Putnam Investments plans to launch a new REIT to purchase mostly residential MBS guaranteed by the Government National Mortgage Association, and the GSEs.
In a filing Tuesday with the Securities and Exchange Commission, Putnam said its new REIT, Putnam Mortgage Opportunities Co., will raise roughly $300 million through an initial public offering.
The firm joins a host of other bond-related funds jumping into the MBS market including PIMCO.
"We believe that the residential mortgage market currently presents opportunities for highly attractive risk-adjusted returns as it recovers from the recent financial crisis and undergoes structural reform," Putnam said in the filing. "We believe that successful mortgage market investors will be able to navigate the challenges posed by a changing rate environment, ongoing changes in government housing policy, and continued changes in servicing practices and bank regulatory capital rules."
The REIT, which might be externally managed and advised by Putnam subsidiary Putnam Advisory Co., will consider purchasing non-agency RMBS, CMBS and ABS.
Putnam said the REIT might also invest in other companies or pooled investment vehicles focused on investing in agency RMBS and/or any class of potential target assets.
