Putnam Investments announced Tuesday that it is developing an absolute return fund for use in variable annuities and other variable insurance products.
The Putnam Variable Trust Absolute Return 500 Fund seeks to exceed the rate of inflation, as reflected by Treasury bills, by 5% over a period of three years or longer.
“The Putnam VT Absolute Return 500 Fund meets a growing demand by insurers for a variable insurance counterpart to our retail Putnam Absolute Return 500 Fund that they could incorporate into their annuity and life insurance platforms,” said Putnam President and CEO Robert L. Reynolds. “This new application is fresh evidence of the great potential that absolute return strategies have to meet a wide variety of investment goals.”
The same portfolio management team that runs the retail fund will manage the insurance version, with Jeffrey L. Knight, head of global asset allocation as lead manager.
The fund is comprised of both beta and alpha strategies, with the beta portion investing in a diversified, multi-asset class portfolio with broad exposure to investment markets, and the alpha portion using active trading strategies made up of security selection, tactical asset allocation, currencies and options.
Putnam launched its suite of absolute return funds in January 2009, which have attracted nearly $3 billion in assets under management. Putnam has also added the absolute-return funds to its suite of 10 target-date funds, the Putnam RetirementReady Funds, and its Putnam 529 for America college savings program.