Second Hawaii plan
drops Putnam

A second Hawaii government workers’ retirement plan is pulling out of Putnam Investments. Trustees of the state Deferred Compensation Plan voted yesterday to take $43 million out of a mutual fund managed by Putnam and place it with a new manager.

The fund, which operates as the Island Savings Plan, is a $1 billion tax-deferred savings plan for employees of the state government and all the counties except the City & County of Honolulu. It is a supplement or alternative to the state Employees Retirement System, which voted Nov. 7 to remove more than $400 million from Putnam’s management.

Kathleen Watanabe, state human resources director and chairwoman of the Deferred Compensation Fund’s trustees, said today the fund has an agreement with a new manager, but because the terms are still being negotiated she cannot disclose the name.

The bigger ERS fund, which has nearly $8 billion with various managers, will hear proposals Friday from four managers seeking to replace Putnam and another fund, Alliance Bernstein, which was dropped because of poor returns on its investments.

Putnam was dropped because of a disclosure that it had allowed outsiders and its own managers several years ago to engage in market timing, a practice that allows quick trades that skim profits from longer-term investors.


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