No one has ever accused Bill Donoghue of being a shrinking violet. So, it is no surprise that Donoghue uses his latest MarketWatch column to take Putnam to the woodshed over its newest advertisements.

Donoghue's complaint is over just how Putnam shows its performance rankings in the ads. Rather than list its annualized total return, Putnam lists the Lipper percentile ranking for each time period for each of five funds listed in the ad.

Those numbers could look a lot like barn-burning returns to the initiated rather than the fair-to-middling results that they are.

The five-year numbers for the funds are of 22%, 48%, 40%, 42% and 29%.

"Seriously, who are they trying to fool?" writes Donoghue before acknowledging that the numbers are fully explained in accompanying text.

Gordon Forrester, head of marketing for Putnam, told Donoghue that the ad is targeted at advisors who will understand what the numbers mean, not regular shareholders. He added that the ad is not misleading and that it was reviewed by the NASD.

That answer did not mollify Donoghue (who admittedly has strong opinions about mutual funds failure to protect investors in bear markets).

"George Putnam would have been ashamed of this ad," writes Donoghue. "Putnam should fire their advertising agency and go back to the drawing boards. It's high time that they redesign their funds to increase returns so that they really have something to brag about."  

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