Putnam Investments has named Dr. W. Van Harlow director for investment retirement solutions, the firm announced Wednesday, July 28. Prior to his appointment, he was serving as a consultant to Putnam.
The announcement said Harlow would be responsible for creating new products and services, and would also focus on the development of asset allocation tools and planning methodologies used by financial advisors, consultants, and plan sponsors in the retirement and institutional markets.
Before consulting with Putnam, Harlow held senior positions with Fidelity Investments from 1991 to 2008, and earlier was a vice president at Salomon Brothers Inc., where he was responsible for quantitative investment and trading strategies.
“The hiring of Dr. Harlow builds upon the intellectual firepower and thought leadership that has driven innovation at Putnam over the past two years, and brought new product offerings, services and strategies to better serve our clients,” Jeffrey Carney, head of marketing, products and retirement, said in the statement.
In a telephone interview, Carney noted that since Robert Reynolds became president and chief executive of Putnam in July 2008, he had focused on three themes in his effort to turn around the 70-year-old firm: talent, innovative products and a renewed commitment to the retirement business. The hiring of Harlow was further evidence of that commitment, Reynolds said.
Even in his consulting capacity, Harlow was contributing to retirement business. According to the firm’s statement, he was instrumental in the firm’s creation of its Lifetime Income Analysis Tool and in development of the methodology that led to the incorporation of absolute return investment strategies into the firm’s suite of 10 RetirementReady lifecycle funds. The statement said Putnam was the first investment manager to add target absolute return strategies to the mix of underlying investments in target-date/lifecycle funds.
Putnam’s target Absolute Return Funds, rolled out in January 2009, sought positive returns over time with less volatility than more traditional mutual funds. Used in
retirement portfolios, absolute return strategies are designed to pursue positive returns in both bull and bear markets, to protect against the harmful effects of adverse investment returns and to reduce volatility, particularly for investors in or near retirement.
Carney said in the interview that the firm was fully confident in offering these strategies because of its long experience in the absolute return space. He also noted that the funds have been approved by big platforms such as Fidelity. “They’re very sophisticated, they’ve done their due diligence, they’ve met with our advisors, our portfolio manager,” he said. “We, of course, have to deliver to the premise.”
Putnam offers four target Absolute Return Funds:
? Putnam Absolute Return 100 Fund seeks to outperform inflation by 1% over periods of three years or more net of all fund expenses as measured by T-bills, and can be an alternative to short-term securities
? Putnam Absolute Return 300 Fund seeks to outperform inflation by 3% over periods of three years or more net of all fund expenses as measured by T-bills, and can be an alternative to bond funds
? Putnam Absolute Return 500 Fund seeks to outperform inflation by 5% over periods of three years or more net of all fund expenses as measured by T-bills, and can be an alternative to balanced funds
? Putnam Absolute Return 700 Fund seeks to outperform inflation by 7% over periods of three years or more net of all fund expenses as measured by T-bills, and can be an alternative to stock funds
According to Putnam, these funds have employed diverse strategies to help manage risk, including investments across sectors, short-maturity fixed-income securities, derivatives to hedge against market declines, Treasury futures contracts to reduce interest-rate risk, and cash positions to stabilize fund performance.
The funds’ performance varied during the second quarter, according to a June statement from Putnam. The 100 and 300 funds posted positive results at net asset value, as fixed-income strategies continued to perform well. The 500 and 700 funds recorded small declines as equity markets experienced their worst quarterly decline since the fourth quarter of 2008. Treasury bills were up 0.06% for the quarter. Results for the Absolute Return Funds over one year and since inception remained positive.
The funds have certainly caught on in the market. Putnam announced in June that the absolute return suite had passed $2 billion in assets, after having passed the $1 billion mark in total assets in December 2009.
Michael S. Fischer ([email protected]) is a New York-based financial writer and editor and a frequent contributor to WealthManagerWeb.com.