Putnam Investments announced Tuesday it planned to launch a version of its Absolute Return 500 Fund for use by insurance companies in variable annuities and other variable insurance products they offered customers.
The Putnam Variable Trust (VT) Absolute Return 500 Fund, which will be available to insurers and other firms issuing variable insurance products, is designed to achieve a positive return that exceeds inflation by 5% over a reasonable period of time (generally at least three years or more, according to the company) regardless of market volatility. The sub-account's strategies are also intended to produce lower volatility than historically seen with traditional asset classes.
"The fund meets a growing demand by insurers for a variable insurance counterpart to our retail Putnam Absolute Return 500 Fund that they could incorporate into their annuity and life insurance platforms," Putnam's President and CEO Robert Reynolds (left) said in a statement. "This subaccount aims for targeted return with managed volatility that insurers can use in assembling portfolios to help meet their variable products' investment, risk and volatility objectives.”
The company expects the Putnam VT Absolute Return 500 Fund will be launched in spring 2011. It will be managed by the same team of portfolio managers as the retail Absolute Return 500 Fund, led by Jeffrey Knight, head of Global Asset Allocation. It will be a diversified fund with the objective of seeking a positive total return that exceeds the rate of inflation by 500 basis points over a reasonable period of time (generally at least three-years or more) regardless of market conditions.
According to the company, in order to achieve its goals, the fund will combine two investment strategies: A beta strategy that seeks to balance risk and provide positive total return through a comprehensively diversified, multi-asset class market portfolio with broad exposure to investment markets; and an alpha strategy with a variety of active trading tactics that employ security selection, tactical asset allocation, currency transactions and options transactions.