Putnam Investments today announced that it has developed the
industry’s first suite of target date funds that integrate target
absolute return strategies with traditional mutual funds.
This significant enhancement to Putnam’s existing lineup of
target date Putnam RetirementReady® Funds is designed to pursue a
higher level of retirement income for investors. The funds will
seek to mitigate market volatility and create a more stable
sequencing of investment returns by combining target absolute
return strategies with more conventional relative return -- or
benchmark-focused -- mutual fund strategies.
“Integrating absolute return investing into target date funds is
a natural evolution in retirement savings products, bringing
long-established institutional strategies to retail retirement
funds,” said Putnam President and Chief Executive Officer Robert L.
Reynolds. “Given the challenges we face today in saving for
retirement, we believe that incorporating absolute return
strategies will add powerful and much-needed diversification to
target date investing, providing investors with what we think is a
stronger, more grounded long-term retirement savings vehicle.”
Reynolds noted that last year’s market slump highlighted the
need for target date managers across the industry to better shield
investors close to or in retirement from market extremes without
sacrificing the potential for gains in more positive markets.
“We’ve redesigned our RetirementReady Funds to address both of
these critically important needs,” Reynolds said. “Ultimately,
we’re aiming to give America a larger lifetime paycheck -- a raise
in retirement.”
The addition of absolute return strategies to Putnam
RetirementReady Funds has wide-ranging implications for the future
of 401(k) plans and other defined contribution retirement plans.
Lifecycle investing is one of the fastest-growing areas of defined
contribution savings, with more than $300 billion already invested
in such strategies -- much of it through “default” investments that
plan sponsors offer to employees who make no choice of their own.
Putnam believes that target date funds embedded with absolute
return strategies have the potential to become the core default
offering of choice for retirement plans in the years ahead.
“With millions of Americans relying on lifecycle investing as a
key part of their workplace savings plans, the inclusion of
absolute return strategies has the potential to be a truly defining
moment in the full-service defined contribution plan market,” said
Putnam Investments Head of Global Marketing, Products and
Retirement Jeffrey R. Carney. “We believe the prospect of reduced
volatility and higher income potential from their retirement
investments will resonate with plan sponsors, participants, and
advisors, who will definitely want to consider this next generation
of target date fund offerings,” said Carney.
Carney indicated that Putnam wanted to build upon the firm’s
risk-focused rolldown strategy, already among the most conservative
in the industry, through the introduction of strategies that
provide exposure to asset classes needed to generate the types of
investment returns that will fuel sufficient accumulation, as well
as limit the impact of severe market swings. “In the end, the goal
is to produce greater income in retirement with limited levels of
risk by pulling together Putnam’s broad investment capabilities and
best thinking around strategic and tactical asset allocation in a
dynamic offering for the retirement market.”
Putnam RetirementReady Funds
Putnam RetirementReady Funds consist of 10 dynamically managed
funds, each of which has a target date based on when investors
expect to begin withdrawing assets. Currently, there are nine funds
targeted to investors expecting to retire in specified five-year
time bands between now and 2050, and one fund intended for
investors currently in or near retirement. The asset allocation of
each RetirementReady Fund is targeted to match investors’
retirement time horizons, becoming progressively more conservative
as each fund approaches its target year and shifts its focus from
capital appreciation to income generation.
Putnam RetirementReady Funds will continue to be managed by
Putnam’s Global Asset Allocation Team led by Jeffrey Knight, Putnam
Investments Head of Global Asset Allocation. The team has overseen
Putnam’s risk-based portfolios since 1994.
Earlier this year, Putnam changed the structure of Putnam
RetirementReady Funds, shifting from a traditional fund-of-funds
approach to a more comprehensive management style, with Putnam’s
Global Asset Allocation team responsible for all aspects of the
funds’ management, from overall diversification strategy and mix of
investments -- down to individual security selection.
Absolute Return vs. Relative Return Strategies
In January 2009, Putnam launched the industry’s first suite of
target absolute return mutual funds, designed to seek annualized
total returns of 1%, 3%, 5%, or 7% above inflation as measured by
Treasury bills over a period of three years or more. Putnam’s
target Absolute Return Funds are designed to provide positive
returns over time, with less volatility than more traditional
funds, whether markets are rising or falling. Putnam
RetirementReady Funds will make use of varying combinations of
Putnam Absolute Return Funds at different allocation levels,
depending on the proximity to a target date’s maturity.
Unlike traditional long-only mutual funds, which are constrained
to closely follow specific market benchmarks, the absolute return
strategies employed by Putnam RetirementReady Funds enable
portfolio managers to invest anywhere in the world and move
dynamically to be positioned in sectors, asset classes, or
geographies they see as likely to produce positive returns.
Absolute return strategies employ modern investment tools that
enable managers to pursue positive returns whether securities
markets are rising or falling.
America’s Retirement Savings Challenge
Putnam’s addition of absolute return strategies to its suite of
RetirementReady Funds is another active step in Putnam’s response
to America’s retirement savings challenge. Earlier this year,
Reynolds called on employers, plan providers, regulators and
Congress to enact a retirement reform agenda that would
dramatically expand and strengthen 401(k)s and other
defined-contribution savings plans to reliably deliver lifelong
income to workers. Reynolds also recently challenged the financial
services industry to innovate in the areas of lower-volatility
products and lifetime income provision.
Product Innovation
The application of absolute return strategies to lifecycle
investing exemplifies Putnam’s renewed leadership in product
innovation. During the past year, Putnam has launched the
industry’s first suite of target Absolute Return Funds, which
already have attracted nearly $500 million in investments*, the
Spectrum Funds, which invest in the securities of undervalued,
leveraged companies, and the Global Sector Funds, which target
stocks in dynamic sectors across global markets.
Recommitment to the Retirement Market
The first use of absolute return strategies is also the most
recent step in Putnam’s recommitment to the retirement market.
Earlier this year, Putnam launched a new
401(k)/defined-contribution platform for advisors and their plan
sponsor clients that provides highly flexible and scalable services
and solutions.
About Putnam Investments
Founded in 1937, Putnam Investments is a leading global money
management firm with over 70 years of investment experience. As of
August 31, 2009, Putnam had $110 billion in assets under
management. Putnam has offices in Boston, London, Frankfurt,
Amsterdam, Tokyo, Singapore, and Sydney. For more information, go
to putnam.com.
*Putnam’s target Absolute Return Funds are not intended to
outperform stocks and bonds during strong market rallies.
Putnam mutual funds are distributed by Putnam Retail
Management.
Putnam Premier Income (NYSE:PPT)
Historical Stock Chart
Von Jun 2024 bis Jul 2024
Putnam Premier Income (NYSE:PPT)
Historical Stock Chart
Von Jul 2023 bis Jul 2024
