Several pension funds have taken action in the past two weeks against managers implicated in ongoing investigations into mutual fund trading practices.
Among the funds terminating or scrutinizing Putnam Investments, Boston, are:
-- The Indiana State Teachers' Retirement Fund, Indianapolis, terminated Putnam, which managed $60 million in active domestic midcap growth equities, said Robert D. Newland, chief investment officer. The $3.3 billion fund moved the money to an existing Franklin Portfolio Associates active domestic midcap core portfolio, increasing it to $160 million, he said. Callan assisted.
-- Jacksonville (Fla.) Fire & Police Pension Fund terminated Putnam, which ran $50 million, said John Keane, executive director-administrator. Trustees for the $800 million plan temporarily moved the money to a Northern Trust EAFE index account, and trustees will decide at their Jan. 22 meeting whether to keep it there or issue an RFP for a new active manager.
-- Lansing (Mich.) Employees Retirement System terminated Putnam, which ran $9 million in active international equities, said Jill Rhode, deputy finance director. The $166 million pension plan parked the assets in a portfolio managed by INVESCO, its other international equity manager, raising it to $18 million, she said. The system plans to search for a second international manager within six months, she said, but details have not been finalized. Asset Consulting Group assisted.
-- Thomson Corp., Stamford, Conn., removed Putnam's International Equity Fund as an investment option in its 401(k) plan, said Jason Stewart, spokesman. The Putnam fund was replaced with Barclays Global Investors' Russell 1000 Large Cap Growth Fund, he said. However, Thomson left several Putnam domestic funds on its options list. Putnam also remains record keeper for Thomson's 401(k) plan. Thomson had $1.3 billion in its 401(k) as of June 2002, according to the Money Market Directory.
-- Nevada Deferred Compensation Fund, Carson City, dropped the Putnam International Capital Opportunities fund as an investment option, effective Jan. 1, said Rob Easton, trustee. The plan offers 22 investment options through Hartford and 20 options through ING. Segal Advisors assisted.
-- United Methodist Church General Board of Pension and Health Benefits, Evanston, Ill., is considering whether to retain Putnam in light of the firm's settlement with the SEC over alleged market timing and other misconduct, said Dave Zellner, chief investment officer. Putnam manages more than $100 million in international equities for the $11.5 billion board, he said. He said no deadline has been set for a decision.
-- Shreveport (La.) Employees' Retirement System put international equity manager Putnam, which runs $10 million, on watch, said Don Norris, pension manager. Trustees are "less concerned" about the charges because Putnam runs an active international equity separate account for the $185 million plan and not a mutual fund, Mr. Norris said. Officials will review the situation at their next meeting in January. Merrill Lynch will assist. Putnam officials did not return a call by press time seeking comment.
-- Duluth (Minn.) Teachers' Retirement Fund on Dec. 10 are expected to determine criteria for a new active international equity manager to run $30 million, replacing Putnam, said Jay Stoffel, executive director. Putnam ran a total of $30 million in three commingled funds for the $250 million pension plan and $40 million 403(b) plan; that money was temporarily moved to an EAFE index fund run by custodian Wells Fargo, he said. The shortlist search will begin in January or February and might be completed in March, he said; further details have not been determined. Jeffrey Slocum & Associates will assist.
-- And Dorsey & Whitney LLP, Minneapolis, is monitoring the Putnam Voyager and Janus Growth & Income funds and might replace both in the next three months, said Daniel Ulland, retirement plans specialist. Officials for the $250 million 401(k) plan will seek other large-cap growth equity funds if the two funds were dropped, he said. The plan has 14 investment options. "The Growth & Income fund has a very strong long-term performance track record, and we are completely confident it will continue to perform well in the long run," said Shelley Peterson, Janus spokeswoman.
Putnam spokeswoman Laura McNamara said, "Putnam, led by its new management team, is putting in place some of the most rigorous governance, oversight, trading and compliance standards in the mutual fund industry. We think they will come to be recognized by investors."
Other funds looking at their managers are:
-- Kansas Public Employees Retirement System, Topeka, put Alliance Capital Management LP and Morgan Stanley Investment Management Inc., both of New York, on probation, according to a written statement by CIO Rob Woodard. Alliance runs $450 million in a passive EAFE portfolio and $320 million in active European equities for the $9 billion system; Morgan Stanley runs $574 million in an active EAFE portfolio. "Probation implies a heightened level of scrutiny and monitoring," Mr. Woodard said. The board will discuss the issue at a Jan. 16 meeting.
An Alliance spokesman declined to comment, as did Morgan Stanley spokeswoman Andrea Slattery.
-- North Dakota State Investment Board, Bismarck, placed Strong Capital Management Inc., Menomonee Falls, Wis., on its watch list, said Steve Cochrane, executive director and chief investment officer of the $3.3 billion system. Strong manages a total of $290 million for the board in two domestic fixed-income separate accounts and an enhanced S&P 500 index account. The board will review Strong Capital at its next meeting on Jan. 16.
Strong spokesman Drew Wineland said, "The important management changes and enhanced corporate governance measures being made at Strong should give all of our clients the confidence that they can maintain their investments with our professionals. We believe these changes will result in an even more robust institution that will continue to have at its core an enormous respect for the responsibility our clients entrust in us to manage their investments."
c Electric Energy Inc., Joppa, Ill., dropped the Janus Worldwide fund as an investment option in its two 401(k) plans, which mirror each other and have combined assets of $25 million, said Tony Goins, employee benefits supervisor. The fund will not be replaced, he said. The plans offer 14 investment options. CIGNA is record keeper and trustee.
Janus spokesman Jeff Snyder said, "The client went through a third-party record keeper, so unfortunately we were unable to build a relationship directly with them. However, we're confident in our ability to deliver a strong performance to our shareholders over time."