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Monday, May 18, 2009

Reynolds Leverages a Fido Vet With Two New Funds

News summary by MFWire's editors

Bob Reynolds continues to make his mark on Putnam, this time with two new mutual funds that invest in leveraged companies. On Monday the Boston-based fund firm revealed the Putnam Capital Spectrum Fund and the Putnam Equity Spectrum Fund, both managed by Fidelity vet and Andover Capital founder David Glancy, who joined Putnam earlier this year as a managing director (see MFWire, 2/19/2009).

Reynolds praised Glancy for being "at the forefront of assessing undervalued, leveraged companies."

"Today, many leveraged companies offer attractive investment opportunities, and few are better at uncovering and capitalizing on these opportunities than David Glancy," Reynolds stated.

Both funds utilize performance-based fees, similar to the absolute return funds Reynolds launched in January (see MFWire, 1/13/2009).

Company Press Release

BOSTON, May 18, 2009 – Putnam Investments today announced that it has launched two new funds that collectively invest across the full spectrum of securities of leveraged companies, including stocks, bonds, bank loans, and convertible securities. Putnam Capital Spectrum Fund and Putnam Equity Spectrum Fund will both be managed by veteran portfolio manager David Glancy, who joined Putnam earlier this year after two decades of specializing in industries of leveraged companies at Andover Capital and Fidelity Investments.

Putnam Capital Spectrum Fund pursues total return by investing in the securities of leveraged companies. Management aims to select the most attractive securities anywhere within a company’s capital structure, including stocks, bonds, bank loans, and convertibles.

Putnam Equity Spectrum Fund (Class A: PYSAX) seeks capital appreciation through investments in the equity securities of leveraged companies. Using deep analytical research and investment experience in this area, management seeks to uncover mispriced stocks of leveraged companies, creating the potential for these stocks to outperform broad market averages.

“Today, many leveraged companies offer attractive investment opportunities, and few are better at uncovering and capitalizing on these opportunities than David Glancy,” said Putnam Investments President and Chief Executive Officer Robert L. Reynolds. “For more than two decades, David has been at the forefront of assessing undervalued, leveraged companies. His career spans the history of leveraged investing, from the leveraged-buyout wave of the 1980s and the private equity wave of the 2000s to the credit crisis of today, and he has amassed an outstanding performance record along the way.”

The leveraged company funds’ investment processes rely on fundamental research by analyzing corporate balance sheets and capital structures to identify the securities with the greatest total return potential. Types of leveraged companies the funds will seek include capital-intensive businesses; early-stage growth companies (rising stars); former investment-grade companies (fallen angels); and companies in special situations, such as restructurings, bankruptcies, or leveraged buyouts. For investors willing to assume the volatility and other risks of these investments, investing in leveraged companies can provide a level of diversification when added to a traditional equity or fixed-income portfolio.

Glancy has access to all of Putnam’s expanded research capabilities, including the High Yield Credit team and the Small- and Mid-Cap Equities group, which combined, cover most of the leveraged company universe.

Although Putnam Capital Spectrum Fund and Putnam Equity Spectrum Fund invest in companies that may be highly leveraged, they do not themselves utilize leverage as a primary investment strategy. Both funds also have an innovative management fee structure in which the fee adjusts based on fund performance. This feature aligns the interests of the fund manager with those of shareholders, similar to the approach taken by the Putnam Absolute Return Funds. Launched in January, the Putnam Absolute Return Funds, the industry’s first suite of target absolute return mutual funds.

“There are a lot more opportunities among leveraged companies today than in the past; debt burdens are higher and earnings recovery is less certain than in the previous two recessions,” said Glancy. “As a result of the volatility and market dislocation we see today, leveraged companies can provide exceptional upside potential for investments across their capital structures, and we look forward to identifying and exploiting those opportunities to generate strong returns for our shareholders.”

Glancy joined Putnam Investments in 2009 from Andover Capital, where he was a founding partner and portfolio manager. Previously, he generated notable performance during his 13-year tenure at Fidelity Investments, where he was the only portfolio manager to manage both equity and debt funds. Among the funds he managed were the Fidelity Capital & Income Fund, the Fidelity Advisor Leveraged Company Stock Fund, and the Fidelity Leveraged Company Stock Fund, which he managed from its inception in 2000 until leaving the firm near the end of 2003. For the one-year period ending June 30, 2003, Mr. Glancy managed the number-one fund in Lipper’s Capital Appreciation category.

NOTE: For more information on Putnam Spectrum Funds, go to http://www.putnam.com/individual/spectrum-funds/

About Putnam Investments
Founded in 1937, Putnam Investments is a leading global money management firm with over 70 years of investment experience. At the end of April 2009, Putnam had $99 billion in assets under management. Putnam has offices in Boston, London, Tokyo, Singapore, and Sydney. For more information, go to www.putnam.com.

For any Putnam fund, request a prospectus from your financial representative or by calling Putnam at 1-800-225-1581. The prospectus includes investment objectives, risks, fees, expenses, and other information that you should read and consider carefully before investing. Putnam mutual funds are distributed by Putnam Retail Management. Putnam Absolute Return Funds are not intended to outperform stocks and bonds during strong market rallies. 

Edited by: Neil Anderson, Managing Editor

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