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Portfolio > Asset Managers

Putnam Investments Prepares to Enter ETF Market

By Bernice Napach

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Putnam Investments, a Boston-based asset manager that distributes its mutual funds through financial advisors, is entering the ETF market.

The firm, which has $190 billion in assets split almost equally between mutual funds and institutional assets, announced plans to launch four actively managed equity ETFs, all semi-transparent, meaning they won’t disclose their actual holdings on a daily basis. All four ETFs are similar to mutual funds of the firm.

Putnam’s entry into the ETF market will follow that of another mutual fund-only firm that distributed exclusively through advisors, then made the same pivot: Dimensional Fund Advisors.

Two of the Putnam ETFs will focus on sustainable investing — the Putnam Sustainable Leaders ETF and the Putnam Sustainable Future ETF — and two will target large-cap equities: the Putnam Focused Large Cap Growth ETF and the Putnam Focused Large Cap Value ETF.

The Sustainable Leaders ETF targets companies committed to sustainable business practices. The Sustainable Future ETF focuses on companies whose products and services contribute to sustainable social, environmental and economic development.

All four ETFs seek long-term capital appreciation and will use Fidelity’s tracking basket methodology that will include some but not all of the ETF holdings and will be published daily on the ETF’s website along with its overlap with the actual holdings of the ETF on the prior business day. The actual ETF holdings will be published monthly with a 30-day lag on Putnam Investments’ website.

Expected Launch

“Putnam Investments is excited to launch its first suite of actively managed ETFs, providing financial advisors and investors with another vehicle to access our firm’s key investment strategies,” said Robert Reynolds, president and CEO of the firm, in a statement. Reynolds added that the firm expects to “gain meaningful traction in the years ahead.”

According to Morningstar, fund flows for Putnam Investments fell $4.7 billion in 2020.

Putnam expects all four ETFs will be available in the spring following completion of the SEC registration process. The firm currently offers mutual funds, separately managed accounts, collective investment trust, private funds and non-U.S. funds.

Bernice Napach

@Think_Napach

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