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Fund Industry Sees Bigger Inflow in May

Markets

June 29, 2005|From Bloomberg News and Times Staff Reports

Investors pumped more money into long-term mutual funds in May than in April, but some fund giants appeared to continue to suffer fallout from the trading scandals revealed in 2003, new data show.

Putnam Investments and Janus Capital Group Inc. had net cash outflows in May, marking the fourth consecutive 12-month period the fund companies had suffered net withdrawals, according to a report from Financial Research Corp. issued Tuesday.

Across the fund industry, investors put a net $18.3 billion into stock and bond funds last month, up from $8.1 billion in April, Financial Research estimated. A recovery in stock prices helped boost equity fund inflows in May, while domestic bond funds had net outflows, the Boston-based firm's data showed.

Year to date through May, long-term funds have taken in $103 billion, down from $130 billion in the first five months of last year.

At Putnam, investors pulled a net $1.5 billion from stock and bond funds last month, and Janus' investors pulled a net $39 million, Financial Research said.

Putnam, based in Boston, and Janus, in Denver, have recorded net redemptions every month since June 2001. The companies' outflows in 2001 and 2002 were largely attributed to their funds' poor relative performance in the stock bear market of 2000 to 2002.

Late in 2003, the two companies were among the first implicated in the industry's abusive-trading scandals, triggering a new wave of investor redemptions.

Putnam, a unit of Marsh & McLennan Cos., had $106 billion in its long-term funds at the end of May, down from $133 billion at the end of 2002, Financial Research estimated. Janus had $67 billion in its long-term funds, down from $80 billion.

Nancy Fisher, a Putnam spokeswoman, said that first-quarter outflows were less than in any of the previous five quarters, and that the company expected "continued improvement in the second quarter."

Janus spokeswoman Shelley Peterson said, "We're confident that, as we continue to perform consistently well, the flow picture will turn around."

The big winner in cash flows last month was State Street Corp., the world's second-largest manager of exchange-traded funds, or ETFs, which have become popular alternatives to traditional mutual funds. Financial Research's data cover purchases and sales of ETFs as well as conventional funds.

State Street had a net cash inflow of $6.8 billion in May, compared with a $2.4-billion outflow in April, Financial Research said.

Second on the inflow list for May was Los Angeles-based American Funds, part of Capital Group Cos. The firm took in a net $5.6 billion, down from $7.1 billion in April.

Year to date through May, American Funds was the industry leader in cash inflows, taking in a net $38 billion, Financial Research said.

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