BOSTON--(BUSINESS WIRE)--Putnam Investments announced a broad restructuring of its equity investment unit, consolidating fund offerings and realigning manager incentives to reward top-flight results. The structural and product changes continue an energetic turnaround strategy for the 70-year old Boston-based asset manager led by Putnam’s newly appointed CEO, Robert L. Reynolds.

“We are reorganizing the way we manage money. We’re actively seeking proven talent in the marketplace, fostering individual managers’ authority, and rewarding top-quartile performers for delivering excellent, long-term results to shareholders,” Reynolds said.

“I have always believed that success in asset management depends on fundamental research, individual manager responsibility and accountability, retaining and attracting the best people, and rewarding those who deliver sustained, superior results,” Reynolds added. “The changes we are making today reflect those beliefs. They lay the groundwork for us to move aggressively toward our highest priority of helping clients succeed by delivering sustained top-quartile investment performance.”

Reynolds has driven a series of strategic changes since becoming Putnam’s CEO. Along with those announced today, these changes include:

Clearing up complexity in Putnam’s equity area:

• Replacing a team management structure within Putnam equity funds, with a new, more nimble, decision-making process that vests full authority and responsibility with individual fund managers.
• Clarifying the equity product line by merging six equity funds into larger, lower-priced funds — aiming to sharpen style discipline and eliminate product redundancies.

Better focusing Putnam’s investment management process:

• Defining fundamental research as the cornerstone of Putnam’s equity management approach with quantitative analysts providing support to — but not driving — investment decisions.
• Building an integrated large cap research capability with worldwide reach by bringing U.S. and non-U.S. analyst teams under common leadership.

Building a culture that rewards excellence:

• Realigning compensation for portfolio managers so that those who achieve top-quartile returns, consistent with fund mandates and strong risk controls, are eligible for full bonuses. Those who reach top decile performance may receive significantly more, while managers who deliver bottom-quartile performance will typically receive no bonus.
• Implementing a similar compensation program for research analysts with greater rewards for successful equity recommendations.

“Our aim is to deliver industry-leading results,” Reynolds explained. “The way to do that is to empower top-tier managers and research analysts, create an incentive structure that generously rewards success, and make sure we provide world-class research and support services so managers can deliver the investment results that retail and institutional clients deserve.”

A simplified equity fund lineup

As part of its restructuring, Putnam is merging half a dozen equity funds to remove product redundancies. In each case, the acquiring fund is the larger of the two funds, and shareholders in funds to be merged are generally expected to benefit from reduced expense ratios.

The mergers of these funds have been approved by the funds’ Board of Trustees and are expected to be completed over the next approximately 30 to 60 days. Shareholder approval is not required because of the similarity of the combining funds.

The acquiring and merging funds are:

Fund to be merged			Acquiring fund			Fund manager(s) for both funds, effective November 17, 2008
Putnam Capital Appreciation Fund*			Putnam Investors Fund*			Gerard Sullivan Robert Brookby
Putnam Classic Equity Fund			The Putnam Fund for Growth and Income			Robert Ewing
Putnam Discovery Growth Fund*			Putnam New Opportunities Fund*			Gerry Moore
Putnam New Value Fund*			Putnam Equity Income Fund*			Bart Geer
Putnam OTC & Emerging Growth Fund*			Putnam Vista Fund*			Ray Haddad
Putnam Tax Smart Equity Fund			Putnam Investors Fund			Gerard Sullivan Robert Brookby

*Portfolio manager changes for the Putnam Variable Trust (variable product) counterparts for these funds are also effective immediately; similarly, mergers will also be implemented.

“For a mutual fund firm, more is not necessarily better,” added Reynolds. “By clarifying the product lineup, Putnam will offer advisors better defined investment choices.”

With these changes, 12 named portfolio managers will be leaving Putnam. In addition, 35 staff positions out of 2,500 have been eliminated across the firm, including reductions to quantitative research. Unrelated to these changes, the Putnam International New Opportunities Fund will now be managed by Jeffrey Sacknowitz.

“We would make these changes whether markets were rising or falling,” Reynolds said. “They reflect a drive to simplify our offerings and foster leaner, more rapid decision-making to deliver better results. They enable us to manage our equity unit more efficiently and redirect resources to growth. And even as we make these adjustments, we are in the marketplace actively seeking to hire proven talent. There will be more to report on that front very soon.”

Investing in the business

Putnam’s latest actions build on a series of initiatives led by Reynolds since he joined the firm in July. “While other asset managers have been forced by the market downturn to retrench, we have taken this as an occasion to bring superior investment talent aboard, align our resources toward promising opportunities, and develop a range of new products,” said Reynolds. “When the market begins to recover, as it always has historically, we will be ready.”

“We enjoy strong, farsighted support from some of the most solid corporate owners in all of financial services,” Reynolds noted. “Great-West Lifeco and Power Financial are the kind of owners anyone would want in their corner. They believe, as we do, that turbulent markets like we see today, offer great opportunities, as well as challenges. With the help of Great-West and Power, we have been able to invest substantially for future growth.”

Over recent months, for example, Putnam has strengthened its equity investment teams through the hires of David Calabro, formerly of MFS, Gerard Sullivan and Robert Brookby from American Century, and Nick Thakore and Robert Ewing from RiverSource. Also, Jeffrey Carney, an industry leader in global strategy, product innovation, and marketing, joined Putnam as the new Head of Global Marketing and Products.

Putnam has also significantly raised the level of experience and expertise of its 35-member large cap analyst team by recruiting six senior stock analysts, who average 15 years of experience. Over the coming months, Putnam plans to add several more significant hires meant to enhance its investment capability. The firm also has 10 new funds slated for release in January 2009. “We see today’s markets as an occasion for renewal,” Reynolds concluded. “Putnam is back in the game to grow – and to win.”

NOTE: Putnam is hosting a one-hour media conference call to discuss this news at 11:30 a.m. (EST) on Monday, November 17. The dial-in number is: Domestic: (866) 516-1098; International: (973) 935-8456; Conference ID#73690798. Robert L. Reynolds, President and Chief Executive Officer, Putnam Investments, will comment on the news and respond to questions.

About Putnam

Founded in 1937, Putnam Investments is a leading global money management firm with over 70 years of investment experience. As of October 31, 2008, Putnam managed $116 billion in assets, of which $62 billion is for mutual fund investors and $54 billion is for institutional accounts. Putnam has offices in Boston, London, Tokyo, and Singapore. For more information, go to www.putnam.com.

Putnam Investments
Laura McNamara, 617-760-1108
or
Sinead Martin, 617-760-8515