The naming of Ed Haldeman to replace Larry Lasser as CEO of Putnam Investments, along with other actions taken by the troubled fund company, have prompted Morningstar to lift its advice to investors that money should not be poured into Putnam funds.
But a caveat remains for those considering buying into the funds. Morningstar said that because of bad performances during the bear market and quick turnover among fund managers, investors should not consider Putnam funds no-brainers just because the company is repairing its scandal-tarnished reputation.
Meanwhile, Morningstar indicated yesterday that it might tell investors to sell out of FleetBostons Columbia funds. "We are reassessing the Columbia situation ¾
As for Putnam, McNeela cited as adequate evidence of progress the firing of all six Putnam employees who conducted improper trades, toughening of company compliance with regulators and introduction of redemption fees for short-term fund trades.
"As a result of these measures, we think that Putnam has risen to a standard whereby its funds can now be evaluated on an individual basis," McNeela wrote.
Since just five of 56 Class A Putnam shares are in the top quartile of Morningstars three-year analysis, though, McNeela added: "Putnam still has a lot of work to do before becoming an attractive investment destination."