Putnam begins countdown to 2007

Following Putnam Investments’ evaluation of 2006 — the year the global investment manager established a new presence in Australia and launched its first local offerings — continued growth has been predicted for 2007.

According to the manager’s director of retail business, Peter Walsh, Putnam has successfully built a profitable business in Australia and is looking forward to capitalising on its early momentum.

Walsh said Putnam’s fixed income capabilities had been a key area of focus throughout the past 12 months, and would remain so in 2007.

He added that the manager planned to begin January conservatively regarding its fixed income positioning, with duration held relatively short in order to preserve principal in the event of a US rate rise.

“We are sceptical about the prospects for Fed rate cuts in coming months and instead believe there is a substantial risk that they’ll resume tightening,” Walsh said.

“The US housing slowdown is no more severe than in past cycles; core inflation, excluding energy and housing, is still high; and several Fed governors have warned that inflationary pressures remain worrisome.

“Among sectors, we look less favourably on corporate bonds, both investment grade and high yield, while favouring opportunities among select mortgage and asset-backed securities.”

Earlier in the year, Putnam was awarded the Overseas Fixed Income Manager of the Year by UK-based Pensions Management for its core fixed income team.

“There’s been a lot of interest in our fixed income capability as a result of the depth, quality of investment team and enviable track record they have achieved,” Walsh said.

“Fixed income markets have become extremely complex, and this complexity suits Putnam’s unique approach, which employs multiple strategies across all fixed income sectors to deliver superior risk-adjusted returns.”