BOSTON — The management shakeup at Putnam Investments Inc. should prove a turning point in the scandal-scarred firm's quest to restore its reputation, but it remains unclear how deep the hole the company now finds itself in will turn out to be.
Even as industry watchers laud parent Marsh & McLennan Cos. Inc.'s decision to replace longtime Putnam head Lawrence J. Lasser with Charles E. "Ed" Haldeman, the list of institutional clients dumping Putnam for not doing more to prevent its international equity portfolio managers from rapid-fire trading of the funds they oversaw continues to swell.
By the end of last week, at least 11 pension funds had yanked about $6 billion in mandates from Putnam. The latest weekly data by AMG Data Services, Arcata, Calif., suggested retail investors were voting with their feet as well, pulling out $4.4 billion out of Putnam mutual funds — $3.9 billion of that from equity mutual funds — in the seven-day period ended Nov. 5. Meanwhile, a report on Marsh & McLennan by Credit Suisse First Boston LLC, New York, suggested as much as $50 billion in assets could drain out of Putnam before the company's situation stabilizes.
That outflow — from a company that had $280 billion under management when it took center stage in the mutual fund-industry trading scandal two weeks ago — will determine the starting point for Putnam's comeback.
Consultants and plan sponsors say it could be 12 months before Putnam can pick up new clients again.