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The changes at the Great-West Lifeco Inc unit mark the biggest steps taken under Chief Executive Robert Reynolds since his appointment in July and reflect efforts to reposition the company for a sharply reduced asset base.
Faltering performance in its biggest funds helped to shave assets to $116 billion at the end of October against $186 billion in February and $371 billion in 2000.
Reynolds told reporters on a conference call that all 47 job cuts will come from Putnam's investments group and include 12 portfolio managers. The quantitative research team will shrink to nine people from 26, he said.
Putnam is also changing the way it manages money by shifting from a team-based approach in its stock funds to giving individual managers full responsibility for the funds. Compensation is being more closely aligned with performance, Putnam said.
Since July, the firm has hired new portfolio managers for its leading funds and recruited research analysts.
"The latest round of news is encouraging but we need to see more from Putnam," said Wenli Tan, a mutual fund analyst at fund research group Morningstar Inc. "I wouldn't consider Putnam to be in the clear yet," she said.
Tan of Morningstar said investors have withdrawn $12.6 billion in 2008 from Putnam's open-ended funds. Its largest funds, the Fund for Growth and Income and the Voyager, are the worst-selling funds in the group, she added.
Putnam was named as having the worst-performing funds in 2007 among 67 major fund families in a February survey by fund research group Lipper Inc for the publication Barron's.
Putnam joins other U.S. asset managers, including giant neighbor Fidelity Investments and rivals such as Janus Capital Group and Legg Mason Inc, in announcing job cuts as the financial crisis has battered asset values and triggered dramatic fund outflows.
The cuts follow the three worst months on record for stock funds, according to TrimTabs Investment Research. Investors withdrew a total $144 billion from equity mutual funds in August, September and October.
While more than 130,000 jobs already have disappeared at banks, brokers and other financial firms since mid-2007, asset managers have held up better because they do not commit their own capital. They generate the bulk of revenue from fee income based on a percentage of assets under management.
Reynolds said the job cuts and other changes were not driven by market conditions and instead reflected a reorganization in the way Putnam manages money.
"These are changes that we would make whether markets are rising or falling," he said.
(Editing by Jason Szep, editing by Gerald E. McCormick) Keywords: PUTNAM/ (murali.anantharaman@thomsonreuters.com; + 1 617 856 4341; Reuters Messaging: murali.anantharaman.reuters.com@reuters.net)
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