Putnam merges, liquidates 10 funds

Putnam Investments is sending 10 of its funds to the dustbin of history. The Boston-based fund company will liquidate four funds: Strategic Volatility Equity Fund (PSVEX), Asia Pacific Equity Fund (PAPAX), Retirement Income Fund Lifestyle 2 (PRYAX) and Retirement Income Fund Lifestyle 3 (PISFX). Other funds are being merged into oblivion. The $46.7 million Arizona Tax Exempt Income Fund (PTAZX) and the $78.2 million Michigan Tax Exempt Income Fund (PXMIX) will merge into the $929.2 million Tax Exempt Income Fund (PTAEX). Similarly, the $1.2 billion Putnam High Yield Fund (PHIGX) will merge into the $560.9 million Putnam High Yield Advantage fund (PHYIX). The $5 billion Putnam Fund for Growth and Income (PGRWX) will merge into the $6.4 billion Putnam Equity Income Fund (PEYAX). The $22 million Putnam Global Dividend Fund (PGDEX) will merge into the $8.1 million Putnam Global Sector Fund (PPGAX). The $36 million Putnam Global Energy Fund (PGEAX) will merge into the $166 million Putnam Global Natural Resources fund (EBERX). Firms typically liquidate funds because they haven't accumulated enough assets to justify their expenses. The funds Putnam is liquidating had assets ranging from $32.8 million (Retirement Income Fund Lifestyle 3) to $7 million (Strategic Volatility Equity Fund). Poor performance is one reason to merge a fund into another. The advantage: The poorly performing fund's record goes into the dustbin of history, too. For example, the Putnam Fund for Growth and Income gained an average 7.05% a year the past three years, according to Morningstar. The Putnam Equity Income fund has gained 9.14% a year over the same period. Fund critics have long criticized using average performance of mutual funds because of survivorship bias. The industry rarely liquidates its best funds, so those that are left tend to skew the averages upwards.