MFS Investment Management and Putnam, both of which have been bleeding investor assets for months, may not be able to make it on their own, but to competitors, they might very well seem like an attractive bet, according to Dow Jones. 

Both companies have broad operational capacities and established histories and a network of financial advisers and brokers through which they sell their products.

But both also have lagging performance, compared with their peers, and a bad name since the mutual fund and trading scandals. Since those events, Putnam parent Marsh & McLennan and MFS's owner Sun Life Financial Services have both vetted their ranks and revamped their policies, but neither had been able to successfully lure investors.

And while both companies' flagship funds are growth funds, neither has delivered above-average performance.

But they do bring significant assets. Putnam, with $92 billion under management in stock and bond funds is the 12th largest U.S. fund company, while MFS with $74 million   comes in at number 16, according to Financial Research Corp.

"Asset gathering is the name of the game," said Roy Wietz, founder of watchdog website FundAlarm.com.

And both companies' assets are significant.

"Most of the Putnam and MFS funds would be reorganized into an acquiring company's funds. They're looking to buy the assets, not the name. The name would be a liability," Weitz said.

The merged funds would likely be received well by brokers and dealers, with the buyer adding credibility to tarnished Putnam and MFS names, and might even be stronger and less expensive.

"In acquisitions, investors need to wait and see the full nature of the transaction and focus on the fact that they may end up with a better situation all around--better performance and expenses than they're already paying," said Geoff Bobroff, a consultant based in East Greenwich, R.I.

"This could end up being a big win for fund holders," said Morningstar analyst Laura Pavlenko Lutton.

Weitz, however, worries that investors will not fare as well.

"They're going to end up in a bigger fund, which is not necessarily in the shareholder's interest," he said. Mega-funds often get too large to outperform, and the sale may result in some investors being hit with extra taxes, he said.

"Maybe Putnam in MFS investors will end up with a great manager, but maybe they won't," Weitz said. "They're starting over. At that point, they ought to go out and shop to find the best fund in the marketplace," he said.

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