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Rating:Putnam Chief Says Layoffs are 'Not a Cost-Cutting
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Monday, November 17, 2008

Putnam Chief Says Layoffs are 'Not a Cost-Cutting Exercise'

Reported by Armie Margaret Lee

Putnam Investments CEO Bob Reynolds continues to put his stamp on the Boston asset manager, setting in motion a reorganization of the firm's equity investment group on Monday, a move that eliminates nearly four dozen jobs, or about 1.8 percent of Putnam's total workforce (see related story). Meanwhile, Putnam is preparing to launch a family of absolute return funds and a group of global-based sector funds next year.

Putnam's AUM at the end of October was $116 billion, down from $175 billion when Reynolds took the reins in July.

"Have I done a great job or what?" Reynolds quipped when a reporter pointed out the decline during a conference call on Monday morning.

"October was one of the toughest months in the history of the market, and we're not immune from that," he said.

Reynolds, however, said the restructuring -- which replaces the team management structure for the funds in favor of having just a single manager calling the shots -- was not a response to the market tumult.

"The more I looked at the process we had in place, the multiple-manager teams and how decisions were made, it became very clear that due to the complexity, we were inhibiting ourselves from being able to generate the type of returns our clients expect," Reynolds told reporters during the call.

"It's not a cost-cutting exercise," he said, adding that Putnam is pursuing the restructuring regardless of whether the market is up or down.

Repeating his favorite line -- "No one cuts their way to greatness" -- Reynolds said that even as Putnam is eliminating jobs, it remains in the market, "actively recruiting proven talent."

The 47 employees departing the firm, all of whom are from the investment group, include 12 portfolio managers and 17 staffers from the quantitative research team. The quant team now has nine members, down from 26.

Putnam has a total of about 2,500 employees.

Reynolds is also streamlining the equity product menu with the merger of six funds into larger, lower-priced ones, realigning compensation for portfolio managers, and bringing U.S. and non-U.S. analyst teams under common leadership.

While much of the spotlight has been on outflows from retail funds, Reynolds noted that the firm also has a large institutional business. This year, Putnam has clinched 40 mandates around the world, he said.

Come January, Putnam plans to bring to market a family of absolute return funds . "We think they are very appropriate for the times we're in," Reynolds said.

Putnam will also launch a family of global-based sector funds run by analysts. 

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