BOSTON - Putnam Investments is merging or liquidating 11 mutual funds, all with a small percentage of 401(k) assets.
Ten funds will be merged into others and one fund will be liquidated. The 11 funds have a total of $477 million in defined contribution assets, making up less than 1% of the firm's $72 billion in defined contribution assets, said Laura McNamara, Putnam spokeswoman. None of Putnam's institutional separate accounts is affected by the actions.
Many of the funds were added in the bull market of the 1990s, when investors sought new and different funds. But now the industry has shifted, and Putnam is looking to keep pace with the needs of investors, said Lawrence Lasser, Putnam's chief executive officer.
"It is time to simplify our product line yet maintain a necessary range of clearly defined products," he said in a statement. "By consolidating our fund lineup, we will be able to concentrate more investment resources and talent on a smaller number of funds, and we expect to deliver stronger performance in those funds."
The recent bear market has hit Putnam hard. Mutual fund assets dropped to $174.9 billion as of Jan. 31, a decrease of 23% from January 2001, according to Financial Research Corp., Boston. Through February, the firm managed $303 billion in total assets, a decline of 22% since Dec. 31, 2000, according to Pensions & Investments data.
Funds to be merged have similar investment strategies to the acquiring funds. They include: the $319 million Balanced and the $930 million Balanced Retirement funds into the $5.5 billion George Putnam Fund of Boston; the $652 million New Century Growth and $157 million Technology funds, into the $1.7 billion Putnam Voyager II Fund; the $153 million Global Growth and Income and the $929 million Global Equity funds into the $3.7 billion Putnam Global Growth Fund; the $185 million Putnam Asia Pacific Growth and the $101 million Emerging Markets funds into the $11.3 billion Putnam International Growth Fund; the $1.5 billion High Yield Trust II fund into the $1.7 billion Putnam High Yield Trust Fund; and the $185 million Strategic Income Fund into the $3.7 billion Putnam Diversified Income Trust.
The fund to be liquidated is the $89 million Putnam Preferred Income Fund.
In all, the 11 funds represent $3.2 billion, or about 3% of Putnam's mutual fund assets. The changes are subject to trustee votes and shareholder approval and won't take effect until September or October. The firm said the larger asset base of each combined fund will lower expenses for shareholders.
Robert Swift, who manages the Global Growth & Income Fund, will be leaving the company, Ms. McNamara said. Beth Cotner, managing director and head of the U.S. large-cap growth group at Putnam, is retiring by the end of the year, said Ms. McNamara. As for the other portfolio managers affected by the changes, Ms. McNamara said they will continue to manage their respective funds through the transition period. At that time, the firm will determine how to move portfolio managers into the new fund management teams, said Ms. McNamara.