Firm to Establish Mortgage Securities Fund and Fine-Tune Absolute Return Offerings
February 01, 2018 — BOSTON–(BUSINESS WIRE)–In a continuing effort to provide financial advisors and their customers with a broad and well-defined set of strategies to address specific investment objectives and larger portfolio construction needs, Putnam Investments today announced plans to reposition a number of funds to best serve the marketplace, pending SEC staff review.
“Putnam is continually evaluating and evolving its product roster in order to provide highly effective, differentiated and results-oriented active management offerings to clients and investors,” said Robert L. Reynolds, President and CEO, Putnam Investments. “We think it is imperative to have a product set that seeks to solve for a range of portfolio needs, utilizing thoughtful strategies, talented investment professionals, and an overall results-oriented approach.”
Reynolds indicated that Putnam will establish its first mortgage securities retail mutual fund, tapping a strong capability within the firm that has long been highly regarded by the institutional marketplace, and a short-term bond fund, leveraging the firm’s experience in ultra-short fixed income. In addition, the firm will be fine-tuning its suite of absolute return funds to provide financial advisors with an even sharper focus on the role these strategies can play in shaping client portfolios.
In particular, the firm is planning the following product moves:
Putnam American Government Income Fund will be merged into Putnam U.S. Government Income Fund, which is being repositioned as Putnam Mortgage Securities Fund. The repositioned fund, which is expected to have over $1 billion in assets, will deepen its investment focus to include a host of mortgage instruments. In addition, the repositioned fund will experience a substantial decrease in the fund’s total expense ratio, which is expected to fall from 64 bps to 50 bps (class Y shares).
Putnam Absolute Return 100 Fund will be repositioned as a short-term bond fund and renamed Putnam Short Duration Bond Fund. From a risk-return perspective, the repositioned fund will reside between the firm’s ultra-short fixed income offering, Putnam Short Duration Income Fund, and the firm’s intermediate-term fixed income offering, Putnam Income Fund. The fund is expected to have nearly $200 million in assets.
Putnam Absolute Return 300 Fund will be renamed Putnam Fixed Income Absolute Return Fund. The new fund, which is expected to have over $450 million in assets, will maintain its current investment strategy.
Putnam Absolute Return 500 Fund will be merged into Putnam Absolute Return 700 Fund, and the combined fund will be renamed Putnam Multi-Asset Absolute Return Fund. The new fund, which is expected to have over $2 billion in assets, will maintain the current investment strategy of Putnam Absolute Return 700 Fund.
Serving current and future needs…
“As we move ahead in helping our clients navigate the opportunities and challenges of today’s dynamic markets, we believe these changes will serve their current and future needs well, through a thoughtful, increasingly well-defined product line-up,” Reynolds said.
Addressing the specific product developments, Reynolds explained that Putnam has provided the institutional market with mortgage investing strategies for many years and is pleased to bring this area of expertise to the retail fund market in a focused, stand-alone product offering — to help advisors address this important asset class. Additionally, he pointed out that investors are also seeking new and differentiated offerings in short-term fixed income, noting the strong client experience that the firm’s ultra-short fixed income offering, Putnam Short Duration Income Fund, has brought to bear in the marketplace.
With regard to other planned changes, Reynolds said that the firm believes strongly that absolute return strategies can be an extremely valuable component of a broader investment portfolio — by providing key characteristics such as diversification, volatility management, and the seeking of positive overall returns regardless of market conditions. “Moving forward, financial advisors and their clients will be able to choose between two distinct absolute return strategies, focused specifically on fixed income and multi-asset approaches,” he added.
As part of the continuing evolution of its product lineup, Putnam recently announced plans to offer two funds with dedicated environmental, social and governance (ESG) strategies to the marketplace toward the end of Q1 2018, pending SEC staff review. The new funds, to be named Putnam Sustainable Leaders Fund and Putnam Sustainable Future Fund, will bring two distinct investment lenses to identify opportunities driven by corporate sustainability practices and solutions, respectively.
Additionally, in September 2017, the firm launched its Putnam PanAgora suite of alternative offerings employing risk parity, managed futures, and market neutral strategies.