Putnam Investments has launched two fully transparent, actively managed ETFs on NYSE Arca.
Robert L. Reynolds, President and CEO, Putnam Investments.
The Putnam BDC Income ETF (PBDC US) offers a high-income strategy by investing in exchange-traded business development companies (BDCs) based in the US.
BDCs generally invest in, lend capital to, or provide services to privately held US companies or thinly traded US public companies.
BDCs are known for their high dividend payouts and offer private investors a chance to obtain the kinds of returns on senior secured debt, private equity, mezzanine loans, and other esoteric layers of the capital structure traditionally only available to institutional investors.
Investment of this kind is not without risks. Investing and lending to private companies and thinly traded public companies, including the debt instruments of such companies, make BDCs potentially susceptible to issues arising out of bankruptcies or defaults. Additionally, limitations on asset mix and leverage may make it difficult for BDCs to raise capital, and BDCs may be more adversely affected by market volatility than more diversified investments.
The fund, which is the first actively managed BDC ETF in the marketplace, is managed by Michael Petro who has 23 years of industry experience including two decades at Putnam Investments. Petro has managed a similar non-public BDC-focused strategy for nearly five years
The ETF comes with a management fee of 0.75%, although acquired fund fees and expenses of 9.86% push its total expense ratio up to 10.61%.
Putnam’s second launch is the Putnam BioRevolution ETF (SYNB US) which targets innovative companies capitalizing on the convergence of technology in the life sciences sector.
The fund is managed by William Rives who has nine years of industry experience, all of which have been at Putnam Investments. Rives seeks outperformance by investing in 30 to 50 high-conviction stocks selected through disciplined portfolio construction and risk management.
The portfolio may include technology-enabled companies that have products contributing to the research, development, production, diagnosis, and treatment of biology in the fields of genomics, proteomics, and cell research. Examples of such products include DNA sequencers, mass spectrometers, electron microscopes, and PCR technology.
The fund may also include synthetic biology companies which are defined as firms that manufacture products from biological materials. This segment covers companies that are engineering organisms to solve problems in medicine, manufacturing, and agriculture.
The ETF has an expense ratio of 0.70%.
Commenting on the new listings, Robert L. Reynolds, President and Chief Executive Officer, Putnam Investments, said: “Putnam is excited to bring these two dynamic new strategies to market as we seek to address the long-term investment needs of advisors and their clients. Our firm is focused on providing unique and differentiated offerings – delivered through a variety of vehicles – that tap Putnam’s deep investing expertise and exceptional research capabilities.”
Carlo Forcione, Head of Product and Strategy at Putnam Investments, added: “We have identified BDCs and advances in the biology sector as providing distinctive opportunities for investors in rapidly evolving sectors of the economy. Our new ETFs represent innovative, early-to-market offerings that will align well with the portfolio construction needs of our clients and the broader marketplace.”