Value Index and the Lehman Brothers Municipal Index.  

Stay ahead of the news ... Sign up for our email alerts now
CLICK HERE