After spending six quarters buried in mutual fund outflows, some companies burned in the trading scandals began to see daylight in March, according to data from Financial Research Corp.
Both Janus Capital Group Inc., one of the first four companies named by New York Attorney General Eliot Spitzer in 2003 as being under investigation, and Putnam Investments, the first company charged (in October 2003) with allowing abusive trading in its funds, continued to reduce outflows on a quarter-against-quarter basis, the Financial Research data showed.
Three bank-owned fund complexes moved into positive territory in March or capped a full quarter of inflows.
Bank of America Corp.'s Nations Funds had a third consecutive month of net inflows to its stock and bond portfolios, the Boston research company reported, and Strong Capital Management - bought by Wells Fargo & Co. in December - had its first month of positive flow since August 2003, just prior to the announcement of the trading investigations by Mr. Spitzer. JPMorgan Chase & Co.'s fund unit had its first month of positive flow since September.
JPMorgan Chase had the biggest swing from outflows to inflows - $171 million came in during March after $3.5 billion of outflows the month before.
Kristen Batteria, a spokeswoman for JPMorgan Funds, said this could be credited primarily to its retail U.S. equity products' performance. The Barron's annual ranking of fund families for 2004 placed JPMorgan Funds seventh overall in U.S. equity performance out of 73 fund families.
The company expects strong retail momentum, she said, after the recent absorption of the One Group funds that came with the Bank One Corp. purchase, which made Morgan's the fifth-largest U.S. fund family.
Analysts said the good results for fund units at banking companies such as Bank of America and Wells Fargo are a good indicator, but a Philadelphia analyst, Burton Greenwald of BJ Greenwald Associates, said, "It is still too early for anyone to believe we are out of the woods."
The Financial Research data showed Strong with $296 million of inflows in March. San Francisco-based Wells, which got $24 billion of mutual fund assets under management with Strong, melded its portfolios into a single family in April - Wells Fargo Advantage Funds.
Richard G. Lipstein, a managing director at Boyden Global Executive Search, said large banks and financial services companies are finding that enhancing their product arrays as Wells did after buying Strong enables them to jump-start revenues.
Both Janus and Putnam continued to suffer outflows in March, but Putnam pointed out that it had $5.4 billion of outflows in the first quarter, down from $6.5 billion in the fourth quarter, and $7.9 billion in the first quarter of last year.
Janus had $4.2 billion of outflows in the first quarter, down from $4.3 billion in the fourth quarter, and $6 billion in the first quarter of last year.
Putnam, the asset management unit of Marsh & McLennan Cos., has been working on reputation repair since Ed Haldeman succeeded Lawrence J. Lasser as president and chief executive officer in November 2003.
Mr. Haldeman said in an interview this week that a positive momentum is building. "We have seen modest gains in mutual fund sales for the second quarter in a row," he said. "In our institutional business, we have had a number of new clients and returning clients, such as the recent Calpers win for a PanAgora mandate."
The company has also improved investment performance, he said. For the 12 months through March 31, 61% of all Putnam mutual fund assets - including half the equity assets and 95% of fixed-income - were in portfolios that performed above the median in their Lipper categories.
Janus had $786 million of outflows in March - the first month of less than $1 billion in outflows since August 2003, the month before Mr. Spitzer unveiled his investigation. The company had $132.2 billion of assets under management at March 31, down from $148.4 billion a year earlier.
Stock and bond funds had $28.4 billion of net inflows industrywide in March, according to Financial Research. International portfolios led the way, with $17.5 billion of net inflows. The nation's three largest fund companies continued to see inflows in March but weaker ones than in the previous month.
American Funds topped all complexes with $7.2 billion of net inflows, down from $7.9 billion in February and from $9.2 billion in March 2004. Vanguard had $5.9 billion of inflows in March, down from $6.3 billion in February and $7.4 billion the year earlier. Fidelity Investments had the steepest decline. In March, it had $1.3 billion of inflows, down from $2.8 billion in February and $3 billion the year earlier.
Vin Loporchio, a spokesman at the Boston fund company, said the data could be misleading because it does not include money market funds, where Fidelity had $2.6 billion of inflows in March. Fidelity has had strong inflows the past year and expects them to persist, he said.
