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 Putnam Investments has a heritage that dates back to the 1830's. Now that's quite a history, even relative to other mutual fund giants we've reviewed. Putnam mutual funds seem to reflect the balance you would expect with such a long history; with a good mix of stock and bond funds.
Putnam Family of Funds
You can purchase Putnam funds through Putnam Investments, which serves both the institutional and individual investor. An interesting part of the company's history dates back to 1830, when Supreme Court Justice Samuel Putnam helped to establish the legal foundation around which the professional money management services industry exists.
In 1937, George Putnam founded the George Putnam Fund of Boston, which claims to be one of the first funds to offer investors a balance of stock and bonds for their portfolio. Today that company has grown to manage over $195 billion in assets and over 9 million shareholder accounts.
Putnam offers investors a wide range of services including over 76 different mutual funds, Roth and traditional IRAs, professional management of over 900 different 401k plans and 529 college savings plans. The company boasts nearly 3,600 employees with offices in Boston, London, and Tokyo.
Putnam Fee Structures and Returns
Morningstar ratings indicate that the expense ratio for mutual funds at Putnam are average including domestic stock funds (1.49%), international stock funds (1.68%), taxable bond (1.25%), and municipal bond funds (1.13%). As mentioned, Putnam shows a relatively balanced mix of stock and bond funds - with around 80% of assets in stocks funds and 20% in bond funds.
The minimum investment to buy into a Putnam fund is only $500 - among the lowest of the families reviewed to date. Unfortunately, only around 10% of the Putnam funds are no-load mutual funds. Typical front-loads are in the 5.25% range. As of the end of November 2007, the average return on a Putnam fund was 12.22% over the last five years. To put things into perspective, Fidelity funds had averaged around 10.54% over the same time span.
Top Rated Putnam Mutual Funds
When we looked at the top rated Putnam mutual funds we saw things that we liked and some things that we didn't like. On the positive side, the annual returns over the last five years for all these funds beat the S&P 500 index or their fund category. On the downside, all three of the funds have a load of 3.75% or higher. Taking all that into consideration, here is a list of the top performing mutual funds from Putnam as of November 2007.
- Putnam Convertible Income Growth (PCONX) - with just over $810 million in assets, this is a relatively small fund with strong focus on convertibles. The larger holdings of this fund include Intl Coal Grp Citigroup and EMC. The expense ratio for the fund is 1.03%, and the average return over the last five years is 12.54%.
- Putnam High Yield Advantage A (PHYIX) - with just over $740 million in assets, this bond fund focuses on the lower range of bonds with an average bond rating quality of only B. This includes a sizable amount of assets in what are considered non-investment quality bonds. Top holdings for this fund include General Motors, CCH (11%) and Ford Motor Car (7.875%). The expense ratio sits at 1.04% and the fund's average return over the last five years is 11.12%.
- Putnam Asset Allocation: Growth A (PAEAX) - with just over $2.8 billion in assets, we have a sizable fund from Putnam that gives investors a mix of assets in stocks (78%), bonds (10%) and Cash (12%) that place it somewhere in the middle of the previously mentioned funds. Top three holdings included ExxonMobil, Cisco Systems Inc. and ArcelorMittal. The expense ratio for the fund is 1.14% and the return over the last five years is 13.07%.
About the Author - Putnam Mutual Funds
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