Putnam could be the next mutual fund giant to enter the exchange traded funds arena.
Filings with the Securities and Exchange Commission (SEC) indicate the Boston-based issuer has plans for at least four ETFs: the Putnam Sustainable Leaders ETF, Putnam Sustainable Future ETF, Putnam Focused Large-Cap Value ETF, and Putnam Focused Large Cap Growth ETF.
The Putnam funds will be actively managed and not disclose holdings on a daily basis.
Issuers believe that semi-transparent active ETFs offers the best of both the traditional and active worlds, highlighting value add through the alpha potential of active management, access to a growing array of active equity strategies, the advantages of the more efficient ETF structure, and the additional choice of structures to meet investor needs.
The Putnam Large-Cap Growth ETF “invests mainly in common stocks of large U.S. companies, with a focus on growth stocks. Under normal circumstances, the fund invests at least 80% of the fund’s net assets in companies of a size similar to those in the Russell 1000 Growth Index. This policy may be changed only after 60 days’ notice to shareholders. Growth stocks are stocks of companies whose earnings are expected to grow faster than those of similar firms, and whose business growth and other characteristics may lead to an increase in stock price,” according to its SEC filing.
Why the Conversions to the ETF Structure?
In the asset management industry, active mutual fund issuers are converting their products to exchange traded funds. Why?
These new funds represent the best of both worlds: the advantages of active management with the liquidity and tradability of ETFs, something that has long eluded the actively managed mutual fund industry.
With more traditional mutual funds eyeing the ETF space but reluctant to give up their secret sauce, many are looking into non-transparent exchange traded products as a way to combine the two. Market observers are forecasting growth in 2021 for the new fund structure.
At the end of January, Putnam had $92 billion in assets under management.
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The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.