Putnam Investments has launched five new fully transparent, actively managed ETFs on NYSE Arca catering to socially responsible investors seeking core portfolio exposures.
Robert L. Reynolds, President and CEO, Putnam Investments.
The line-up includes three fixed income ETFs offering access to aggregate, high yield, and ultra-short bond portfolios.
The Putnam ESG Core Bond ETF (PCRB US) invests predominantly in US Treasuries and investment-grade corporate bonds from issuers located in the United States, focusing on debt securities with maturities greater than three years. The fund’s expense ratio is 0.35%.
The Putnam ESG High Yield ETF (PHYD US) invests predominantly in sub-investment-grade bonds from US-based corporate issuers, also focusing on securities with intermediate duration. The fund’s expense ratio is 0.55%.
The Putnam ESG Ultra Short ETF (PULT US) invests predominantly in short-duration, investment-grade money market and other fixed income securities. The fund’s expense ratio is 0.25%.
The three ETFs are managed by Putnam’s Fixed Income division which screens for issuers that meet relevant environmental, social, and governance (ESG) criteria on a sector-specific basis. Putnam’s ESG analysis considers board structure and composition, workplace diversity and inclusion, carbon intensity, sources of energy used for operations, water use and re-use, employee safety, supplier audits, and product safety, among other factors
Putnam assigns each company a proprietary ESG rating ranging from 1 to 4 with issuers required to possess a score of either 1 or 2 to be eligible for inclusion.
The remaining two ETFs, which are sub-advised by Putnam affiliate PanAgora Asset Management, invest in portfolios of developed or emerging market stocks that meet PanAgora’s assessment of ESG criteria.
The Putnam PanAgora ESG International Equity ETF (PPIE US) and Putnam PanAgora ESG Emerging Markets Equity ETF (PPEM US) come with expense ratios of 0.49% and 0.60%, respectively. Each fund maintains the flexibility to invest across market capitalizations and investment styles.
PanAgora’s proprietary ESG framework uses quantitative models to assign each company a score between -2 and +2 with any firm required to possess a score greater than zero to be eligible for inclusion.
In addition to ESG criteria, PanAgora considers a company’s valuation, financial strength, growth potential, competitive position in its industry, projected future earnings, cash flows, and dividends when deciding whether to buy or sell investments.
Commenting on the new listings, Robert L. Reynolds, President and CEO of Putnam Investments, said: “We think it is increasingly important to offer clients a range of investment products across asset classes delivered through a choice of product wrappers, such as ETFs, mutual funds and separately managed accounts. One of Putnam’s hallmarks has been its commitment to providing investment strategies that align with investors’ evolving needs. With today’s launch, Putnam is bringing a number of significant investment offerings to market in an ETF format.”
Carlo Forcione, Head of Product and Strategy at Putnam Investments, added: “We are enthused about extending our ETF product shelf into the actively managed fixed income and non-US equity spaces. Today’s newly launched ETFs are powered by strong existing investment capabilities and demonstrate the firm’s continuing focus on providing an array of compelling offerings in asset classes that are important to our clients and the broader marketplace.”