Among major U.S. mutual fund companies, scandal-tainted Putnam Investments ranks as the worst-selling group of stock and bond funds for the second year in a row, according to new data Wednesday from Financial Research Corp.
Putnam, a unit of insurance broker Marsh & McLennan Cos. Inc., had outflows of $4.7 billion for the month of December, bringing the total for the year to $28.9 billion. The full-year outflows represent about 22 percent of stock and bond fund assets at the end of 2002.
Putnam's stock and bond fund assets ended 2003 at $130.4 billion, down about 2 percent for the year, according to the FRC, which does not include money market funds in its rankings.
Marsh & McLennan said in its fourth-quarter earnings announcement Wednesday that Putnam's total assets under management ended 2003 at $240 billion, down from $251 billion at the end of 2003.
Mutual fund assets were $163 billion at the end of 2003, down from $164 billion, and institutional assets were $77 billion, down from $87 billion, the company said.
Marsh & McLennan said a new leadership team at Putnam, installed after the ouster last November of former chief executive Lawrence Lasser, is working to restore the confidence of investors.
Putnam became embroiled in the fund scandal late in 2003 after it said it allowed some managers and clients to engage in rapid trading of funds, a practice which is not illegal, but which can hurt long-term investors.
In 2002, Putnam also ranked as the worst-selling of the major fund companies, with outflows of $15.6 billion. Investors fled funds of Putnam and some others that year as former high-flying funds did poorly in the bear market.
Putnam's December 2003 stock and bond fund outflows of $4.7 billion were smaller than the $13.0 billion that left the company in November.
Marsh & McLennan said the Putnam net redemptions totaled $54 billion in the fourth quarter of 2003, but had slowed significantly in January. Total assets edged up to $241 billion as of Jan. 26.
The FRC said Janus Capital Group Inc., another fund company that saw outflows in 2002 in the bear market and then became embroiled in the fund scandals, saw outflows of $2.8 billion in December and $15.2 billion in 2003.
Like Putnam, Janus has been working to win back investor confidence. Last month, the company said it would pay back to shareholders or to funds $31.5 million that was realized from improper trading.
Strong Capital Management, a privately-held company also caught up in the scandals, saw outflows of $2.2 billion in December, amounting to about 5 percent of stock and bond fund assets at the start of the period, according to the FRC.
Strong, one of four companies originally snared in the investigation started by New York Attorney General Eliot Spitzer, has been looking for a buyer.
Privately-held American Funds, based in Los Angeles, was the most popular fund group in 2003, with $65.6 billion in net sales for its stock and bond funds, the FRC said. The company, known for a conservative investment style that fares well in bear markets, has been unscathed by the scandals and continuing investigations.
