Putnam Investments has launched two funds that collectively invest across the full spectrum of securities of leveraged companies, including stocks, bonds, bank loans, and convertible se
Putnam Investments has launched two funds that collectively invest across the full spectrum of securities of leveraged companies, including stocks, bonds, bank loans, and convertible securities.
Putnam Capital Spectrum Fund and Putnam Equity Spectrum Fund will both be managed by veteran portfolio manager David Glancy, who joined Putnam earlier this year after two decades of specializing in industries of leveraged companies at Andover Capital and Fidelity Investments.
Putnam Capital Spectrum Fund pursues total return by investing in the securities of leveraged companies. Management aims to select the most attractive securities anywhere within a company’s capital structure, including stocks, bonds, bank loans, and convertibles.
Putnam Equity Spectrum Fund seeks capital appreciation through investments in the equity securities of leveraged companies. Using analytical research and investment experience in this area, management seeks to uncover mispriced stocks of leveraged companies, creating the potential for these stocks to outperform broad market averages.
‘Today, many leveraged companies offer attractive investment opportunities, and few are better at uncovering and capitalizing on these opportunities than David Glancy,’ says Putnam Investments president and chief executive officer Robert L. Reynolds (pictured). ‘For more than two decades, David has been at the forefront of assessing undervalued, leveraged companies. His career spans the history of leveraged investing, from the leveraged-buyout wave of the 1980s and the private equity wave of the 2000s to the credit crisis of today, and he has amassed an outstanding performance record along the way.’
The leveraged company funds’ investment processes rely on fundamental research by analyzing corporate balance sheets and capital structures to identify the securities with the greatest total return potential.
Types of leveraged companies the funds will seek include capital-intensive businesses; early-stage growth companies (rising stars); former investment-grade companies (fallen angels); and companies in special situations, such as restructurings, bankruptcies, or leveraged buyouts.
Glancy has access to all of Putnam’s expanded research capabilities, including the high yield credit team and the small- and mid-cap equities group, which combined cover most of the leveraged company universe.
Although the funds invest in companies that may be highly leveraged, they do not themselves utilize leverage as a primary investment strategy. Both funds also have an innovative management fee structure in which the fee adjusts based on fund performance. This feature aligns the interests of the fund manager with those of shareholders, similar to the approach taken by the Putnam Absolute Return Funds.
