Federated Investors Inc., the third- biggest U.S. manager of money-market funds, reported that assets in cash products fell in the third quarter by $28 billion to $318 billion as customers moved to higher-yielding investments.

Investors put $1.8 billion into bonds and $126 million into equity funds, including Federated Prudent Bear, during the three months ended Sept. 30, the Pittsburgh-based company said today in a statement. The firm said earnings rose 1 percent from a year earlier to $57 million, or 56 cents per share.

Federated, which derived 63 percent of its revenue from money-market assets in the quarter, has been acquiring stock and bond funds to offer investors a broader range of products. The company, which manages about $392 billion in assets, last year acquired two funds from David Tice, the money manager known for his bets against the stock market.

Interest rates hovering near zero have prompted investors to pull $420 billion out of money-market funds this year through Oct. 20, according to data from IMoneyNet Inc. in Westborough, Massachusetts. Fixed-income funds attracted inflows of $254.6 billion during the first nine months of 2009, compared with $14.5 billion for stock managers, according to research firm Morningstar Inc. in Chicago.