City Pension Board To Replace PutnamNov 21, 2003 | Milwaukee Journal Sentinel
A City of Milwaukee Pension Board committee voted Thursday to yank about $277 million out of embattled Putnam Investments as soon as a replacement can be found. The board joins other pension funds that have moved to replace the Boston-based firm in the wake of the mutual funds scandal.
Putnam has been managing the international stock investments in the city pension fund's $3.89 billion portfolio, representing 7.1% of the fund's holdings, said Jennifer Shannon, the pension fund's chief investment officer.
Both Putnam money managers overseeing the pension fund's international investments, Omid Kamshad and Justin Scott, were forced out of their jobs last month, after the Securities and Exchange Commission and Massachusetts regulators filed civil complaints accusing them of market timing, the Boston Globe has reported.
Although no pension fund money was affected by the trading, the accusations shook pension officials' trust in Putnam, Shannon said.
That wasn't the only reason to switch from Putnam, Shannon said. Since the start of the year, the Milwaukee pension fund's international investments have grown 18.8%, while an international stock index has risen 25.2% in the same period, she said.
Weeks before the legal problems arose, the pension fund staff and its adviser, Mercer Consulting, were calling for a change, Shannon said.
On Thursday, the Pension Board's investment committee agreed and authorized a search to replace Putnam. The international funds will remain under Putnam management until that search is completed, Shannon said.