Cronin exits Putnam; more changes expected

The departure last week of Kevin Cronin as head of investments at Putnam Investments is a sign of more change to come at the beleaguered mutual fund company, some observers say. Mr. Cronin, who joined Putnam in 1997, is leaving for personal reasons, effective Wednesday, the firm said. Robert L. Reynolds, who took over as president and chief executive on July 1, is reviewing the firm's organizational structure, said Laura McNamara, a Putnam spokeswoman. Until a new investment structure is finalized, Mr. Cronin's team will report to Mr. Reynolds.

NOT SURPRISING

David Calabro, who joined the firm in May, will take over as interim head of large-cap equities. Considering the poor performance of Boston-based Putnam's domestic-equity funds, the departure wasn't surprising, said Wenli Tan, an analyst at Chicago-based Morningstar Inc. When Mr. Cronin took over as head of investments in 2005, Putnam was managing $112 billion in assets, according to Morningstar. Today the firm manages $66 billion, excluding money market funds, according to Morningstar. "[Mr. Cronin] had to be feeling the pressure," Ms. Tan said. Large-cap equities have been among Putnam's most troubled funds, she added. Putnam, a unit of Montreal-based Power Corp., which acquired the firm last year from Marsh & McLennan Cos. Inc. of New York, has lost several portfolio managers during the past year. "Many of the funds do not have seasoned managers," Ms. Tan said. Some observers say that Mr. Reynolds, a former executive at Fidelity Investments in Boston, will continue to make changes. He left Fidelity in June 2007 after serving as vice chairman and chief operating officer since 2000. Earlier, he was president of Fidelity Investments Institutional Retirement Group. "Bob Reynolds is taking a firm grip and doing things to shake up the organization," said Burton Greenwald, a Philadelphia-based mutual fund consultant. "I wouldn't be surprised to see some people from Fidelity put in place there." Putnam's stock and bond funds shed $12.5 billion in assets last year after shrinking by $14.9 billion in 2006.

'DRAMATIC ACTIONS' NEEDED

"They have got to take some dramatic actions over there," Mr. Greenwald said. Improving fund performance will be key, said Howard Schneider, president of Practical Perspectives LLC, an industry consulting firm in Boxford, Mass. "I'm sure the ownership is putting a lot of pressure on them to boost business and get back to positive flows," he said. "It hasn't been materially better, and they are not making an impression in the marketplace." E-mail Sue Asci at [email protected].