The deal will add bring a team of 11 London-based high-yield managers at New Flag with the 27 investment professionals at Putnam, which currently has $11 billion of high-yield assets under management.
New Flag Asset Management, founded and headed by Anton Simon, will continue to manage European high-yield assets for its current and future clients, primarily through its flagship institutional fund called the New Flag First Euro High Yield Fund PLC. It will also provide management and research support for Putnam’s existing high-yield and fixed-income product array, according to the firms.
Although the New Flag deal means Putnam can fill a gap in its product lineup, growth in that sector is likely to be slow with worries about corporations straining under debt burdens and other debt issuers finally giving way to defaults.
British retail investors, for example, are flocking to corporate bond funds as they look for a safe haven and a steady income stream, although financial advisers say investing in corporate bonds, especially high-yield bonds, carries risks such as losses when a company defaults.
Putnam’s deal with New Flag allows it to step up its involvement in the European high-yield sector, said Stephen Peacher, Putnam’s chief investment officer for high-yield.