Putnam Investments has unveiled the industry’s first absolute-return target-date funds, which will combine both conventional investing strategies with absolute-return methods that seek to mitigate market volatility.
“Integrating absolute-return investing into target-date funds is a natural evolution in retirement savings products, bringing long-established institutional strategies to retail retirement funds,” said Putnam President and Chief Executive Officer Robert L. Reynolds. “Given the challenges we face today in saving for retirement, we believe that incorporating absolute-return strategies will add powerful and much-needed diversification to target-date investing, providing investors with what we think is a stronger, more grounded long-term retirement savings vehicle.”
Jeffrey R. Carney, head of global marketing, products and retirement at Putnam, added that absolute-return target-date funds could even become the core default offering of 401(k) plants in the years ahead. He called the funds the “next generation of target-date fund offerings” and “a truly defining moment in the full-service defined contribution plan market.”
Earlier this year, Putnam adjusted its target-date family, the RetirementReady Funds, from a fund-of-funds approach to one overseen by an asset allocation team responsible for all aspects of the funds’ management, from overall diversification strategy down to individual security selection.