With an unprecedented interest rate environment and last year's bullishness gone, Putnam Investments will seek out micro opportunities in the market, according to Jeffrey Knight, managing director and co-head of the firm's capital markets committee.

"It's just starting to feel like the sleepy markets can't go on forever, but I'm having a hard time identifying what is going to break the markets out of this," he said. Knight, co-author of a recent Putnam market outlook research paper, said he expects it to be a stock-picker's environment, with both the equities and bond markets underperforming their historical averages for the next few years.

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