Putnam Investments today added another five actively managed exchange-traded funds to its lineup, all of which implement environmental, social and governance strategies.
Three of the funds offer exposure to different sectors of the fixed income market. The new ETFs and their expense ratios are as follows:
- Putnam ESG Core Bond ETF (PCRB), 0.35%
- Putnam ESG High Yield ETF (PHYD), 0.55%
- Putnam ESG Ultra Short ETF (PULT), 0.25%
- Putnam PanAgora ESG Emerging Markets Equity ETF (PPEM), 0.60%
- Putnam PanAgora ESG International Equity ETF (PPIE), 0.49%
All five funds list on the NYSE Arca. The addition of these funds brings Putnam’s total ETF offering to 11 funds, and rounds out its ESG lineup to cover a complete selection of asset classes.
“When you think about the lens of somebody as an ESG allocator—whether that's in the retail intermediary channel, the direct channel or the institutional marketplace—for the first time, Putnum will really be a full-service product provider across asset classes within the ESG/sustainable marketplace,” said Carlo Forcione, Putnam’s head of product and strategy, though he noted that investors should not assume Putnam is done launching sustainable or ESG ETFs.
“We're active managers, and it's our view that some of those passively oriented strategies [are] somewhat naive in their approach,” he added. “As active managers, we're trying to generate alpha, trying to generate excess return for our clients. We're trying to do that in a holistic, comprehensive way. That's our DNA in terms of using a full set of fundamentally oriented research inputs, and now for these ESG-focused products, ESG-oriented inputs.”
PCRB primarily covers investment-grade debt, but can invest in junk bonds. While it will also invest mainly in U.S. debt, it can also invest in foreign securities.
Meanwhile, PHYD invests mainly in debt issued by U.S.-domiciled entities with maturities of three years or longer.
PULT invests in a wide range of short-term debt denominated in U.S. dollars, and the dollar-weighted average maturity for the portfolio is expected to be four years or less, according to the prospectus.
The ESG overlay for all three fixed income funds will evaluate companies relative to their sector peers. PCRB will only hold bonds that are rated in the top two tiers of a four-tiered ratings system, according to its prospectus. All three funds include seeking high current income among their investment goals.
The two equity funds in the rollout are subadvised by Putnam-affiliated PanAgora Asset Management, which uses quantitative models to manage PPEM and PPIE. The prospectuses for both funds note PanAgora relies on “advanced statistical and machine learning techniques” as well as in-house and third-party data to evaluate companies’ ESG characteristics and potential to generate returns.
Contact Heather Bell at [email protected]