Investors Forgive Scandal-Tainted Funds

Published December 07, 2004, 1:00 a.m. EST

Updated December 07, 2004, 1:00 a.m. EST

1 Min Read

Investors appear willing to forgive funds that have been tainted by the fund scandal as long as they deliver strong performance, USA Today reports.

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While Putnam Investments has lost $40 billion in the past 12 months through Oct. 31, according to Financial Research Corp., investors withdrew only $706 million from Putnam funds rated four stars by Morningstar.

The same is true at MFS Investments. This shop lost $9.1 billion from funds rated three stars or less, while $3.1 billion went to its top or non-rated funds, for a net loss of $6 billion. But Franklin Resources actually reaped net inflows of $11.8 billion over the past 12 months, with $9.3 billion of this going to funds with five stars, Morningstars highest rating.

"Its clear that investors are forgiving if performance is good," said FRC Analyst Sam Campbell.

And for those funds that havent been named in the scandal that also have a number of strong performers, its been a boondoggle. American Funds has taken in $91 billion in additional assets in the past year, while Vanguard attracted $59 billion and Fidelity $26 billion, according to FRC.

The staff of Money Management Executive ("MME") has prepared these capsule summaries based on reports published by the news sources to which they are attributed. Those news sources are not associated with MME, and have not prepared, sponsored, endorsed, or approved these summaries.