Putnam jumping into semitransparent ETFs with ESG

The 84-year-old fund complex enters the ETF market with four funds, including two ESG strategies.


Putnam Investments is taking the better-late-than-never approach to the ETF business with plans to launch four semi-transparent strategies this year, including two that will emphasize ESG strategies.

The 84-year-old asset management firm with $190 billion under management is joining a host of fund companies that are seeking new opportunities in the fledgling semi-transparent ETF space.

“Having recently passed the $200 billion in assets milestone, active ETFs have succeeded in capturing investor interest,” said Todd Rosenbluth, director of mutual fund and ETF research at CFRA.

“While Putnam is very late to enter the ETF market, they have a strong brand and experienced managers to leverage in hopes of catching up,” he added.

Like other asset managers with established mutual fund businesses, Putnam will leverage existing strategies for its ETF debut.

Unique to Putnam will be a focus on the increasingly popular ESG angle.

Two of the funds will emphasize ESG strategies: Putnam Sustainable Leaders ETF focuses on companies that exhibit a commitment to sustainable business practices, and Putnam Sustainable Future ETF will focus on companies whose products and services provide solutions that directly contribute to sustainable social, environmental, and economic development.

The suite will also include Putnam Focused Large Cap Growth ETF with a focus on growth stocks, and Putnam Focused Large Cap Value ETF with a focus on value stocks that offer potential for growth, current income, or both.

“As a long-time active manager, Putnam is enthused to enter the active ETF marketplace, which we expect will gain meaningful traction in the years ahead,” Robert Reynolds, Putnam president and chief executive, said in a prepared statement.

All four Putnam ETFs will utilize the Fidelity tracking basket methodology for active equity ETFs. Fidelity’s tracking basket methodology and related features are designed to provide market makers with enough information to make effective markets in shares of the ETFs, while also maintaining the confidentiality of portfolio holdings, which is a key element bringing active managers like Putnam into the active ETF space.

“These firms hope to tap into the same demand that has driven ARK Funds to more than $50 billion in actively managed equity ETF assets,” he added.