- We aim to employ a holistic research approach that is greater than the sum of its parts.
- Our discussions with company management are supplemented by deeper topical conversations with corporate sustainability leaders.
- We believe our approach is enhanced by discussions with other researchers and investors, industry and subject experts, and non-profit organizations.
We are investors first and foremost, and an integrated part of Putnam’s investment group. We include the entire research department and our fellow portfolio managers as colleagues and collaborators. The form of this integration can be difficult to convey, as we are not simply adding thoughtful sustainability work to Putnam’s core fundamental research. Rather, we are combining the two elements throughout the investment process. In doing so, we aim to employ a holistic approach that is greater than the sum of its parts. Here we offer some additional detail from a week of our team’s meetings, in December 2019, as a way to bring these processes more vividly to life.
We include the entire research department and our fellow portfolio managers as colleagues and collaborators.
Meetings with company management teamsThese meetings are typically with CEOs, CFOs, and investor relations representatives, and usually involve our fellow portfolio managers and analysts from Putnam’s core equity research team. In addition to assessing traditional business fundamentals, we aim to discuss key sustainability issues as part of our regular investment discussions, supplemented by deeper topical conversations with corporate sustainability leaders.
An example of a week of company meetings on sustainability topics (December 2019)
|Financial||Improvement of next-gen access and strategy for student loan management products|
|Medical technology (two companies)||Patient benefits of new product innovations|
|Transportation||Efforts to ensure passenger and driver safety|
|Retail||Product mix and consumer trends|
|Investment||Capital deployment strategy and sustainability focus with investee companies|
|Waste management||Increased demand for recycling and environmental improvements in the fleet of equipment|
|Hotel||Environmental programs and focus on employee safety|
|Industrial||Efficiency and environmental benefits of product platforms|
|Materials||Zero-carbon production process and challenges in raw materials mining|
Independent research workIn addition to our conversations with company management teams, we perform a wide range of independent research, including discussions with other researchers, industry and subject experts, non-profit organizations, and other types of investors.
Examples of a week of independent research events (December 2019)
|Due diligence on a medical benefits company||Verify positive client experience|
|Meeting with a service provider||Assess their approach to measuring impact|
|Meeting with a nonprofit||Learn about structural access to resources women-led businesses|
|Discussions with an academic researcher||Review analysis of gender bias in investment management|
|Conversation with a philanthropic consultant||Learn more about their client interest in impact investing|
|Meeting with local impact investors||Analyze needs of local food enterprises|
|Discussion with sell-side researchers||Review of their ESG research along with traditional fundamental work|
Partnerships with Putnam and beyondWe believe our investment work also benefits from inputs from our colleagues and business partners, within Putnam and beyond.
Examples of a week of partner meetings (December 2019)
|Clients||Discuss our work and evolution in the broader sustainable investing field|
|Putnam’s ESG leadership committee and PRI committee||Set priorities for the coming year|
|Cross-company collaborative group||Review 2019 progress and discuss best practices for organizing ongoing ESG-related workflow|
Our investment process incorporates sector analysis, stock recommendations from the core research team, and insights from other portfolio managers. Activity that supports Putnam’s collaborative research process includes daily morning meetings, company management meetings, investment conference attendance, and company visits.
We aim to utilize ESG data within the relevant context of each company and industry, and to incorporate more qualitative research in areas where new issues are emerging, or data is not yet standardized. Throughout the research process, our goal is to identify companies with excellent investment potential and excellent sustainability performance, which results in portfolios with meaningful active weights by industry and sector.
For a deeper look at sustainability research, read our 2020 Sustainability and impact report.
As part of our investment analysis, depending on the strategy in question, we may integrate environmental, social, or governance (“ESG”) issues or considerations into our research and/or investment decision-making. In our view, analysis of ESG issues is part of good investing, as these issues, like other, more traditional areas of investment analysis, such as market position, growth prospects, and business strategy, have the potential to impact risk and returns. For example, in the governance area, evaluation of the strength of a company's management has always been a critical consideration in our investment process. The relevance and materiality of other ESG issues in our process will differ from strategy to strategy, from sector to sector, and from portfolio manager to portfolio manager, and for some strategies, most notably those where we lack relevant ESG data, ESG considerations are not a material part of our process.
This material is a general communication being provided for informational and educational purposes only. It is not designed to be a recommendation of any specific investment product, strategy, or decision, and is not intended to suggest taking or refraining from any course of action. The material was not prepared, and is not intended, to address the needs, circumstances, and objectives of any specific institution, plan, or individual(s). Putnam is not providing advice in a fiduciary capacity under applicable law in providing this material, which should not be viewed as impartial, because it is provided as part of the general marketing and advertising activities of Putnam, which earns fees when clients select its products and services. The views and strategies described herein may not be suitable for all investors. Putnam Investments does not guarantee any minimum level of investment performance or the success of any investment strategy. As with any investment there is a potential for profit as well as the possibility of loss.
For informational purposes only. Not an investment recommendation.
This material is provided for limited purposes. It is not intended as an offer or solicitation for the purchase or sale of any financial instrument, or any Putnam product or strategy. References to specific asset classes and financial markets are for illustrative purposes only and are not intended to be, and should not be interpreted as, recommendations or investment advice. The opinions expressed in this article represent the current, good-faith views of the author(s) at the time of publication. The views are provided for informational purposes only and are subject to change. This material does not take into account any investor’s particular investment objectives, strategies, tax status, or investment horizon. Investors should consult a financial advisor for advice suited to their individual financial needs. Putnam Investments cannot guarantee the accuracy or completeness of any statements or data contained in the article. Predictions, opinions, and other information contained in this article are subject to change. Any forward-looking statements speak only as of the date they are made, and Putnam assumes no duty to update them. Forward-looking statements are subject to numerous assumptions, risks, and uncertainties. Actual results could differ materially from those anticipated. Past performance is not a guarantee of future results. As with any investment, there is a potential for profit as well as the possibility of loss.
Diversification does not guarantee a profit or ensure against loss. It is possible to lose money in a diversified portfolio.
Consider these risks before investing: International investing involves certain risks, such as currency fluctuations, economic instability, and political developments. Investments in small and/or midsize companies increase the risk of greater price fluctuations. Bond investments are subject to interest-rate risk, which means the prices of the fund’s bond investments are likely to fall if interest rates rise. Bond investments also are subject to credit risk, which is the risk that the issuer of the bond may default on payment of interest or principal. Interest-rate risk is generally greater for longer-term bonds, and credit risk is generally greater for below-investment-grade bonds, which may be considered speculative. Unlike bonds, funds that invest in bonds have ongoing fees and expenses. Lower-rated bonds may offer higher yields in return for more risk. Funds that invest in government securities are not guaranteed. Mortgage-backed securities are subject to prepayment risk. Commodities involve the risks of changes in market, political, regulatory, and natural conditions. You can lose money by investing in a mutual fund.
Putnam Retail Management.