Putnam Investments's new chief executive said that he will make changes in a number of areas to help resuscitate the Boston fund company, which has suffered a steady stream of outflows for the past several years.
Robert L. Reynolds, a former executive at Fidelity Investments who Putnam announced Thursday would be its president and CEO, said he will consider adding people and products when he joins the company July 1.
He will succeed Charles E. "Ed" Haldeman, who will become chairman of Putnam Investment Management LLC. Mr. Haldeman, 59, was promoted to chairman, president, and CEO of Putnam in November 2003 after the Boston company got caught up in the market-timing scandal and suffered heavy outflows.
Financial Research Corp., a Boston firm that tracks fund flows, said Putnam had $27.1 billion of outflows from its equity and bond funds in 2003 and lost $28.89 billion in 2004. Poor performance cost Putnam more assets this year. According to FRC, its long-term fund assets fell 14%, to $72.3 billion, in the first quarter. It ended the quarter with $175 billion of total assets.
Mr. Reynolds said during a conference call Thursday that Putnam is working on its problems. It has hired senior portfolio managers and senior analysts in recent months and he expects to continue hiring. He said he expects to add products in the next six months. He called himself a "huge fan" of asset allocation and income products, and alternative vehicles, such as 130/30 and 120/20 funds.
"Cutting costs is not on my agenda," he said. "Companies don't cut their way to success or greatness. We have to be efficient and put our resources in the right places, but our hiring in the investment area speaks to the fact that we are putting money" into the company.
The Canadian firm Great West Lifeco Inc. bought Putnam from Marsh & McLennan Cos. Inc. in August 2007 for $3.9 billion.
Mr. Haldeman said during the conference call that even in his earliest talks with the Winnipeg firm's executives he spoke about setting a leadership succession plan. He told them "that my absolute No. 1 priority was getting a long-term owner for Putnam and I was a big boy and I understand the way the game is played and I know that a new owner might want to make a change in leadership," he said. "We decided it was important initially for me to stay on as CEO, but I continued to think that my role was to position Putnam for a future with leadership that will last beyond me."
Mr. Haldeman said his performance as CEO "doesn't deserve an 'A' in all subjects" but he did help Putnam get through a scandal and develop its institutional business.
Jeffrey Orr, the chairman of Putnam's board of directors, said during the conference call that Mr. Haldeman will continue to play a role in supporting Putnam's management team.
Mr. Reynolds, 56, was a vice chairman and the chief operating officer at Fidelity before retiring from the Boston company in June 2007. Previously he was the president of the company's institutional retirement group. He had worked for Fidelity since 1984.
Analysts said that Mr. Reynolds has developed a reputation as a "heavy hitter," as one of them put it, in the investment management business and that he is considered one of the fathers of the bundled 401(k) plan. In 2006, Mr. Reynolds was one of five finalists to be commissioner of the National Football League.
Mr. Reynolds said he began speaking with executives at Putnam two months after leaving Fidelity. He said he was drawn to Putnam because he wanted to remain in the investment management business with "a long-term player with tremendous upside."
The company's brand was another enticement, he said. "Putnam has had its ups and downs like every investment firm has, but it was, and has been, positioned to take advantage of what is going to happen next in the money management business."
Rus Prince, an analyst at Prince & Associates in Shelton, Conn., said the new CEO will get the resources to make changes at Putnam. "Mr. Reynolds will have the parameters and the leeway to make a difference in their investment business, but it is going to be difficult," Mr. Prince said. "Let's be realistic. A lot of funds are still having issues regarding investments they made in everything from subprime on up. He will try to fix things, but there are no assurances that his strategies will work."
