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The launch is another step in a series of moves initiated by chief executive Robert Reynolds to stem the steep decline in assets at Putnam, a unit of Canadian insurer Great-West Lifeco Inc. Reynolds flagged the introduction of the funds in November.
The Absolute Return 100 Fund, the 300 Fund, the 500 Fund and the 700 Fund aim to achieve annualized returns exceeding the return of U.S. Treasury bills by 1 percent, 3 percent, 5 percent and 7 percent, respectively, if held for three years or more.
Traditional mutual funds are benchmarked against popular indexes and are judged on the basis of how they fare against the benchmarks. But investors can still lose money, as happened in 2008 when even the best performers were in the red.
Putnam's new funds, which it said were the first such in the industry, will invest in a mix of bonds, stocks, currencies and commodities to produce positive returns. They may also use derivatives.
"The funds are a great diversification tool and will be very very popular in light of the market," Reynolds told Reuters. "Looking out over the next three to five years, absolute-return will be a major mutual fund category."
Reynolds declined to say how much in assets the funds expect to garner.
"What's unique about these funds is that they are stating the percentage of returns expected," said Tom Roseen, senior research analyst at Lipper Inc. Lipper is a unit of Thomson Reuters.
Reynolds, a former Fidelity Investments vice chairman who took over as CEO in July, has hired fund managers and analysts in an attempt to boost poor performance of Putnam's leading stock funds. The Boston-based firm also fired 47 staff, including 12 portfolio managers, and merged six stock funds late last year.
Putnam's assets had declined to $106 billion by Dec. 31 from $186 billion in February.
(Reporting by Muralikumar Anantharaman; Editing by Andre Grenon) Keywords: PUTNAM/FUNDS
(murali.anantharaman@thomsonreuters.com + 1 617 856 4341; Reuters Messaging: murali.anantharaman.reuters.com@reuters.net)
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