Mutual fund companies have turned over a new leaf in the wake of the scandals that hit the industry in the fall of 2003. Since last October, the S&P 500 Asset Management and Custody Banks Index has seen a 12% price gain, compared to the 5% increase in the S&P 500, Forbes reports.

Among the fund companies either named or subpoenaed by government agencies, Alliance Capital Management Holding LP has emerged stronger. The company, which experienced a major management revival, has cut its fees by 20%, Rachel Barnard, a senior analyst at Morningstar, told Forbes.

She also pointed out that Alliance's value funds overtook its growth funds to reaffirm the position of its subsidiary, Sanford C. Bernstein, which specializes in value funds. With its $490 billion-plus assets under management in institutional accounts, Alliance, Barnard predicted, will show yearly revenue growth of seven to 10% over the next several years.

Another company, Franklin Resources, which owns the Templeton and Mutual Series fund brands, was ordered to pay $43 million in penalties last year but saw a 34% increase in its stock price in 2004.

Janus Capital Group has put in place reforms as far as manager compensation is concerned. The company now rewards its managers on a five-year basis, as opposed to a one-year basis, to prevent short-term gains and heavy risk taking.

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