Putnam slashes sales charge, broker payout on three funds

In a bid to ease investors out of cash and back into the market, Putnam Investments is dropping the sales charge and broker payout on the Class A and Class M shares of three of its mutual funds. Starting April 5, Putnam is reducing to 1%, from 3.25%, the sales charge on all purchases of Class A shares of its Putnam Floating Rate Income Fund, Putnam Absolute Return 100 Fund and Putnam Absolute Return 300 Fund. Putnam is also reducing the sales charge on Class M shares of the three funds to 0.75%, from 2%. Additionally, Putnam is lowering the investment minimum at which investors can buy its fixed-income and absolute-return funds at net asset value to $500,000, from $1 million. Putnam is lowering the minimum investment and the sales charges to help advisers encourage investors to get back into the market, said Elaine Sullivan, managing director, head of retail marketing. “It seems like there are a lot of investors who continue to have money in cash,” she said. The reduced sales charges are intended to make them more competitive with other short-term-bond funds in the marketplace, Ms. Sullivan said. As a result of the lower charges, broker payouts for the Class A shares of the funds will drop to 1% upfront, from 3%. Broker payouts on the Class M shares will decrease to 0.75%, from 1%. Commission-based advisers may be reluctant to sell these funds, however, since they’ll be getting paid less upfront, said Scott Smith, associate director at Cerulli Associates Inc. “It seems like a good [public-relations] move to make the funds more accessible at a lower price, but I am not sure that advisers will embrace it,” Mr. Smith said. But Putnam believes that advisers will do what is in the best interests of their clients, Ms. Sullivan said. “If an adviser feels this kind of pricing arrangement meets their clients’ needs more than other pricing arrangements, then it will work for all parties,” Ms. Sullivan said.