Putnam latest to jump into "multi-cap" funds

* Putnam Investments offers three new multi-cap funds

* Field grows crowded as companies face sluggish markets

BOSTON, Sept 27 (Reuters) - Inside every mutual fund manager lurks a desire to be the next Peter Lynch, the onetime star leader of Fidelity's Magellan Fund known for his "go-anywhere" style.

Now, more managers are getting the freedom to chase the dream. On Monday, Putnam Investments became the latest fund company to offer a set of "multi-cap" funds designed to invest in companies of all sizes.

"Lynch was in every style box at some point, and I think that is where we're going," said Gerard Sullivan, who now heads Putnam's Multi-Cap Core Fund.

The three funds begun by Putnam, part of Canada's Power Financial Corp (PWF.TO), are the newest entrants in a market growing more competitive. Companies hope multi-cap products will prove distinctive amid sluggish stock markets that have held back equity funds that once were star performers.

Data from Lipper, a unit of Thomson Reuters, show 45 multi-cap mutual funds have been introduced so far this year, on pace to exceed the 57 launched in 2009, though down from a recent peak of 78 launched in 2008.

Among the largest multi-cap funds are American Funds Capital World Growth & Income fund, with $72.5 billion in assets, and Fidelity's Growth Company fund, with $30 billion. In year ended Aug. 31, Vanguard's Total Stock Index fund has taken in the most of any multi-cap fund, $15.3 billion.

More multi-cap funds are biased toward growth rather than core or value stocks, said Lipper analyst Jeff Tjornehoj. "Maybe there's a perception that the post-recession recovery will reward faster growing stocks," he said.

Designating a fund as multi-cap gives a manager room to chose among many more stocks than a fund that tracks a particular category. In fact, rules require that multi-cap funds not have more than 75 percent of assets in any one category.

Traditionally, companies organized their funds around those categories to make them easier to sell to individual investors, to reassure them they were diversifying across different asset classes.

But those distinctions have grown less important to investors as stock movements have begun to converge, driven by the same macroeconomic forces, Putnam Chief Executive Robert Reynolds told journalists at a briefing on Monday.

Reynolds and others said the new funds will make better use of Putnam's 95 analysts worldwide, allowing managers to pick from a much broader set of funds. Robert Brookby, new manager of Putnam Multi-Cap Growth Fund, gave the example of a time when results from Cisco Systems Inc (CSCO.O), a large-cap company, showed good opportunities in the videoconference space but the fund he was running was not able to buy shares in several smaller pure-play rivals to Cisco that would have been good investments.

Giving managers more freedom to choose among companies of various sizes, he said, "is going from the accidental find to the more targeted approach," he said. (Reporting by Ross Kerber; editing by John Wallace)