Magazine article American Banker

Putnam Funds' Dominance Gives an Edge in Annuities

Magazine article American Banker

Putnam Funds' Dominance Gives an Edge in Annuities

Article excerpt

In 1999, Putnam Investments' bank sales of mutual funds were nearly twice those of the nearest competing fund company, and executives at the Boston company say they believe this has given it a leg up in getting its funds into bank-sold variable annuities.

Putnam sold $7.5 billion of its funds through banks last year, and Aim Management Group sold $4.4 billion. In the first half of 2000 -- the latest data available -- Putnam sold $5.3 billion of mutual funds through banks; second-place Aim, $3.6 billion, according to Kenneth Kehrer Associates, a Princeton, N.J., bank insurance consulting firm.

Jane Mancini, managing director and head of insurance at Putnam, said this success has carried over to her company's variable annuity business. Putnam does not release its own numbers, but Kehrer Associates says that in the first half the Boston company sold $968 million of its funds through bank-sold variable annuities developed by outside annuity providers -- more than any other fund complex.

Ken Kehrer, the consulting firm's president, said this number shows clearly that insurers recognize Putnam's performance in mutual fund distribution through the channel. "It's clearly a strategy insurance companies have followed," he said. "They see which are the best-selling funds. They'll turn to Putnam, Aim, Fidelity or Oppenheimer, or other successful fund companies."

Putnam, known primarily as a mutual fund complex, doesn't underwrite annuities. But it's an active player in the multimanaged, variable annuity market, especially on the bank side. Currently, 38% of its sales of funds in variable annuities come through banks, Ms. Mancini said. And 10 of the 32 largest variable annuities sold through banks now have Putnam funds in them.

"Banks have limited shelf space," Ms. Mancini said. "They have room for one to four variable annuities, and they want to take advantage of their reps' knowledge of our investment products. …

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