Retail shareholders are voting with their feet and pulling cash from Putnam Investments. According to figures provided by AMG Date Services, funds advised by Putnam saw $4.4 billion in net redemptions in the week ending on Wednesday. Investors pulled a net $1 billion from the Putnam International Equity Fund.

That news follows decisions by public fund managers to terminate nearly $6 billion of mandates with the money manager. Putnam manages $272 billion in assets according to its most recent disclosures.

AMG's outflow figures are based on net flows in Putnam's retail funds and would include institutional accounts that pulled mandates from those funds. However, many of the public plans that said they are firing Putnam use separate accounts that would not be included in AMG's data. In addition, many of those funds have not yet had time to actually pull the assets from Putnam, so their decision would not yet appear in AMG's numbers.

Those figures suggest that Putnam has likely lost no less than $10 billion in assets to manage since Massachusetts Secretary of the Commonwealth William Galvin made his charges public last week. That figure could well be higher since few private sector institutional investors make their decisions known to the public.

AMG President Robert L. Adler said that the retail fund outflows were the largest seen by the data collector in 2003. His data may also show the power held by investigators when they file formal charges. Media reports had tied Putnam to the fund scandals for nearly a week before Galvin filed his civil complaint against the firm on October 28, yet the flows out of Putnam funds did not surge before Galvin filed the charges. The SEC also filed an enforcement action at the same time as Galvin's made his complaint.

Investors' reaction to the charges may provide insights to other firms named in the scandals but not yet charged on how they should prepare. Adler noted that Janus and Strong funds are also seeing retail outflows. Bank of America's NationsFunds and Bank One's OneGroup Funds were also named in the original Spitzer complaint but not charged. Other funds said to be under investigation are Alliance Capital and Invesco Funds.

As significant as the outflows and publicly disclosed institutional mandate losses are, they are not large enough to harm Putnam's franchise. Even $10 billion they would represent just 3.7 percent of Putnam's assets, an amount no greater than the change in the markets' value in any given week.

The bad news for Putnam did not translate to the rest of the industry. The Arcata, California-based AMG reports that the rest of the fund industry pulled in more than $3 billion of net flows during the week.  

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