SOURCE: Putnam Investments

Putnam Investments

November 29, 2010 15:16 ET

Putnam Investments Lowers Expense Ratios for Widely Accepted Absolute Return Funds

Expenses for Absolute Return Funds and RetirementReady® Lifecycle Funds Drop as Much as 54 Percent and 24 Percent, Respectively

BOSTON, MA--(Marketwire - November 29, 2010) - Building on the successful launch of the Putnam Absolute Return Funds, which now have $2.6 billion in assets, and seeing an increased need for absolute return strategies by financial advisors to help investors address inflation and volatility risks, Putnam Investments and the Board of Trustees of the Putnam Funds announced that the total expense ratios across the four Absolute Return Funds* have been reduced by as much as 54 percent. Since the Absolute Return Funds are included as underlying investments in the Putnam RetirementReady® Funds, the firm's suite of 10 target-date/lifecycle retirement funds, the expenses for those funds also have been reduced, by as much as 24 percent.

"Although I am pleased with the $2.6 billion in assets since our launch, we expect the numbers to increase significantly, because of the broad application of our suite of Putnam Absolute Return Funds," said Robert L. Reynolds, president and chief executive officer of Putnam Investments. "Based on advisor feedback and investor needs around inflation and volatility, we decided to take a fresh look at the pricing of the Absolute Return Funds and have determined that a reduction in expenses better aligns them to compete aggressively across the marketplace, and helps to further their use as core investments for many different types of investment portfolios across all time horizons."

Nearly 9,000 financial advisors from more than 500 broker-dealers use the Absolute Return Funds in portfolio construction. A recent Putnam national survey of 256 financial advisors about their views on absolute return strategies found growing understanding and use of these strategies. Three in five advisors surveyed (59%) were likely or certain to recommend them to their clients. The same number (59%) said that a major strength of absolute return funds was their ability to help minimize portfolio volatility, and 37 percent saw them as an effective hedge against inflation.

The new total expense caps, which limit recurring costs such as management and service fees, were implemented retroactive to November 1, 2010, to align with the beginning of the new fiscal year of the Absolute Return Funds. By lowering expenses, the expense caps contribute to potentially higher net returns for both current and new shareholders, regardless of when they purchased their shares. The percentage reductions in the expenses of the Funds' Class Y shares are as follows:

Fund   New Total Expense Cap*   Expense Reduction (in basis points)**   Expense Reduction (%)**
Absolute Return 100 Fund   0.40% of fund average net assets   -47 bps   -54%
Absolute Return 300 Fund   0.60% of fund average net assets   -35 bps   -37%
Absolute Return 500 Fund   0.90% of fund average net assets   -29 bps   -24%
Absolute Return 700 Fund   1.10% of fund average net assets   -24 bps   -18%

* Total expense caps are before any performance fees and exclude certain expenses, such as distribution and service (12b-1) fees (if applicable for a share class). Please see the Absolute Return Funds' prospectuses for additional details.
** Expense reductions are shown as compared to the expense ratios shown in the Absolute Return Funds' prospectuses dated 2/28/2010. 

The total expense caps represent a contractual obligation of Putnam to limit the Funds' total expenses through at least February 28, 2012. Putnam and the Board of Trustees fully expect that the expense caps will remain in place undisturbed through at least that date.

"As the Absolute Return Funds continue to gain traction in the marketplace, we have gained a better understanding of how advisors and their clients are utilizing the strategies, and have positioned the new pricing accordingly," continued Reynolds. "The Absolute Return Funds are now extremely competitively priced compared with certain relative return funds against which some advisors may compare the Absolute Return Funds. We believe the new pricing levels of the Absolute Return Funds will create yet another compelling reason for advisors and their clients to consider these solutions that are designed to seek to limit volatility, produce more dependable returns and address inflation risk."

The Putnam RetirementReady® Funds, the only suite of lifecycle funds to integrate absolute return strategies, also saw significant reductions in their expense ratios as a result of the new total expense caps for the Absolute Return Funds. The percentage reductions in the expenses of the RetirementReady Funds' Class Y shares are projected to be as follows:

Fund   New Projected Expense Ratio   Expense Reduction (in basis points)*   Expense Reduction (%)*
RetirementReady Maturity   0.74% of fund average net assets   -24 bps   -24%
RetirementReady 2015   0.79% of fund average net assets   -20 bps   -20%
RetirementReady 2020   0.83% of fund average net assets   -16 bps   -16%
RetirementReady 2025   0.88% of fund average net assets   -12 bps   -12%
RetirementReady 2030   0.92% of fund average net assets   -9 bps   -8%
RetirementReady 2035   0.96% of fund average net assets   -6 bps   -6%
RetirementReady 2040   0.99% of fund average net assets   -6 bps   -6%
RetirementReady 2045   1.02% of fund average net assets   -5 bps   -4%
RetirementReady 2050   1.04% of fund average net assets   -4 bps   -4%
RetirementReady 2055**   1.04% of fund average net assets   --**   --**

* Expense reductions are shown as compared to the expense ratios shown in the RetirementReady Funds' prospectuses dated 11/30/2009.
** Putnam RetirementReady® 2055 Fund will be launched on 11/30/2010. 

The expense ratio reductions continue Putnam's commitment to providing shareholders with strong investment results at competitive prices. This initiative follows the re-pricing of nearly all of Putnam's other retail mutual funds announced in July 2009. At that time, management fees were significantly reduced or eliminated on fixed income, asset allocation and RetirementReady funds. In addition, Putnam successfully obtained shareholder approval of shareholder-friendly, innovative "fund family breakpoints" (under which asset-level discounts for management fee determinations are based more broadly on the growth of all Putnam mutual fund assets, rather than the growth of an individual Putnam mutual fund's assets) for all funds and performance fees (which more closely align Putnam's and shareholders' economic interests) for U.S. growth funds, international funds and the Putnam Global Equity Fund.

Putnam Investments and Absolute Return Strategies

Putnam Investments launched the mutual fund industry's first suite of Absolute Return Funds in January 2009 with four funds:

  • Putnam Absolute Return 100 Fund (Class A: PARTX) seeks to outperform inflation, as measured by T-bills, by 1%, net of all fund expenses, over periods of three years or more, and can be an alternative to short-term securities.
  • Putnam Absolute Return 300 Fund (Class A: PTRNX) seeks to outperform inflation, as measured by T-bills, by 3%, net of all fund expenses, over periods of three years or more, and can be an alternative to bond funds.
  • Putnam Absolute Return 500 Fund (Class A: PJMDX) seeks to outperform inflation, as measured by T-bills, by 5%, net of all fund expenses, over periods of three years or more, and can be an alternative to balanced funds.
  • Putnam Absolute Return 700 Fund (Class A: PDMAX) seeks to outperform inflation, as measured by T-bills, by 7%, net of all fund expenses, over periods of three years or more, and can be an alternative to stock funds.

Absolute return strategies seek to earn a positive total return over a full market cycle with less volatility than traditional funds and largely independent of market conditions. Absolute return strategies also seek to outperform broad market indexes during periods of flat or negative market performance.

About Putnam Investments
Founded in 1937, Putnam Investments is a leading global money management firm with over 70 years of investment experience. The firm was recently named "Mutual Fund Manager of the Year" by Institutional Investor. At the end of October 2010, Putnam had $118 billion in assets under management. Putnam has offices in Boston, London, Frankfurt, Amsterdam, Tokyo, Singapore, and Sydney. For more information, visit putnam.com.

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.

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