Morningstar first to downgrade BT over Putnam
Research houseMorningstarhas downgradedBT Funds Management’s international equities capability following the much-publicised scandal involving its US-based management partner, Putnam Investments.
It was recently revealed that Putnam was being investigated for “market timing,” or moving clients’ funds frequently in and out of markets to take advantage of short-term price changes.
Though Morningstar says the “serious breaches of fiduciary duty” by two Putnam senior portfolio managers and other investment professionals are not proven, it downgraded BT due to concerns over how Putnam will handle compliance, rebuilding business culture, dealing with US regulators and restoring investor confidence.
BT’s international capabilities have been moved from three out of a possible five, denoting a ‘good quality’ manager, to a two out of five - the ‘poor quality’ manager category.
Morningstar says that it will readdress the rating downgrade when it gains confidence that Putnam has addressed cultural issues enabling its staff to focus fully on investments.
BT says it has been very disappointed by the recent revelations and has taken the news of regulatory action against Putnam and other US mutuals very seriously.
As a result, a formal working group of senior executives within BT has been set up to assess ongoing developments at Putnam. Its charter will be to monitor ethical standards as well as ongoing performance.
The BT group says it has also been active over the last few weeks in ensuring that Putnam enforced change quickly and that an independent review of Putnam’s procedures was undertaken.
AUTHOR
Recommended for you
With HNW investors representing the largest market for alternative assets, Praemium and CoreData research underscores why this presents a compelling opportunity for advisers.
Having completed the successful integration of Diverger, Count has upgraded its forecast for expected synergy benefits achieved by the acquisition by a third.
Australia’s largest licensee has seen the biggest number of adviser losses over the past week, while the expected wave of new entrants has boosted overall adviser numbers.
Iress has increased its forecast adjusted EBITDA by $5 million for the 2023/24 financial year in light of the sale of its platform business to Praemium and hinted at a return to dividend payments.
