Eliot Spitzer may have changed the behavior of fund executives, but he may has well of been spitting in the wind when it came to investors. Putnam Investments and Janus Capital continue to see outflows over 2004, but the damage may have more to do with weak investment performance rather than regulatory scandals.

Bisys' Financial Research Corp. showed Putnam and Janus as one-two on the list of firms with weakest flows (or strongest outflows) through October. Putnam lost $22.6 billion in estimated net redemptions compared to $15.9 billion for Janus.

Yet $8.6 billion of net inflows to Franklin Resources' funds suggest that the scandals that snared all three firms may have played a smaller role than relative performance for shareholders making decisions about what to do with their holdings.

Franklin, primarily offers funds with a value bent, while Putnam and Janus are both known for their growth-focused funds. Other funds hit by the scandals (Columbia Funds and AIM) also saw net outflows.

The top three sellers of funds were a familiar list: American Funds, Vanguard and Fidelity Investments. Each of those firms dominates its distribution niche with American Funds selling best among brokers, Vanguard direct investors and Fidelity qualified plans.  

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