Quantcast
The MFWire
Manage Email Alerts | Sponsorships | About MFWire | Who We Are

Subscribe to MFWire.com's News Alerts [click]

Rating:Finding Unintended Consequences Drives Reynolds' Putnam Strategy Not Rated 3.0 Email Routing List Email & Route  Print Print
Tuesday, June 29, 2010

Finding Unintended Consequences Drives Reynolds' Putnam Strategy

Reported by Sean Hanna, Editor in Chief

New regulations, and their accompanying unintended consequences, necessarily open doors to many opportunities. With the flurry of regulatory changes coming thanks to the fall 2008 liquidity crisis, those doors are opening now, believes Putnam Investments CEO Bob Reynolds. One opportunity, says Reynolds, may be in short-term fixed income in an interview.

Reynolds sees fund firms willing to stretch the boundaries of money markets with what he calls "non-dollar denominated" funds (those that do not keep their NAV at a buck).

He points to the new rules that restrict the type and and duration of money fund holdings as creating more of a commodity environment. As the range of possibilities and returns offered by money funds restricts, the opportunity for fund firms to roll out alternatives will expand, predicts Reynolds.

"These new rules will open the door and allow manager the opportunity they need to differentiate themselves," he says.

Interestingly, Putnam is not a big player in money market funds, but it does have a presence on the fixed income side of the ball.

Reynolds' two-year anniversary at Putnam falls this week, and he has spent that time recreating Putnam around another "unintended consequence" of new regulation.

At the start of the century then New York Attorney General Eliot Spitzer, rewrote the rules governing Wall Street research even before he rewrote trading rules for mutual funds. That rewrite created an opportunity for Putnam to rely on proprietary, fundamental research to create a sustainable edge in active equity management, Reynolds believes. The hedge funds using short-term investing strategies have pushed that door even further open, creating still more value in long-term, fundamental research.

To take advantage of that opportunity, Reynolds reports that Putnam has doubled its equity analyst team with 25 new hires since he took over two years ago. He also implemented performance-based fees for the Putnam funds to put Putnam on the "same side of the table" as shareholders.

To align the interests of PMs and analysts, Reynolds also shook up how the bonus pools at the firm are split.

He also developed a strategy to leverage those fundamental research abilities with the absolute return strategies. Those funds target a positive return paired with a premium over inflation.

So far, those funds are hitting on all cylinders. The absolute return family of funds recently surpassed the $2 billion in AUM mark, says Putnam.

"It took a year to cross a billion and another six months to cross the two billion mark," says Reynolds, before adding that "7,500 advisors have sold this product, and another 95 percent say that they would recommend it to another advisor."

In September, Reynolds and his crew at Putnam will push out new funds built around fundamental research in multi-cap strategies to further build on the growing opportunity.

Another opportunity, says Reynolds, is in the still nascent retirement income area.

"There is a huge challenge for the whole industry that we are spending a lot of horsepower on is the issue of retirement income," he says.

Finally, one area where you do not see Putnam leveraging its edge in proprietary research is the ETF market.

Reynolds notes that the ETF space remains dominated by passive equity products and that hurdles remain for active equity specialists seeking opportunities in ETFs.

"Among the drawbacks is that you are exposing the portfolio every day. If we are investing heavily in fundamental, proprietary research showing our cards every day is not a smart move," Reynolds observes. 

Stay ahead of the news ... Sign up for our email alerts now
CLICK HERE

3.0
 Do You Recommend This Story?



GO TO: MFWire
Return to Top
 News Archives
2025: Q3Q2Q1
2024: Q4Q3Q2Q1
2023: Q4Q3Q2Q1
2022: Q4Q3Q2Q1
2021: Q4Q3Q2Q1
2020: Q4Q3Q2Q1
2019: Q4Q3Q2Q1
2018: Q4Q3Q2Q1
2017: Q4Q3Q2Q1
2016: Q4Q3Q2Q1
2015: Q4Q3Q2Q1
2014: Q4Q3Q2Q1
2013: Q4Q3Q2Q1
2012: Q4Q3Q2Q1
2011: Q4Q3Q2Q1
2010: Q4Q3Q2Q1
2009: Q4Q3Q2Q1
2008: Q4Q3Q2Q1
2007: Q4Q3Q2Q1
2006: Q4Q3Q2Q1
2005: Q4Q3Q2Q1
2004: Q4Q3Q2Q1
2003: Q4Q3Q2Q1
2002: Q4Q3Q2Q1
 Subscribe via RSS:
Raw XML
Add to My Yahoo!
follow us in feedly


    Sorry, no records in the database matched your search parameters. Clich back and try again.



  1. Nicsa webinar - New research by Alex Edmans and the Diversity Project - The Power of diverse thinking: How the best teams make decisions, July 1
  2. MFDF Director Discussion Series - Open Forum, July 9
  3. MFDF webinar - Mid-Year Tax Update for Registered Investment Companies, July 10
  4. MFDF Director Discussion Series - Open Forum (Philadelphia), July 15
  5. 2025 MMI Women in Advisory Solutions Forum, Jul 15-16
  6. Nicsa webinar - How Trusted GenAI is Transforming Data Access in Asset Management, July 16
  7. MFDF webinar - M&A and Consolidation in Asset Management, July 16
  8. MFDF webinar - ETF Conversions, July 17
  9. MFDF Director Discussion Series - Open Forum (New York), July 22
  10. MFDF Ask Anything webinar - AI Edition, July 24
  11. MFDF webinar - Use of Derivatives by RICs, July 29
  12. MFDF Director Discussion Series - Open Forum (Columbus, Ohio), August 20
  13. Samfund Soiree Boston 2025, August 21
  14. MFDF webinar - The Audit Committee Chair's Guide to Balancing Duties and Emerging Issues, September 3
  15. ICI ETF Conference, Sep 8-10
  16. Nicsa webinar - Reimagining Reconciliation: AI, Regulation, and Capital Markets Transformation, September 10
  17. MFDF webinar - Series Trust Funds - Compliance and Board Reporting, September 10
  18. MFDF In Focus - Board Oversight of DEI in Current Landscape, September 11
  19. MFDF webinar - MFDF 15(c) White Paper Webinar Series: Part 4 – Enforcement Action Takeaways, September 16
  20. MFDF webinar - Latest in Closed-End Funds Litigations, September 23
  21. MFDF webinar - Fixed Income Insights: Navigating Market Trends & Opportunities, September 24
  22. MFDF webinar - Risk Management Essentials for RICs and Boards, September 29
  23. MFDF webinar - Diligent - Tools for Fund Board Book, October 1
  24. 10th annual Fuse Forum, October 8
  25. MFDF webinar - Essential Strategies in Board Oversight of Operational Risk Management, October 14
  26. 2025 MMI Annual Conference, Oct 15-17




©All rights reserved to InvestmentWires, Inc. 1997-2025
14 Wall Street | 20th Floor | New York, NY 10005 | P: 212-331-8968 | F: 212-331-8998
Privacy Policy :: Terms of Use