Putnam Investments
Encyclopedia
Putnam Investments is a privately owned investment management firm founded in 1937 by George Putnam, who established one of the first balanced mutual funds, The George Putnam Fund of Boston. As one of the oldest mutual fund complexes in the United States
, Putnam has over $
125 billion in assets under management
, 79 individual mutual fund offerings, 96 institutional clients, and over seven million shareholders and retirement plan participants.
The firm benchmarks the performance of its equity portfolio again the S&P 500 Index, Russell 1000 Value Index, Russel 2000 Growth Index, MSCI World Index, Russel 2000 Index and the Emerging Market Free Index and it's fixed income portfolio against the JP Morgan Developed High Yield Index.
, Tokyo
, Frankfurt
, Amsterdam
, Sydney
, and Singapore
. Putnam is a subsidiary of Great-West Lifeco
, a Canadian company with global interests in the financial services industry. Putnam manages assets for 79 individual mutual funds, 96 institutional clients, and over 7 million shareholders and retirement plan participants.
Putnam's institutional defined benefit business was launched in 1969 and under the leadership of Lawrence Lasser became "one of the largest managers of mutual funds."
In 1997, Putnam established alliances with Nippon Life Insurance in Osaka, Japan, and Nissay Asset Management Company, a unit of Nippon Life, to manage and market products to sponsors of pension funds in Japan.
In October 2003, the Securities and Exchange Commission (SEC) and the Massachusetts Secretary of State each filed separate civil complaints against Putnam, alleging that the company had permitted portfolio managers to avoid company policies and engage in rapid trading of its mutual funds along with certain preferred clients. A few days later, Lasser resigned and Charles "Ed" Haldeman, director of one of the company’s investment divisions, was promoted to chief executive.
Between 2003 and 2007 Haldeman initiated broad changes within the company. He created a new set of guiding principles for the company and reduced the company's staff by 11 percent, including the elimination of 25 of the highest-paid executive positions. He reduced senior management compensation to half of what it was in 2000 and adjusted portfolio managers compensation to encourage more long term thinking and planning.
In early 2004, the company admitted to allowing its portfolio managers and some investors to market time
its funds. Under agreements with the SEC and the Secretary of the Commonwealth of Massachusetts, Putnam paid $110 million in fines and restitution to settle charges with the state and federal regulators. After allegations of improper trading became public, Putnam's investors withdrew at least $28 billion from its stock and bond funds over a six-month period. By May, 70 civil actions had been filed against Putnam for allegedly engaging in improper trading.
In 2005, Putnam paid $40 million to settle charges made in 2003 that it "did not tell fund investors or directors about paying" brokerage firms for recommending its mutual funds to clients. Afterward, some investors withdrew their funds. This settlement was the final resolution in an investigation of Putnam’s payments to 80 brokers that was conducted over a three-year period.
Efforts to rebuild the company paid off and in 2006, 48 percent of the Putnam's mutual funds scored in the top 50 percent when compared with funds in their peer group, an increase of 8 percent from two years prior. However, that same year, several former employees of Putnam Investments, including the transfer agency chief, were accused in a lawsuit filed by the Security and Exchange Commission (SEC) of "defrauding several mutual funds and a corporate retirement plan of $4 million" so they could "cover up an investment-processing error." The lawsuit stemmed from a one-day asset transfer deal in the 401(k) Cardinal Health plan in January 2001. After suffering a $4 million loss, Putnam executives hid the loss by attributing it to the mutual fund according to the SEC.
, which is controlled by Power Corporation of Canada
, announced it would acquire Putnam Investments, a "troubled mutual fund manager," from the Marsh & McLennan Companies
for the approximate price of $3.9 billion. The acquisition of Putnam was motivated by Great-West Lifeco's 2005 decision to expand into the United States. The following month, Putnam received the 2007 Optimas Award for Ethical Practice in recognition of its then-recent efforts to create a more ethical company culture.
In June 2007, two of Putnam's former managing directors agreed to each pay a $400,000 civil penalty to settle charges of improper trading of mutual fund shares according to the Securities and Exchange Commission. The two directors also agreed to a one-year suspension from any role as an investment advisor. They settled their charges without any admission or denial of guilt. That same month, Lasser, Putnam's former chief executive, agreed to pay $75,000 as a settlement against accusations by the Security and Exchanges Commission that he "failed to disclose that the investment company used fund assets to pay brokerage firms for preferred marketing agreements" but gave no admission or denial of guilt.
In 2008, Haldeman was replaced by Robert L. Reynolds who was named President and Chief Executive Officer of Putnam Investments. In November, Reynolds told the Financial Times
that he would restructure equity investing, merge six equity funds, base managers and analysts pay on performance, and lay off 47 people including 12 who were portfolio managers.
On September 18, 2008, Putnam directors voted to liquidate its $12.3 billion Putnam Prime Money Market Fund and return capital to its approximately 155 professional investors. According to a statement issued by the company, the decision came as a result of "significant redemption pressure." The fund's board of trustees decided that "selling assets to meet redemption [obligations] would risk losses for the remaining investors."
In 2009, according to a Putnam press release, Reynolds designed a 10-point plan and launched an effort calling for public and private collaboration to strengthen the nation's retirement system. That year, Putnam launched the industry’s first suite of absolute return funds available to U.S. retail investors and re-entered the institutional defined contribution business with a 401(k) product offering.
In 2011, Putnam received the DALBAR Service Award for the 21st consecutive year for "industry leading service to shareholders and financial professionals."
Putnam was the first mutual fund company to implement the voluntary "Mutual Fund Protection Principles", an industry standard for compliance and investor protection. Putnam also has a Risk parity
strategy called the Putnam Policy Portfolio.
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
, Putnam has over $
United States dollar
The United States dollar , also referred to as the American dollar, is the official currency of the United States of America. It is divided into 100 smaller units called cents or pennies....
125 billion in assets under management
Assets under management
Assets under management is a financial term used denote the market value of funds being managed by a financial instutition on behalf of its clients, investors, depositors, etc. This metric is a sign of size and success against competition...
, 79 individual mutual fund offerings, 96 institutional clients, and over seven million shareholders and retirement plan participants.
The firm benchmarks the performance of its equity portfolio again the S&P 500 Index, Russell 1000 Value Index, Russel 2000 Growth Index, MSCI World Index, Russel 2000 Index and the Emerging Market Free Index and it's fixed income portfolio against the JP Morgan Developed High Yield Index.
Overview
Putnam is headquartered in Boston, Massachusetts and has offices in LondonLondon
London is the capital city of :England and the :United Kingdom, the largest metropolitan area in the United Kingdom, and the largest urban zone in the European Union by most measures. Located on the River Thames, London has been a major settlement for two millennia, its history going back to its...
, Tokyo
Tokyo
, ; officially , is one of the 47 prefectures of Japan. Tokyo is the capital of Japan, the center of the Greater Tokyo Area, and the largest metropolitan area of Japan. It is the seat of the Japanese government and the Imperial Palace, and the home of the Japanese Imperial Family...
, Frankfurt
Frankfurt
Frankfurt am Main , commonly known simply as Frankfurt, is the largest city in the German state of Hesse and the fifth-largest city in Germany, with a 2010 population of 688,249. The urban area had an estimated population of 2,300,000 in 2010...
, Amsterdam
Amsterdam
Amsterdam is the largest city and the capital of the Netherlands. The current position of Amsterdam as capital city of the Kingdom of the Netherlands is governed by the constitution of August 24, 1815 and its successors. Amsterdam has a population of 783,364 within city limits, an urban population...
, Sydney
Sydney
Sydney is the most populous city in Australia and the state capital of New South Wales. Sydney is located on Australia's south-east coast of the Tasman Sea. As of June 2010, the greater metropolitan area had an approximate population of 4.6 million people...
, and Singapore
Singapore
Singapore , officially the Republic of Singapore, is a Southeast Asian city-state off the southern tip of the Malay Peninsula, north of the equator. An island country made up of 63 islands, it is separated from Malaysia by the Straits of Johor to its north and from Indonesia's Riau Islands by the...
. Putnam is a subsidiary of Great-West Lifeco
Great-West Lifeco
Great-West Lifeco is an insurance centered financial holding company that operates in North America , Europe and Asia through 5 wholly owned, regionally focussed subsidiaries...
, a Canadian company with global interests in the financial services industry. Putnam manages assets for 79 individual mutual funds, 96 institutional clients, and over 7 million shareholders and retirement plan participants.
History
The firm was founded in 1937 by George Putnam who established one of the first balanced mutual funds: The George Putnam Fund of Boston.Putnam's institutional defined benefit business was launched in 1969 and under the leadership of Lawrence Lasser became "one of the largest managers of mutual funds."
In 1997, Putnam established alliances with Nippon Life Insurance in Osaka, Japan, and Nissay Asset Management Company, a unit of Nippon Life, to manage and market products to sponsors of pension funds in Japan.
2000 to 2006
The year 2000 marked the beginning of a gradual asset value decline that took Putnam's asset value from $400 billion to $192 billion.In October 2003, the Securities and Exchange Commission (SEC) and the Massachusetts Secretary of State each filed separate civil complaints against Putnam, alleging that the company had permitted portfolio managers to avoid company policies and engage in rapid trading of its mutual funds along with certain preferred clients. A few days later, Lasser resigned and Charles "Ed" Haldeman, director of one of the company’s investment divisions, was promoted to chief executive.
Between 2003 and 2007 Haldeman initiated broad changes within the company. He created a new set of guiding principles for the company and reduced the company's staff by 11 percent, including the elimination of 25 of the highest-paid executive positions. He reduced senior management compensation to half of what it was in 2000 and adjusted portfolio managers compensation to encourage more long term thinking and planning.
In early 2004, the company admitted to allowing its portfolio managers and some investors to market time
Market timing
Market timing is the strategy of making buy or sell decisions of financial assets by attempting to predict future market price movements. The prediction may be based on an outlook of market or economic conditions resulting from technical or fundamental analysis...
its funds. Under agreements with the SEC and the Secretary of the Commonwealth of Massachusetts, Putnam paid $110 million in fines and restitution to settle charges with the state and federal regulators. After allegations of improper trading became public, Putnam's investors withdrew at least $28 billion from its stock and bond funds over a six-month period. By May, 70 civil actions had been filed against Putnam for allegedly engaging in improper trading.
In 2005, Putnam paid $40 million to settle charges made in 2003 that it "did not tell fund investors or directors about paying" brokerage firms for recommending its mutual funds to clients. Afterward, some investors withdrew their funds. This settlement was the final resolution in an investigation of Putnam’s payments to 80 brokers that was conducted over a three-year period.
Efforts to rebuild the company paid off and in 2006, 48 percent of the Putnam's mutual funds scored in the top 50 percent when compared with funds in their peer group, an increase of 8 percent from two years prior. However, that same year, several former employees of Putnam Investments, including the transfer agency chief, were accused in a lawsuit filed by the Security and Exchange Commission (SEC) of "defrauding several mutual funds and a corporate retirement plan of $4 million" so they could "cover up an investment-processing error." The lawsuit stemmed from a one-day asset transfer deal in the 401(k) Cardinal Health plan in January 2001. After suffering a $4 million loss, Putnam executives hid the loss by attributing it to the mutual fund according to the SEC.
2007 to Present
In February 2007, Great-West LifecoGreat-West Lifeco
Great-West Lifeco is an insurance centered financial holding company that operates in North America , Europe and Asia through 5 wholly owned, regionally focussed subsidiaries...
, which is controlled by Power Corporation of Canada
Power Corporation of Canada
Power Corporation of Canada is a Canadian company with assets in North America and Europe in a number of industries. These industries include media, pulp and paper, and financial services....
, announced it would acquire Putnam Investments, a "troubled mutual fund manager," from the Marsh & McLennan Companies
Marsh & McLennan Companies
Marsh & McLennan Companies, Inc. is a US-based global professional services and insurance brokerage firm. In 2007, it had over 57,000 employees and annual revenues of $10.49 billion. Marsh & McLennan Companies was ranked the 221st largest corporation in the United States by the 2009 Fortune 500...
for the approximate price of $3.9 billion. The acquisition of Putnam was motivated by Great-West Lifeco's 2005 decision to expand into the United States. The following month, Putnam received the 2007 Optimas Award for Ethical Practice in recognition of its then-recent efforts to create a more ethical company culture.
In June 2007, two of Putnam's former managing directors agreed to each pay a $400,000 civil penalty to settle charges of improper trading of mutual fund shares according to the Securities and Exchange Commission. The two directors also agreed to a one-year suspension from any role as an investment advisor. They settled their charges without any admission or denial of guilt. That same month, Lasser, Putnam's former chief executive, agreed to pay $75,000 as a settlement against accusations by the Security and Exchanges Commission that he "failed to disclose that the investment company used fund assets to pay brokerage firms for preferred marketing agreements" but gave no admission or denial of guilt.
In 2008, Haldeman was replaced by Robert L. Reynolds who was named President and Chief Executive Officer of Putnam Investments. In November, Reynolds told the Financial Times
Financial Times
The Financial Times is an international business newspaper. It is a morning daily newspaper published in London and printed in 24 cities around the world. Its primary rival is the Wall Street Journal, published in New York City....
that he would restructure equity investing, merge six equity funds, base managers and analysts pay on performance, and lay off 47 people including 12 who were portfolio managers.
On September 18, 2008, Putnam directors voted to liquidate its $12.3 billion Putnam Prime Money Market Fund and return capital to its approximately 155 professional investors. According to a statement issued by the company, the decision came as a result of "significant redemption pressure." The fund's board of trustees decided that "selling assets to meet redemption [obligations] would risk losses for the remaining investors."
In 2009, according to a Putnam press release, Reynolds designed a 10-point plan and launched an effort calling for public and private collaboration to strengthen the nation's retirement system. That year, Putnam launched the industry’s first suite of absolute return funds available to U.S. retail investors and re-entered the institutional defined contribution business with a 401(k) product offering.
In 2011, Putnam received the DALBAR Service Award for the 21st consecutive year for "industry leading service to shareholders and financial professionals."
Putnam was the first mutual fund company to implement the voluntary "Mutual Fund Protection Principles", an industry standard for compliance and investor protection. Putnam also has a Risk parity
Risk parity
Risk parity is an alternative approach to investment portfolio management which focuses on allocation of risk rather than allocation of capital...
strategy called the Putnam Policy Portfolio.