manager is seeking to buy fund management expertise and form distribution partnerships in the continent
US fund manager Putnam Investments is continuing a period of strong European expansion with the launch of two aggressive fixed interest products and the admission that it is seeking to opportunistically buy fund management expertise and form yet more distribution partnerships in the continent.
The first fund launch is a European high yield fund, to be run by what used to be HY specialists New Flag Asset Management before they were bought by Putnam last year. The second is an emerging market debt fund, the retail version of a US-based existing institutional fund.
The London-based high-yield team is headed up by Anton Simon, who used to run New Flag. He is now a key part of the integration of Putman's US and London fixed interest teams. Putnam is leveraging his expertise but also expanding on it, with the hiring of a couple of high-grade bond analysts. This will be followed by more product launches involving these asset classes.
Simon sees the european bond market as a great opportunity for the company to expand, at least in certain areas.
'Credit Europe has arrived and will get bigger and bigger and high yield has become an integral part of it,' he said. 'Where we are going to star is in the lower end ' European high yield and lower investment grade.'
Putnam is generally on the lookout for expansion possibilities in Europe. The company's Dublin fund range ' the Putnam World Trust ' came out of its Cayman structure, which was designed for US Non- Resident Aliens and Latin American investors.
'We are going to make it much more European friendly,' explained head of Europe business Stephen Cohen. 'For example, at the moment there are too many US equity funds there. European investors don't need eight US equity funds.'
As part of increasing its European friendliness, the company is looking to fill in any perceived gaps in its product line-up. Although nothing has been publicly disclosed, discussions are underway with boutique managers and specialist teams. Two areas that the company are looking to strengthen are European small cap and general UK equities.
The company will continue to distinguish itself with its traditional value/growth/core product line up. And while there is no official company stance on this, a value and growth European equity offering would be an obvious next step for the company.
According to Putnam research, R2 ' the extent to which stocks are affected by market movements ' has come down, after a strong rise in 1999- 2000. Sector risk has also come down, and the value/growth division is less important than it was. However, Cohen believes it will come back up again, and with it the marketing story for growth/value and presumably sector funds.
Putnam's strategy for approaching the European market has been to tie in with local distributors in joint venture partnerships. This strategy will continue, according to Cohen.
'If opportunities present themselves, we would be interested in setting up more partnerships,' said Cohen.
Putnam have been pursuing this strategy for years, with private equity specialists Thomas H Lee and Rothchild Australia in 1999, Sceptre in Canada in 2000, Safei in Spain in 2001 and Ampega in Germany in 2002.
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