Boston-based asset manager Putnam Investments has hired a head of sustainable investing as part of plans for as push into the environmental, social and governance (ESG) market.
Putnam has recruited Katherine Collins from ESG research firm Honeybee Capital, where she had been chief executive.
Prior to Honeybee, Collins worked at Fidelity from 1990 to 2008, when she served as a portfolio manager on the Fidelity America and mid-cap funds and launched a pilot sustainable strategy.
Collins, who will report directly to Putnam chief investment officer for equities Aaron Cooper, will oversee the firm’s ESG efforts, which is likely to include new sustainable-focused mutual funds and strategies for institutional clients.
The firm has also hired Stephanie Henderson, a fundamental analyst from Fidelity, who will work with Collins, alongside Alexander Rickson, a Putnam veteran who will provide quantitative analysis.
Cooper said the firm did not currently offer any specific ESG strategies but that its fundamental managers already evaluated companies based on sustainable criteria, as these factors correlated to strong long-term returns.
He said Collins would work with these managers to support their research process as well as develop new strategies.
‘The second piece, which is really exciting to us, is on the product side,’ he told Citywire. ‘The discussions are ongoing. We are confident there will be strategy opportunities in this space and that will be a big part of our efforts in the coming periods.’
‘Katherine coming from a portfolio manager background was an important piece of this, because she is an investor first and she has a tremendous track record of running money. So we feel we will have some differentiated strategies in this space that can move the ball forward.’
Collins (pictured above) said she expected ESG funds to grow hugely over the coming years.
‘To be good long-term investor… you really need to be thinking about these long-term strategic and business issues, which include a lot of ESG issues. So from that perspective I think all the dollars will be ESG dollars over time,’ she said.
‘But just as exciting to me is the chance to develop these dedicated products, which I think are in that $100 billion range, but I really think it is going to be multiples of that in the not too distant future.’
Back on the front foot
The move to expand into ESG investing follows last year’s news that Putnam was cutting back in other areas. In November 2016 the firm announced plans to cut 8% of its workforce, or 115 jobs, in an effort to reduce costs by $65 million.
The highest profile departure was that of then-chief investment officer Walter Donovan.
Cooper said since then the firm had looked to make strategic investments in certain specialist areas, such as small caps and ESG.
In March it hired David Diamond from The Boston Company as a co-manager on the Putnam Small Cap Value fund. It also hired analyst Bill Wiese and promoted a number of in-house analysts in the small cap team to portfolio manager status as part of a wider reorganization of the division.
As part of these changes the small cap team has adopted a more concentrated approach, running portfolios with fewer holdings.
‘We are in investment mode as we see exciting opportunities,’ said Cooper.
‘You saw some of the headlines towards the end of last year, but what you are seeing here, and will continue to see, is that as we see areas where we can really excel and add value from an active management standpoint we are going to aggressively go after those and attempt to attract some of the best people in the industry and build these capabilities.’