Make a Quick Buck Off Putnam's Purchase

"This deal is a potential catalyst for Putnam closed-end funds," says Larry Glazer, a managing partner at Mayflower Advisors in Boston and a longtime Putnam watcher. "Putnam closed-ends perennially traded at a discount because of the uncertainty around the company, and this removes that uncertainty."

Closed-end funds, unlike standard open-ended mutual funds, have a fixed number of units in circulation, and these trade throughout the day on the stock exchange like an ordinary stock. Sometimes units trade at a discount to their underlying assets, giving you a great opportunity to buy $1 worth of assets for, say, 95 cents or even less.

A Free Pop

Which is where we are now with Putnam's closed-ends. Maybe the company's new owner, Power Financial from Canada, will rebrand the funds. Or maybe it will reorganize or merge some of them. Or maybe it will just fold them all into an open-ended fund. It's too early to know.

But if any of this happens, you could be looking at a free pop of 10% or so. It doesn't shoot out the lights, but then you're not taking a lot of risk. These are diversified bond funds.

"This change is a potential catalyst for the Putnam closed-ends," says Glazer. "When we look at these types of funds, we look at the discounts, the credit quality and the sustainability of the yields."