Putnam Launches Its First ETFs
The four actively managed semi-transparent equity ETFs are similar to four actively managed Putnam mutual funds.
Putnam Investments has entered the ETF market with the launch of four actively managed equity ETFs that are similar to four of the firm’s mutual funds.
They are the Putnam Sustainable Leaders ETF (PLDR), Putnam Sustainable Future ETF (PFUT), Putnam Focused Large Cap Growth ETF (PGRO) and Putnam Focused Large Cap Value ETF (PVAL). The fund company, which has $197 billion in assets, announced plans for the ETFs in February.
Most of the Putnam ETFs have lower fees than the cheapest classes of their comparable mutual funds, and not all of them will disclose their holdings on a daily basis, unlike most traditional ETFs. They will instead use Fidelity’s methodology for semi-transparent ETFs, disclosing on a daily basis a tracking basket of holdings that has a 70%-80% overlap with actual portfolio holdings and disclosing actual holdings on a quarterly basis with an eight-day lag. Two of the new ETFs are focused on environmental, social and governance factors.
Carlo Forcione, head of product and strategy at Putnam, tells ThinkAdvisor that the firm expects to see a vast majority of interest for the ETFs coming from financial advisors, including registered investment advisors (RIAs) who are already familiar with Putnam mutual funds.
Those funds are distributed primarily through advisors, though they are available to other retail investors on some major investment platforms. All retail investors can access Putnam’s new ETFs. The firm is “vehicle agnostic,” Forcione said.
Here’s a rundown of the new funds:
- Putnam Sustainable Leaders ETF (PLDR) invests in companies of any size that have demonstrated leadership in sustainability issues that are financially material to their business context. Total expense ratio: 59 basis points.
- Putnam Sustainable Future ETF (PFUT) invests in companies of any size whose products and services provide innovative solutions to address key sustainability issues. Total expense ratio: 64 basis points.
- Putnam Focused Large Cap Growth ETF (PGRO) invests in companies that exhibit both a high level of growth and an above-average duration of growth that can outperform in a variety of economic environments. Total expense ratio: 55 basis points.
- Putnam Focused Large Cap Value ETF (PVAL) invests in companies that are priced below their long-term potential and are poised for positive change, which could include fundamental improvement, strong cash flow that enables dividend growth, or relative value opportunities within sectors. Total expense ratio: 55 basis points.
Katherine Collins and Stephanie Dobson manage the two new sustainable ETFs; Richard Bodzy and Gregory McCullough manage the Focused Large Cap Growth ETF; and Darren Jaroch and Lauren DeMore manage the Large Cap Value ETF.
Forcione tells ThinkAdvisor that the firm expects to launch more actively managed equity ETFs in the future. He said the timing will depend in part on whether the Securities and Exchange Commission extends expedited broad approval to semi-transparent ETFs, as it has done for traditional ETFs.