BOSTON - Although Putnam's global sector strategies have not yet caught on with U.S. institutions, foreign investors poured money into them in 2000.
Boston-based Putnam Investments Inc.'s five-year-old institutional global equity separate account portfolios - growth and core - attracted US$262 million in Canada, $1 billion in Japan and $3 billion in Europe last year.
While U.S. pension fund investors typically hire separate domestic and international specialists, said John Brown, chief of institutional management at Putnam, as markets continue to become more global, they will grow more interested in the sector-based approach.
Since October, Putnam has won seven Canadian mandates for its global equity products, said John Brown, chief of institutional management at Putnam.
As of July 1, the percentage of assets Canadian pension funds could invest in foreign equities increased five percentage points to 25%. In January, the number increased to 30%.
Sceptre Investment Counsel Ltd. of Toronto markets Putnam investments to Canadian institutional investors.
In 2001, Putnam plans to launch a global value portfolio and a global concentrated portfolio that would include 30 to 50 stocks, said John Boneparth, chief of international distribution and business development.
`Global seamless' approach
Like the other two portfolios, the global value and concentrated portfolios will use what Putnam calls its "global seamless" approach, which focuses on stock and sector rather than geographic region, Mr. Brown said. The portfolios are built on the idea that stocks within a sector behave more similarly on a global basis than within a geographic region or country. A company such as BMW, for example, behaves more like the global automobile industry than the German economy, he explained.
For periods ended Sept. 30, the global growth portfolio had a one-year return of 26.5%, an average annualized three-year return of 20.3%, and a five-year return of 21.3%, according to Pensions & Investments' Performance Evaluation Report. The five-year return places it in the top decile among global equity separate accounts, according to PIPER. The global core equity portfolio had a one-year return as of Sept. 30 of 29.1%, a three-year return of 21.8%, and a five-year return of 23.4%.
The largest sector weightings in the global growth portfolio are technology, 31%, financials, 22%, and health care, 11.5%. By country, the United States has the largest slice of the pie, accounting for 58% of the growth portfolio. The United Kingdom and France are next with 7.5% of the portfolio each. Japan is third with 7% of the stocks, followed by Brazil with 5% and the Netherlands with 4%.