According to an article in Financial Planning magazine, the former fund giant Putnam funds has been sold. I’m not sure if this is good news or bad news. The purchaser, Great-West Lifeco Inc. subsidiary Financial Corp, said they will keep Putnam intact.

Maybe Great-West is just looking for a quick way into U.S. Markets; maybe they think new leadership can turn Putnam around. But if they don’t make some radical changes then they’ve missed the boat. Putnam isn’t failing because they have the wrong owner, they’re failing because their performance is poor.Poor performance happens to all funds. It’s something we live with. The managers are after all human. We have all had to take those calls from clients that just don’t quite get that. You know the call, you hear the paper rustling in the background and the client says hey, fund x was better than the one you picked, why did that happen?

Even your back-office staff has dealt with these calls. You don’t back-peddle, you try to explain to your clients why your pick was and still is the best pick. If you client does not understand all the subtleties of fund selection and your personal methodology, explanations probably wont help.

Now imagine taking this call and your picks have underperformed every year for five or more years. This is what Advisors that have been holding Putnam funds have been trying to explain to their clients. This also explains why Putnam has had such large outflows over the past few years.

Hopefully, Great-West won’t just leave everything as is. Putnam used to be a good fund group and maybe they will be again. But it will take some serious changes in leadership.