The moves were voluntary and not a part of the firms settlement with the
Spitzer returned to Congress yesterday to speak before the financial management subcommittee of the
Putnams Stand
Putnam said it will limit the expense ratios on all of its funds to an amount lower than the average industry ratio in its
Additionally, Putnam is reducing the front-end sales charges on all A shares, a cut that will apply to equity fund purchases below $500,000 and fixed-income buys of $250,000 or less.
"Putnam is determined to earn back the trust and confidence of the marketplace," said Ed Haldeman, Putnams CEO, in a statement. "Our first step was to put in place additional controls to help protect shareholders. The second step was to look at new ways we can better serve the interests of our clients and investors."
To appease those of its investors who have bucked an increasing trend and not rushed to the doors, six of Putnams international and global funds involved in improper activity will have their expense ratios capped at Sept. 30, 2003 levels. This is so as not to penalize long-term investors for the misdeeds of Putnams managers. Net outflows had been a major problem for the firm, as nearly 12% of Putnams assets evaporated in November, the month Putnams deviation hit the news pages.
As for increasing the transparency in the funds, Putnam will disclose the total value of Putnam employee and trustee holdings in all Putnam funds on both its Web site and in all fund prospectuses. Holdings will be presented in a consolidated manner, as opposed to revealing each managers individual holdings, Forrester said.
Managers incentive compensation will also be disclosed in prospectuses in an attempt to bring rewards in line with goals of long-term consistent, dependable performance. Putnams shareholder reports will also include an actual expense amount paid by shareholders for each fiscal period, shown for a hypothetical $1,000 investment. Brokerage commissions for the trailing 12 months will be disclosed in prospectuses as a percentage of a funds assets.
"Their hope is to shore up the declines in their asset base," said
However, it is still too early to tell what the financial impact will be, since the firm is trying to turn the tide of outflows and keep investors in their shop, Vostry said.
"It all depends on whether this has the effects that Putnam wants. In the long run, they have to do something," he said. "These are steps in the right direction. Are these permanent changes? Are they temporary? How is that going to work? Are they going to rebalance their expense ratio per year? A lot depends on how this is put into place."