Market Extra: Putnam is getting into the ETF game

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Putnam Investments has eyes on the world of exchange-traded funds.

The 84-year-old global money manager plans to join the ETF fray later this spring with the launch of four actively managed U.S. equity funds, two of which will be focused on sustainable investments.

“Active ETFs are going to be a big part of the retail marketplace,” Putnam’s Chief Operating Officer Aaron Cooper told MarketWatch, adding that regulatory changes only occurred in 2019 that made it less onerous for a portfolio to be actively managed in the ETF format. “It’s still early days.”

Cooper also said Putnam’s debut of two sustainable investment ETFs was intentional, particularly as U.S. funds last year saw a record $51 billion flow into the sector as more investors seek out greener investments. About a quarter of those funds flowed into actively managed funds, he said.

“Surveys show the end client is extremely interested in investing in a sustainable way,” Cooper said, adding that demand likely is “just starting to open up.”

The funds, outlined below, will bring Putnam’s research-driven approach to investing and will buy stocks of U.S. companies. They will keep their daily portfolio holdings confidential:

  • Putnam Sustainable Leaders ETF — focus on companies that exhibit a commitment to sustainable business practices;
  • Putnam Sustainable Future ETF — companies that provide products or services that directly contribute to sustainable social, environmental and economic development;
  • Putnam Focused Large Cap Growth ETF — growth stocks of large U.S. companies;
  • Putnam Focused Large Cap Value ETF — value stocks of large and midsize U.S. companies

Like similar semi-transparent funds from asset managers T. Rowe Price TROW, +0.01%, Fidelity and Natixis, Putnam’s ETFs will require approvals from the U.S. Securities and Exchange Commission.

Fees associated with Putnam’s funds will be finalized when the funds launch, said Carlo Forcione, Putnam’s head of product and strategy, who expects the regulatory approvals to wrap up in the second quarter of this year.

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