Putnam Investments has lost more than $4.3 billion in pension business this week, following allegations that portfolio managers engaged in market timing.
Pennsylvania Public School Employees' Retirement System, Harrisburg, terminated Putnam from a $1 billion international equities portfolio, said Jeffrey B. Clay, executive director. "The current troubles at Putnam Investments have caused great concern at PSERS, and after careful consideration, the decision was made to terminate them," said Mr. Clay. The $43.5 billion pension fund will move the money into an internally managed MSCI EAFE index fund.
Rhode Island Employees Retirement System dropped Putnam from an active international equities portfolio worth $651 million. State General Treasurer Paul Tavares said there were "three strikes" against the company - poor performance, personnel turnover and Putnam's response to the allegations. The $4.9 billion system plans to issue an RFP for a new international equity manager in 60 to 90 days, Mr. Tavares said.
Iowa Public Employees' Retirement System, Des Moines, terminated Putnam from a $586 million active European equity portfolio, said Michael L. Fitzgerald, state treasurer. "Putnam has been accused by the SEC of fraudulent behavior," Mr. Fitzgerald said. "When there is a cloud of suspicion, you have to protect the assets." He said it hasn't been decided how the $15.8 billion system will invest the Putnam proceeds. Wilshire assisted.
New York State Teachers' Retirement System, Albany, removed Putnam from a $395 million active international equity portfolio "for performance and significant organizational issues" related to the investigation, said John Cardillo, spokesman. The $73.4 billion plan moved the money to an enhanced passive international equity fund run by Barclays Global Investors, bringing it to $1.13 billion.
On Thursday, the $29 billion Massachusetts Pension Reserves Investment Management Board, Boston, terminated Putnam, which had run a total of $1.7 billion in two equity portfolios, one international and one domestic.
Separately, Indiana State Teachers' Retirement Fund, Indianapolis, will consider the future of Putnam's $57 million active domestic midcap growth equity portfolio in December, said Robert D. Newland, CIO. The $3 billion plan placed Putnam on watch in January for poor performance, personnel changes and layoffs, he said. "Now you have all this stuff with mutual funds," he added. Callan is assisting.
Also, American Medical Response, Greenwood Village, Colo., is reviewing whether to keep Putnam as bundled provider of its $165 million 401(k)/profit-sharing plan, said Kurt Ronsen, director of compensation and benefits. He could not say when a decision will be made.
Officials at Putnam did not return calls seeking comment by press time.