Federated Investors announced yesterday that it took over a $12.3 billion money market fund that Putnam Investments closed last week after institutional investors began cashing out.

The Downtown investment manager, a pioneer in the money market field, said securities held in Putnam's Prime Money Market Fund yesterday were transferred to Federated's Prime Obligations Fund. Putnam investors received $1 in the Federated fund for every $1 they held in the Putnam fund.

Putnam closed the fund last week and said it would be liquidated after assets in another fund, Reserve Money Market, were valued below $1 because of bad debt the fund held in bankrupt Lehman Bros. That set off fears of problems at other money market funds, which caused the run on Putnam's AAA-rated fund. Federated's Prime Obligations Fund is also rated AAA.

Money market funds are not insured by the Federal Deposit Insurance Corp., the federal agency that insures bank deposits up to prescribed limits. But instances where money market fund investors have lost the principal value of their investment have been rare.

Proposed measures being considered in Washington to combat the meltdown in credit markets include a U.S. Treasury-run insurance program for money market funds. Federated said yesterday it expects to participate in that.

Federated manages about $248 billion in money market mutual funds, up from $242 billion as of Sept. 15. That accounts for about 70 percent of the $333.5 billion Federated manages.