Financial Research Corp (FRC), which estimates mutual fund asset flows monthly, reported in its latest data that Putnam suffered $13 billion in November outflows (following $2.28 billion in October asset losses), lowering its latest total to $131.4 billion. That was enough to drop the beleaguered company down one notch in the FRC’s ranking of the nation’s 25 largest fund groups from fifth to sixth place. Replacing Putnam was PIMCO Funds with $138.2 billion, FRC reported.
The FRC figures differ from Putnam’s own numbers as reported in regulatory filings. Putnam reported that at the end of November, it had $158 billion in assets in long-term mutual funds, plus another $6 billion in short-term or money market funds.
But even Putnam’s own data reflect a torrent of assets headed for the exits after the company was hit with charges that it committed fraud by allowing money managers to market time funds they supervised.
By Putnam’s own reckoning, the company’s mutual fund assets under management fell $11 billion in November, and its institutional assets, such as pension fund money that isn’t counted by FRC, fell by $21 billion, Putnam said. Putnam numbers also reflect market appreciation or depreciation that occurred in November.
The company agreed on November 13 in a pact with the US Securities and Exchange Commission (SEC) to institute new employee trading controls (See Putnam, SEC Reach Securities Fraud Settlement ) .
Though Putnam continues to see clients withdraw money, company officials told the Boston Globe that the worst is now behind them. “We have significant improvement in the trend related to our fund flows so far in December, compared to November,” spokeswoman Nancy Fisher told the Globe.
Putnam wasn’t the only firm caught up in the scandal to see investors flee with their dollars, according to the November FRC data:
- Strong Capital Management, whose founder and former chairman, Richard Strong, admitted to improper trading in company funds (See Trading Probes Muscle Out Strong, Putnam Chiefs ), had $1.6 billion in net outflows from company funds during the month.
- Alliance Funds, which agreed to pay $250 million in penalties and restitution for allowing market timers, lost $786 million (See Alliance, Regulators Reach Settlement ).
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