Putnam Investments is to convert two existing mutual funds into environmental, social and governance (ESG) strategies.
In March the $4.3 billion Putnam Multi-Cap Growth fund will become the Putnam Sustainable Leaders fund.
It will be managed by Katherine Collins, Putnam head of sustainable investing, Shep Perkins, Putnam co-head of equities, and assistant portfolio manager Stephanie Henderson.
The Multi-Cap Growth fund was picked for the conversion because it has a multi-cap approach, which allows it to go up and down the market cap spectrum and most of the companies the firm has found in the ESG space have a growth tilt, according to Aaron Cooper, chief investment officer, equities, Putnam Investments.
In May 2017, the firm hired Collins as head of the sustainable investing team from Honey Bee Capital where she was chief executive.
Henderson, previously a fundamental analyst at Fidelity, was hired at the same time to work with Collins.
Also in March, the $450 million Putnam Multi-Cap Value fund is to be revamped into the Putnam Sustainable Futures fund and will continue to be managed by Collins, who will be joined by Henderson.
According to Cooper, the Multi-Cap Value fund is primarily focused on mid-cap stocks and the firm has envisioned the Sustainable Futures fund primarily investing in mid-cap companies so it made sense to convert this offering.
Cooper also said that Putnam would move to offer ESG separately managed accounts in the near future pulling from the firm’s existing strategy line-up.
'It's a different center to use ESG analysis at the heart of the process ... I see this as an extension of that deep fundamental understanding, Collins said.
'Its not an abandonment of one set of tools in exchange for this other but its more of a combination of the two.'
The Putnam Multi-Cap Growth fund is ranked 58 out of 135 Multi-Cap Growth funds tracked by Citywire for three-year total returns to the end of December 2017. Over that time it returned 38.4% compared to the average Multi-Cap Growth fund, which was up 34.4%.
The Putnam Multi-Cap Value is ranked 82 out of 92 Multi-Cap Value funds tracked by Citywire for three-year total returns to the end of December 2017. Over that time it returned 19.6% compared to the average Multi-Cap Value fund, which was up 26%.
Rob Brookby who was a manager on the Putnam Multi-Cap Growth fund will leave the firm to pursue other opportunities.
Brookby was also a manager on five other funds including the $4.6 billion Putnam Growth Opportunities funds. According to a Securities and Exchange Commission filing, Samuel Cox has been appointed to that fund, joining Richard Bodzy.
Bodzy was also previously on the Putnam Multi-Cap Growth, but has also come off as it converts to its ESG mandate.