Boston may still control 20 percent of all mutual fund assets, but other trends signal that the firms' hometown is collectively slipping from its top spot, reported
Charles Stein of the Boston Globe
In 2003, Boston fund firms captured only 8 percent of new money, compared to 42 percent in 1994, according to the Financial Research Corp. Who's to blame? Stein cites troubles at Boston firms Putnam Investments and MFS Investment Management, and the tremendous success of firms like Vanguard Group, American Funds, PIMCO Funds and Dodge & Cox.
Putnam and MFS, both suffering outflows in 2002, took harder hits after the two were named in investigations, said Stein. In 2003, Putnam's net outflows were $28.8 billion and MFS had a net inflow of $1.6 billion. In the first two months of 2004, Putnam and MFS both experienced outflows.
Boston-based Fidelity, although it has lost ground to Vanguard and American Funds in recent years, has benefited from staying far away from the mutual fund scandals. Fidelity garnered $31 billion in 2003 and $11 billion in the first two months of 2004, Stein reported.
American Funds, PIMCO and Dodge & Cox all responded effectively to the market collapse by promoting a conservative image and stable investments.
American Funds' inflows were $4 billion in 2000, $23 billion in 2001, $38 billion in 2002 and a record $65 billion in 2003. Two of American's funds also surpassed industry vanguard Fidelity's Magellen as the largest funds.
Offsetting the decline is the inflow of funds managed by Boston subadvisors for firms like Vanguard, and the rise of smaller and mid sized fund firms, like Pioneer Investments, Eaton Vance and Grantham, Mayo, Van Otterloo.
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