Putnam and Barclays Global Investors both posted earnings reports Thursday, and the fortunes of the two asset managers could not be more different. Putnam's revenues and assets under management are down, while BGI's are way up.

On the one side of the see-saw, BGI has been looked upon favorably by the first half of 2006. In his half-year review, Barclays CEO John Varley called BGI's profit performance "excellent." According to an SEC filing by its British parent, before-tax profits at BGI grew 51 percent since December 31. AUM at the international asset managing leviathan hit $1.6 trillion, rising $110 billion. That rise included $30 billion in inflows, $43 billion of market appreciation, and $37 billion coming from exchange rate shifts.

And on the other end of the stick, Putnam looks like it still has not recovered from its tangle with New York attorney general Eliot Spitzer. The asset manager's parent, Marsh & McLennan Companies Inc., missed earnings forecasts for its second quarter by 13 cents (earning $0.31 per share, not the $0.44 expected), and from the looks of MMC's earnings report released Thursday, Putnam definitely contributed to that disappointment.

According to the release, revenues dropped ten percent to $339 million from $377 million in the second quarter of 2005. AUM fared slightly better, dropping only 7.69 percent from last June, from $195 billion to $180 billion. So why are revenues at Putnam magically declining faster than assets? The answer lies in where Putnam's AUM is declining: of that $15 billion drop, nearly all ($13 billion) of that drop was in mutual funds, which have higher fees than their institutional counter-parts.

Putnam suffered $6 billion in net outflows, including $2.8 billion taken out by an Australian company, Bankers Trust, with which Putnam had had, according to spokesperson for MMC, a "long-standing relationship".

"They requested to end the relationship," Robin Liebowitz told the MutualFundWire, "so Putnam is rebuilding its own capacity in Australia."

Surprisingly, Putnam's operating margin increased to 22.4 percent, from only 18.8 percent last June. It looks like Putnam is slimming itself down to a permanently smaller size in an attempt to deal with its continued outflows (which totaled $31.7 billion last year). 

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