Putnam Investments announced today that its unique suite of target Absolute Return Funds*, has passed $1 billion in assets as of December 14, 2009 — less than a year after they were launched in January 2009 — making the funds one of the best selling in its category. The funds pursue positive real returns with less volatility than traditional mutual funds.

“This marks the emergence of a major new category in mutual fund investing in America,” said Putnam Investments President and Chief Executive Officer Robert L. Reynolds. “Reaching this milestone so quickly reflects the very strong appetite in the marketplace for products that are designed to produce more steady investment returns over time to address volatility, longevity, inflation and income concerns.

“This is just the beginning,” Reynolds continued. “We think absolute return strategies — our own and others — will become a major part of the entire investment landscape in coming years — as core elements of portfolios, and through inclusion in retirement and other savings vehicles, including lifecycle date funds, 529 plans, and 401(k) plans.”

The versatility and broad application of the Absolute Return Fund suite has been well received by the advisor community, which has made use of each of the four funds in varying combinations to address portfolio needs around longevity and volatility risks, the specter of inflation, and the increasing desire for a more dependable stream of income. As evidence of its wide-ranging use, the suite has assets spread across each of its four funds.

In addition to being sold individually to investors, the Absolute Return Funds are combined among the underlying investments in the Putnam RetirementReady Funds, Putnam’s suite of 10 target-date lifecycle retirement funds. Putnam RetirementReady Funds are the only suite of lifecycle funds to integrate these strategies alongside more conventional relative return — or benchmark-focused — mutual fund strategies to control volatility. When used in retirement portfolios, Putnam Absolute Return Funds strive to pursue positive returns in up and down markets, and, importantly, to protect against the harmful effects of adverse investment returns, by relying on a greater percentage of absolute return fund exposure the closer the target date fund is to its maturity using a changing mix of absolute return funds, as investors near retirement.

Putnam offers four Absolute Return Funds, which collectively make up the industry’s first suite of target absolute return mutual funds:

  • Putnam Absolute Return 100 Fund (Class A, PARTX) seeks to outperform inflation by 1% over periods of three years or more net of all fund expenses as measured by T-bills, and can be an alternative to short-term securities.
  • Putnam Absolute Return 300 Fund (Class A, PTRNX) seeks to outperform inflation by 3% over periods of three years or more net of all fund expenses as measured by T-bills, and can be an alternative to bond funds.
  • Putnam Absolute Return 500 Fund (Class A, PJMDX) seeks to outperform inflation by 5% over periods of three years or more net of all fund expenses as measured by T-bills, and can be an alternative to balanced funds.
  • Putnam Absolute Return 700 Fund (Class A, PDMAX) seeks to outperform inflation by 7% over periods of three years or more net of all fund expenses as measured by T-bills, and can be an alternative to stock funds.

“The growth of Putnam’s Absolute Return Funds has exceeded all expectations,” said Reynolds. “The appeal for financial advisors and brokers is clear. Less than a year after the funds were launched, over 350 brokerage and wirehouse firms and 4,800 financial advisors are already using the Putnam Absolute Return Funds with their clients. With a reawakened awareness of risk across all asset classes, as well as approximately $11 trillion in cash still sitting on the sidelines of the markets, we think there is enormous potential for the continued growth of these strategies among mainstream investors.”

The introduction of the Putnam Absolute Return Funds exemplifies Putnam’s renewed leadership in product innovation during 2009. In addition to the four target Absolute Return Funds, Putnam has launched 10 new mutual funds in 2009, including Putnam Spectrum Funds, which invest in the securities of leveraged companies. The actively managed Putnam Global Sector Funds, which target stocks in dynamic sectors across global markets, cover nine sectors across the entire MSCI World Index and can be combined to create a highly customized portfolio.

About Putnam Investments

Founded in 1937, Putnam Investments is a leading global money management firm with over 70 years of investment experience. As of November 30, 2009, Putnam had $114 billion in assets under management. Putnam has offices in Boston, London, Frankfurt, Amsterdam, Tokyo, Singapore, and Sydney. For more information, visit 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.

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