Putnam Cuts Analysts and Revamps Research


New York, NY – Based on an article written last week by Reuters, asset manager Putnam Investments has started taking action to improve the sub-par performane of its various mutual funds by firing three of its analysts and restructuring its research department.

Putnam apparently fired three of their analysts and lost a fourth, who left for a rival money management firm.  According to sources within the firm, Putnam is also in the process of revamping its research department — moving their analysts from a central research pool to making them responsible for specific funds and sectors.

Unfortunately, Putnam has been suffering poor investment performance and significant asset outflows in recent years as its growth style did not fare well in the bear market of 2000 to 2002.  In addition, Putnam has been plagued by bad press, including the late trading scandal.  As a result, Putnam has seen assets under management plunge from $371 billion in 2000 to $187 billion in recent months.

Putnam is in the process of being purchased from Marsh & McLennan by Canada’s Power Financial Corp. for $3.9 billion.

The following is the full text of the Reuters article on this topic.


Putnam cuts stock analysts, revamps research

Tue Mar 27, 2007 5:48PM EDT

By Muralikumar Anantharaman

BOSTON, March 27 (Reuters) – Money manager Putnam Investments has fired three equity analysts as part of moves to improve the lackluster performance of its funds, a person familiar with the matter said on Tuesday.

Putnam, which is being bought by Canada’s Power Financial Corp. (PWF.TO: Quote, Profile, Research) from U.S. financial services firm Marsh & McLennan Cos. (MMC.N: Quote, Profile, Research) for $3.9 billion, is revamping its equity research and making analysts responsible for particular funds rather than using them as a central pool, the source said.

A fourth analyst left to join a rival, the source added.

A Putnam spokeswoman confirmed that four equity analysts had left the firm recently but declined to provide details on their departure. She said one new analyst was hired but there was no new structure for equity analysts being put in place.

Boston-based Putnam has 58 equity analysts overall and $187 billion in total assets under management.

“If you have analysts dedicated to particular strategies as well as sectors, they can give more tailored advice to the particular fund managers,” said Reginald Laing, an analyst at research firm Morningstar, adding that it remains to be seen if the revamping of the research function would be a positive.

Putnam has suffered billions of dollars of outflows as its growth style of investing went out of favor in the bear market of 2000-02 and after it was charged by regulators with trading abuses. Assets have fallen from about $371 billion in 2000.

Two main funds, the Fund for Growth and Income and the Voyager, have been underperforming their benchmarks since 2000. Voyager returned 5.2 percent in 2006 against the S&P 500’s 15.8 percent and Growth and Income fund returned 15.83 percent for 2006 against the 22.3 percent of the Russell 1000 Value Index.

The Putnam spokeswoman, however, said more than two-thirds of Putnam funds were above the Lipper median at the end of February over a three-year period.

Outflows at the firm continue — according to fund flow research firm Financial Research Corp, Putnam saw outflows of $1.35 billion from its stock and bond funds in January. Analysts said the turnaround will take some time.

“It doesn’t happen overnight. It was always going to be a long process to move past that ugliness and usher in a new era of Putnam,” said Jeff Tjornehoj, senior research analyst at Lipper.


About Author

Leave A Reply