Putnam's Absolute Return Funds pass $1B mark — but are they big money-makers yet?

Putnam Investments' Absolute Return Funds lineup passed the $1 billion asset mark as of Monday — less than a year after they launched in January. The milestone for the four funds, which all seek to outperform inflation with different targets, is a big one for the firm and its president and CEO, Robert L. Reynolds, who has made these funds a big focus of the firm's marketing efforts this year, experts said. “The product itself brings to the investor what was needed at the time,” Mr. Reynolds said. More than 350 brokerage firms have signed on to sell the funds to clients. Flows into the funds have been averaging $5 million to $10 million a day, Mr. Reynolds said. While hitting the $1 billion mark is a good sign for Putnam, it begs the question whether the firm is actually making money off the funds given all it has spent on marketing them, said Geoff Bobroff, president of Bobroff Consulting. “When you consider all of the dollars spent on advertising to promote the products... you have to ask, ‘was it really worth it,'” he said. Advertising was essential for these funds since they were new to the retail market, Mr. Reynolds said. Putnam doesn't disclose how much it spends on advertising, but Mr. Reynolds said “it wasn't that much.” As for fees, Putnam's Absolute Return Funds have performance fees, which the managers get if they meet their targets. The fees vary depending on the fund. As part of an overall pricing restructuring. the firm did waive the wrap fee of its target-date funds when it included the Absolute Return Funds in that menu this year. .