Putnam Cuts Expense Ratios on Absolute Return Funds

Putnam Investments announced that the total expense ratios across its four Absolute Return Funds have been reduced by as much as 54%.

The Absolute Return Funds are included in the Putnam RetirementReady Funds, the firm’s suite of 10 target-date/lifecycle retirement funds. Therefore, the expenses for those funds also have been reduced, by as much as 24%.  

According to the announcement, the new total expense caps, which limit recurring costs such as management and service fees, were implemented retroactive to November 1, 2010, to align with the beginning of the new fiscal year of the Absolute Return Funds.  

The new total expense caps are: 

  • Absolute Return 100 Fund – 0.40% of fund average net assets; 
  • Absolute Return 300 Fund – 0.60%; 
  • Absolute Return 500 Fund – 0.90%; and 
  • Absolute Return 700 Fund – 1.10%. 

The total expense caps represent a contractual obligation of Putnam to limit the Funds’ total expenses through at least February 28, 2012.  

The company said nearly 9,000 financial advisers from more than 500 broker/dealers use the Absolute Return Funds in portfolio construction. A recent Putnam national survey of 256 financial advisers asked them about their views on absolute return strategies; Putnam found a growing understanding and use of these strategies.   

Three in five advisers surveyed (59%) were likely or certain to recommend them to their clients. Fifty-nine percent also said that a major strength of absolute return funds was their ability to help minimize portfolio volatility, and 37% saw them as an effective hedge against inflation.