Free of BT, Putnam thinks big picture

When Putnam Investments late last month announced that it had won a significant new mandate from Equity Trustees Superannuation, it represented a validation of the strategy that saw the big US-based funds management firm break out of its BT relationship almost 12 months ago.

Putnam announced last month that it had been a winner in the reallocation of Equity Trustees Superannuation’s international manager line for its Wealthpac Superannuation Service in the form of a new investment into Putnam’s Global Concentrated Fund — the first institutional investment into the fund since it was launched late last year.

Commenting on the mandate, Putnam director of retail in Australia Peter Walsh said the company was building a strong and diverse business in the Australian market and that the Equity Trustees Superannuation mandate represented “tangible feedback that we are heading in the right direction”.

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He said the Equity Trustees Superannuation allocation was the third significant signal of support for Putnam’s capabilities by Australian investors since the company re-launched in Australia under its own banner last year.

Indeed, the mandate must have been high on the agenda for discussions between Walsh and his boss, Putnam Investment president and chief executive Charles Haldeman, when he visited the company’s Australian operations in mid-February.

Haldeman’s visit to Australia came just days after the announcement that Putnam Investments would be acquired from March & McLennan by the Canadian-based Great-West Lifeco, a subsidiary of Power Financial Corporation.

Under the deal, Putnam will remain headquartered in Boston and retain its brand, operations, personnel and offices, but Haldeman last month made it clear to Money Management that the big Canadian parent company would likely have different priorities, some of which would likely impact Australia.

With more than nine months elapsing since Putnam ended its long-standing relationship with BT in Australia, Haldeman was quick to point out that the company’s strategy in Australia was on track and that it was reaching milestones.

Putnam ended the BT Funds Management relationship in May 2006.

Under that relationship, Putnam’s products had been sold into the Australian market via BT and, in announcing the change, Putnam said it would be moving to directly offer “a broad range of investment styles directly to institutional clients and through advisory platforms to retail”.

At the time of the change, Putnam said it would also be offering quantitative products through PanAgora Asset Management, a majority-owned affiliate of Putnam.

The company said the initiative was aimed at providing Putnam with the opportunity to grow its brand on a much broader scale within the Australian market.

To suggest that, nine months down the track, Putnam had established a formidable physical presence in Australia would be a distinct over-statement. In fact, only a very few people are working within the company’s Australian operations. The strength of the company strategy in Australia is that those few people can call on the considerable back-office capabilities of a major global financial services player.

Haldeman said that the decision to end the BT relationship and launch Putnam under its own brand had not been taken lightly but, nearly nine months down the track, the feedback from the market suggested it had been justified.

What is more, he suggested that Putnam’s acquisition by Great-West Lifeco would have a further impact on the Australian strategy in circumstances where the Canadian-based company had effectively achieved global asset management status.

Indeed, Great-West Lifeco said that it had been pursuing a strategy to expand and broaden its financial services business in the US, as well as in Europe and globally.

“The acquisition of Putnam’s asset management business allows Lifeco to achieve, with a single transaction, a major presence in the mutual fund and institutional asset management industry in the US. The acquisition also includes operations in Europe and Asia, and a world-class brand,” the Great-West Lifeco announcement said.

“I think the acquisition will see us being even more committed to Australia,” Haldeman said.

“We are developing some strong relationships via our relatively small Australian team,” he said.

“We are very committed to this market and I believe that is something that has been paying off.”

Looking back at the company’s long-running relationship with BT, Haldeman said that it had been a successful arrangement but that, ultimately, Putnam had felt constrained.

He said in relaunching under its own brand in Australia, Putnam was effectively “opening up a menu of amazing choice”.

The Putnam strategy is certainly not aimed at achieving short-term outcomes, with both Haldeman and Walsh emphasising to Money Management that the company had a very long-term horizon with respect to Australia and was determined to build relationships the right way.

In the meantime, and notwithstanding mandates such as that secured with Equity Trustees, Putnam’s focus is very much on gaining the appropriate responses from Australian ratings houses.

“At this early stage in our business, we remain focused on gaining research house ratings, and then look forward to taking these to a select number of platforms with whom we can develop deep relationships,” Walsh said.

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