Boston-based Putnam Investments announced on Wednesday that it will launch three liquid alternative mutual funds based on strategies it has offered to institutional investors.
The funds, expected to launch in the third quarter, will offer advisors and retail investors access to three strategies that can be used as diversifiers within their portfolios, including a risk parity strategy seeking total return, a market neutral fund seeking uncorrelated alpha via long/short equity strategies, and a managed futures fund seeking absolute return.
“This is what I would term an extension of what we’ve been doing over the past nine years, which is bringing to the marketplace products that are more non-traditionally constructed and non-benchmark oriented,” says Scott Sipple, Putnam’s head of global investment strategies.
The funds will be sub-advised by Boston-based PanAgora Asset Management, a Putnam affiliate, which has managed these strategies for institutional clients for several years. All of the strategies’ management will be kept in-house.
According to Sipple, Putnam has heard demand from wirehouses, regional firms, RIAs and financial planners for more non-correlated investments.
“This was an opportunity to seize on that market, and to harness PanAgora’s capabilities,” says Sipple. “As we’ve continued to bring these kinds of products to the marketplace, we’ve seen uptake across all channels.”
The Putnam PanAgora Risk Parity Fund seeks to diversify risk across asset classes through strategic allocation to offer investors more stable returns and more downside protection than other multi-asset approaches. PanAgora has been managing the strategy for institutional clients since 2006.
The Putnam PanAgora Market Neutral Fund is a systematic long/short equity strategy that exploits global market inefficiencies and arbitrage opportunities to create attractive absolute returns. The fund will use an approach similar to that of the PanAgora Diversified Arbitrage strategy, which has been offered to institutional cleints since 2010.
The Putnam PanAgora Managed Futures Fund will provide diversification through a managed futures strategy that creates an absolute return with low correlation to traditional asset classes. PanAgora has implemented multi-asset portfolios using managed futures across its 28-year history.
“We have to educate advisors and home offices about who PanAgora is and the success they’ve had in the institutional marketplace,” says Sippe. “Then we have to educate advisors on how these instruments can be used within a portfolio structure. We have tools, a sales organization and knowledgable wholesalers that can assist advisors with thinking about how to implement these products.”