Putnam’s new crossover hits showrooms
| May 27th, 2009 | Filed under: Editor's Pick, Today's Post | By: Alpha Male |
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Yesterday we highlighted a series of media articles that described the ongoing skirmish between hedge funds and mutual funds as a “resistance” movement and a “turf war”. Today, we examine one mutual fund that adopted several of the key weapons used by hedge funds without actually using the term “hedge fund.”
When asked to list the key differences between hedge funds and mutual funds, most point to the (potential) use of leverage, investment latitude and performance fees. Indeed, these weapons have been banned by mutual fund regulators.
Leverage by any other name
Enter Putnam’s new “Equity Spectrum Fund”, listed as a “blend” fund on the firm’s website. Like most mutual funds, this fund invests in equities without using any borrowed money. But like many hedge funds, the Equity Spectrum Fund actually includes leverage – only this leverage exists within the holdings, not within the fund itself. The fund invests in “leveraged companies”. And according to the Putnam website More…
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