Institutional Buy-Side Layoffs Mount
First it was Fidelity and Janus. Now it's BlackRock and Putnam. Traditional asset management is fast losing its status as a career haven in today's stormy seas.
BlackRock, a top manager of fixed-income funds, yesterday notified staff of the firm's first mass layoff since its founding 20 years ago. An internal memo reported in various news media states that an undisclosed number of positions across the firm will be eliminated this week.
"BlackRock is not immune" to the current downturn affecting most financial markets, says the memo, which the DealBreaker blog published in full mid-afternoon Monday. "Some positions across the firm will be eliminated, resulting in some of our co-workers, colleagues and friends leaving BlackRock."
The memo doesn't state the number of layoffs or which areas of the firm are most affected. A BlackRock spokeswoman told Bloomberg that details won't be made public until next year.
BlackRock has 5,500 employees and manages bond and stock funds and an alternative investments unit comprising hedge funds, real estate and private equity. The largest publicly traded asset management firm in the U.S., its shares have fallen 51 percent this year.
Putnam Reshuffles People, Pay, Process and Products
Meanwhile, Boston-based Putnam Investments, known for its equity mutual funds, announced a broad restructuring that includes 47 staff departures, folding six of its funds into other funds, and revamping the bonus system to give more weight to each portfolio manager's returns relative to a peer group. Putnam also said it's shifting equity research to a more fundamentally driven approach, while de-emphasizing quantitative analysis.
Quantitative researchers account for some of the 35 staff positions eliminated in the restructuring, the fund firm said. It also announced the departure of 12 portfolio managers, but said it's hiring others. "Even as we make these adjustments, we are in the marketplace actively seeking to hire proven talent. There will be more to report on that front very soon," said Chief Executive Robert L. Reynolds, who joined Putnam from Fidelity earlier this year. Naming several seasoned equity investment professionals who recently came aboard, the release goes on to say that in coming months Putnam plans to make "several more significant hires" for its investment team.
Putnam's new compensation plan awards "full bonuses" to portfolio managers whose funds perform in the top quartile of their peer group, and promises "significantly more" to those who perform in the top 10 percent. Conversely, managers who perform in the bottom quartile among their peers typically will receive no bonus. The firm says it's implementing a similar compensation program for research analysts with greater rewards for successful equity recommendations.
Putnam denies "retrenching," but says the moves are aimed at improving its fund performance, which has lagged in recent years.
The developments at BlackRock and Putnam follow news that Fidelity, the world's biggest asset management firm, is eliminating about 3,000 jobs and Janus Capital, a publicly traded manager of equity mutual funds, is cutting about 115 jobs or 9 percent of its staff.