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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 $163 billion in assets and over 8 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 (1.50%), international stock funds (1.66%), taxable bond (1.25%), and municipal bond funds (1.10%). As mentioned, Putnam shows a relatively balanced mix of stock and bond funds - with around 75% of assets in stocks funds and 25% 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 12% of the Putnam funds are no-load mutual funds. Typical front-loads are in the 5.25% range. As of the end of August 2008, the average return on a Putnam fund was 5.97% over the last five years. To put things into perspective, Fidelity funds had averaged around 8.24% 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 August 2008.
- Putnam Convertible Income Growth (PCONX) - with just over $750 million in assets, this is a relatively small fund with strong focus on convertibles. The larger holdings of this fund include Chesapeake Energy (2.25%), Transocean Sedco Forex Covertables (1.5%), and Patriot Coal (3.25%). The fund has a front load of 5.75% and requires a minimum investment of $500. The expense ratio for the fund is 1.04%, and the average return over the last five years is 5.88%. (August 2008)
- Putnam High Yield Advantage A (PHYIX) - with just over $695 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 NRG Energy (7.375%), , HCA (9.25%) and Ford Motor Credit (9.875%)The expense ratio sits at 1.08% and the fund's average return over the last five years is 6.49%. (August 2008)
- Putnam International Capital Opp A (PNVAX) - with just over $1.6 billion in assets, we have a sizable fund from Putnam that gives investors a strong selection of international stocks (96.5%). Top three holdings included Teck Cominco Limited, Methanex Corporation, and Vallourec.. The fund requires a minimum investment of $500 and carries a front load of 5.75%. The expense ratio for the fund is 1.49% and the return over the last five years is 13.78%. (August 2008)
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