Putnam closes a money market fund
Putnam Investments, one of Boston's largest mutual fund companies, today suddenly shut down one of its money market funds for institutional clients, such as corporations and pension funds.
Putnam spokeswoman Sinead Martin said the Putnam Prime Money Market Fund, which has about $12.2 billion in assets, was closed because of an unusually high volume of requests for withdrawals by shareholders in the fund.
The fund's minimum investment was $10 million.
Separately, shares in another institutional fund run by Bank of New York Mellon Corp., BNY Institutional Cash Reserves fund, fell to 99.1 cents a share, from its standard $1-a-share level, Bloomberg reported today. The fund was not a typical money-market fund, though it was designed to work like one.
The Bank of New York fund sustained losses due to its investments in Lehman Brothers Holdings Inc., the giant Wall Street investment house, which filed for bankruptcy protection this week.
Putnam said that its fund had no holdings in Lehman, Washington Mutual or American International Group, three companies in turmoil over the spreading crisis on Wall Street.
To prevent losses on the Putnam fund's investments, which would've occurred had the securities been sold quickly to redeem the shares, the company plans an orderly sale and will distribute the proceeds to the shareholders, Sinead said.
"With these pressures and the constraints in liquidity in money market instruments, the portfolio would've realized losses to meet these high redemptions," she said.
Other Putnam funds are not affected in any way, the company said. The problems were "specific to the fund's circumstance," she said.
Don Phillips, managing director of Morningstar Inc., which tracks mutual funds, said by closing the fund Putnam was putting its shareholders' interests first and protecting them from losses.
(By Kimberly Blanton, Globe staff)
