Putnam Investments is overhauling its fund fee structures to include lower management fees, the use of performance fees on certain funds, and fund family-wide breakpoints.

The Boston-based firm, which is owned by Great-West Lifeco Inc., said Tuesday that it will make sweeping changes to the fees charged on its retail mutual funds, “designed to provide investors with a host of immediate and long-term pricing benefits, and to make Putnam’s product line-up more competitive in the marketplace.” Certain changes will require the approval of shareholders at meetings to be held later this year.

“Every element of our re-pricing plan is crafted to benefit our shareholders,” said Putnam’s president and CEO, Robert Reynolds, “in some cases immediately, in all cases over the long haul. We will be lowering management fees on many of our mutual funds on August 1. In addition, the new management contracts for which we are seeking shareholder approval would go a step further and reduce management fees on nearly all of our mutual funds, while giving investors a real stake in our future growth and, in the case of certain funds, tying the funds’ management fees to investment performance. We think the marketplace will welcome these changes as fresh evidence of our commitment to provide shareholders with strong, sustained investment results at competitively priced levels.”

Reynolds indicated that the firm is particularly excited about the potential impact of the introduction of performance fees. Currently, Putnam charges performance fees on its family of absolute return funds and Spectrum funds. The firm is moving to apply the fees to its U.S. growth funds, international funds, and Putnam Global Equity Fund.

“There’s a pure and simple logic to performance fees: If a fund performs well, shareholders pay a higher management fee, which they will be very content to do if results are strong. Conversely, if a fund underperforms, the management fee charged to shareholders will be lower. The direct correlation between performance and fees charged provides a value-add equation for the shareholder,” he noted.

IE