As expected, Putnam Investments announced today that it will consolidate its retail mutual lineup. The firm will merge 10 funds and liquidate the $89 million Putnam Preferred Income Fund.
"We are consolidating our product line to ensure that Putnam anticipates and keeps pace with the evolving needs of our investors," said Lawrence Lasser, Putnam's president and CEO, said in a statement. "Investors in the 1990s continually sought new and different fund products, but the markets and industry have shifted. It is time to simplify our product line, yet maintain a necessary range of clearly defined products so investors can build comprehensive, diversified portfolios. By consolidating our fund lineup, we will be able to concentrate more investment resources and talent on a smaller number of funds, and we expect to deliver stronger performance in those funds."
The 11 funds held $5.2 billion or roughly 3% of Putnams total retail assets as of the end of February, according to Putnam. The mergers and liquidation affects about 3.5% of the firms retail shareholders.
If approved, the mergers would take affect in the third and fourth quarters of the 2002, Putnam said. The reorganization plan was given preliminary approval by Putnams fund trustees at a meeting last week. They are expected to give their final approval at their next meeting scheduled for April 11 and 12. Most of the mergers will also require shareholder approval, and shareholders will vote over the next several months, the company said.
The firm is also planning to merge two of its funds that are offered to separate accounts of insurance companies into other funds, and liquidate several incubated funds, which have been available only to employees of Putnam and Marsh & McLennan, Putnams parent company.
After drawing in more than $17.5 billion in net flows in 2000, the third highest total in the industry, Putnam experienced net outflows of $4.5 billion last year, according to Financial Research Corporation. Only Janus and Morgan Stanley Investment Advisors lost more.
Putnams funds have not fared any better in the beginning of 2002. In January, the firm had net outflows of $712 million, second only to Janus, according to FRC. Meanwhile, Fidelity Investments, Vanguard Group and American Funds, the three complexes ahead of Putnam in terms of assets under management experienced inflows of $3.2 billion, $6.2 billion and $5.0 billion, respectively, in January, according to FRC.
The ten retail funds that Putnam is proposing to merge and the funds that would acquire the assets are listed below. The acquiring funds are bolded.
Putnam Balanced Fund ($319 million)
Putnam Balanced Retirement Fund ($930 million)
George Putnam Fund of Boston ($5.5 billion)
Putnam New Century Growth Fund ($652 million)
Putnam Technology Fund ($157 million)
Putnam Voyager Fund II ($1.7 billion)
Putnam Global Growth and Income Fund ($153 million)
Putnam Global Equity Fund ($929 million)
Putnam Global Growth Fund ($3.7 billion)
Putnam Emerging Markets Fund ($101 million)
Putnam International Growth Fund ($11.3 billion)
Putnam High Yield Trust II ($1.5 billion)
Putnam High Yield Trust ($1.7 billion)
Putnam Strategic Income Fund (185 million)
Putnam Diversified Income Trust ($3.7 billion)