Putnam is shuffling its income fund menu to get a bigger piece of the Baby Boom retiree market, but CEO Robert Reynolds is clearly focused on lobbying for regulation for his insurer-sold competition.
The headline news coming out of Putnam yesterday was the $125 billion fund complex's reworking of a few of its income-oriented funds to cater to retired Boomers.
The centerpiece of the program is the integration of Putnam's "absolute return" portfolios -- designed to avoid losses over any foreseeable three-year period -- into the company's new "Retirement Income Fund" suite.
Putnam Retirement Income Lifestyle 1 is aimed at the most conservative investors and is essentially a rebranded version of the old Putnam RetirementReady Maturity fund.
Putnam Retirement Income Lifestyle 2 is new, comprised of a very broad basket of absolute return strategies and balanced market exposure.
And Putnam Retirement Income Lifestyle 3 takes on "prudent risk" in order to expose shareholders to capital appreciation opportunities. It's the new name of Putnam's Income Strategies fund.
The funds are earmarked to segue from Putnam's RetirementReady line of target-date funds. Presumably the theory here is that once the target date comes and goes, retirees will transfer their assets into these funds and know that their "glide path" has more or less landed.
The ramifications here for target-date fund design -- and liability -- are a little esoteric, but basically it means that the accumulation-oriented target-date funds are now free to focus on accumulation, and not complicate their strategies with considerations about how long a retirement term to plan for.
But while this may put Putnam at the forefront of a new mutual-fund-oriented retirement income approach, CEO Robert Reynolds has terse words for the "unsustainable promises" made by vendors of competing annuity-based income products.
To "curb temptation," Reynolds wants Congress to mandate a national insurance charter and a new federal agency to oversee all forms of lifetime income products.
The former may be tough to achieve. The latter may be a bit easier, but until members of Congress -- much less the investing public -- understand annuities better, it's going to be a hard sell.