Managed Volatility Fund II

Variable Annuity Funds . Asset Allocation .


October 31 2023
$158.0 M

Seeks to achieve high current income and moderate capital appreciation by investing in both equity and fixed-income securities that have high income potential.

Key Facts - Part 1
Benchmark 40% Russell® 1000 Value Index/60% Bloomberg US Aggregate Bond Index
Key Facts - Part 2
Fund Number(s)
CUSIP 3 1 3 9 1 6 1 0 8
Performance Incp. Date February 10 1994
Insurance Tactical Allocation
Large Blend
Insurance Tactical Allocation
Medium Moderate
Global Diversification
Damian McIntyre, CFA, FRM, CAIA
Vice President
Portfolio Manager
Senior Quantitative Analyst

joined Federated Hermes
15 years of experience
Ian Miller, CFA
Vice President
Senior Portfolio Manager
Director of Quantitative Research, Equity

joined Federated Hermes
17 years of experience
Dana Meissner, CFA, FRM, CAIA
Senior Vice President
Senior Portfolio Manager
Head of Alternatives Equity Team

joined Federated Hermes
24 years of experience
Jerome Conner, CFA
Vice President
Senior Portfolio Manager
Senior Investment Analyst

joined Federated Hermes
27 years of experience
Ihab Salib
Senior Vice President
Senior Portfolio Manager
Head of International Fixed Income Group

joined Federated Hermes
31 years of experience
Todd Abraham, CFA
Senior Vice President
Senior Portfolio Manager
Head of Government/Mortgage Backed Fixed Income Group

joined Federated Hermes
34 years of experience
Mark Durbiano, CFA
Senior Vice President
Senior Portfolio Manager
Head of Domestic High Yield Group
Head of Bond Sector Pod/Committee

joined Federated Hermes
41 years of experience



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



1 disclosure If this product is new, it will not have completed its first financial reporting period. Please check back to view future shareholder reports. For the new share of an existing fund, you may wish to view recent shareholder reports of another share of that fund by visiting another share.

The “As of Date” for regulatory documents  is the date when the document is effective with the SEC and made available on Federated Hermes' website.

2 disclosure Each fiscal quarter, the Fund will file with the SEC a complete schedule of its monthly portfolio holdings on “Form N-PORT.” The Fund’s holdings as of the end of the third month of every fiscal quarter, as reported on Form N-PORT, will be publicly available on the SEC’s website at within 60 days of the end of the fiscal quarter upon filing.

double dagger disclosure PDF file consists of a President's Message or Market Overview (if applicable) and Annual/Semi-Annual Shareholder Report. NOTE: To be sure you have the most recent information, please access both the Annual Report and the Semi-Annual Report.

Distributions and Taxes


dagger disclosure The fund’s expense ratio is from the most recent prospectus, which shows that the fund is voluntarily waiving expenses.

Expenses shown do not reflect any additional fees or expenses that may be imposed by separate accounts of insurance companies or in connection with any variable annuity or variable life insurance contract. If these had been included, an investor's costs would be higher.

Total returns for periods of less than one year are cumulative.

Total return may have been lower in the absence of temporary expense waivers or reimbursements.

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

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 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.

The 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 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. The fund’s managed volatility strategy may expose the fund to losses (some of which may be sudden and significant) that it would not have otherwise been exposed to if it only invested directly in equity and fixed income securities. For example, the value of the Long S&P Futures Positions (which may 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 Futures Position (which may 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. Furthermore, losses on the Short S&P Futures Position are potentially unlimited. Additionally, Long S&P 500 Futures Positions are 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. The fund’s managed volatility strategy also exposes shareholders to leverage risk and the risks of investing in derivative contracts. There can be no assurances that the fund’s use of derivative contracts or hybrid instruments will work as intended.

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 Advisor 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.

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.

The fund is a managed portfolio and its holdings are subject to change.

The holdings percentages are based on net assets at the close of business on the date above, and may not necessarily reflect adjustments that are routinely made when presenting net assets for formal financial statement purposes. Because this is a managed portfolio, the investment mix will change.

The ratings referred to in the quality breakdown are provided by Standard and Poor's, Moody's, and Fitch. The allocation of ratings presented aligns with the methodology of the Bloomberg index. Bloomberg employs the middle rating from Standard and Poor's, Moody's, and Fitch to determine a security's credit classification, essentially following a "two-out-of-three" rule. In cases where only two agencies rate a security, the more conservative (lower) rating is utilized. If only one agency rates a security, that single rating is used. Additionally, certain securities may not have a credit rating from any of the agencies, and they are categorized as "not rated."  For clarity, credit ratings of A or better are indicative of high credit quality, while BBB represents good credit quality and the lowest tier of investment grade. Ratings of BB and below are assigned to lower-rated securities, often referred to as "junk bonds," and credit ratings of CCC or below indicate a high level of default risk. This breakdown doesn't consider the impact of credit derivatives in the fund.

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.

Product classifications noted at the top are Federated Hermes' internal classifications.

Federated Securities Corp., Distributor

Not FDIC Insured
May Lose Value
No Bank Guarantee