Putnam Spectrum Funds

Seeking returns from opportunities
in leveraged companies

With a career that spans the history of
leveraged investing, portfolio manager David Glancy has deep expertise and specialized skills.

Can increase return on equity | Total return and lower volatility potential | Performance history of leveraged companies

How leverage can increase a company's return on equity

A company can generate higher returns on equity if it increases its use of debt. When a company uses debt, its equity holders avoid risking additional equity because the new money is borrowed from others. Any future increase in returns (above the cost of debt service) accrues to the same equity base.

Of course, the interest payments that come with the debt add to the company's operating expenses and thereby reduce profits. However, as long as the company's cash flow can cover the interest payments, even a smaller profit margin can result in a higher return on the equity invested by shareholders.

Leverage can increase return potential to equity investors

Example of a Leveraged Company vs. a Non-Leveraged Company

Read David Glancy’s latest insight into why leveraged companies are choosing to pay more for financing.

Product Information

Fund Fact Sheets (pdf)

Literature (pdf)

Consider these risks before investing: Growth stocks may be more susceptible to earnings disappointments, and value stocks may fail to rebound. Our focus on leveraged companies and the fund's "non-diversified" status can increase the fund's vulnerability to these factors. Our use of short selling may increase these risks.

Additional risks associated with Putnam Capital Spectrum Fund: Funds that invest in bonds are subject to certain risks including interest-rate risk, credit risk, and inflation risk. As interest rates rise, the prices of bonds fall. Long-term bonds are more exposed to interest-rate risk than short-term bonds. Unlike bonds, bond funds have ongoing fees and expenses. Lower-rated bonds may offer higher yields in return for more risk. Investments in small and/or midsize companies increase the risk of greater price fluctuations. Growth stocks may be more susceptible to earnings disappointments, and value stocks may fail to rebound. Long-term bonds are more exposed to interest-rate risk than short-term bonds. Unlike bonds, bond funds have ongoing fees and expenses. Our focus on leveraged companies and the fund's "non-diversified" status can increase the fund's vulnerability to these factors. Our use of short selling may increase these risks.

Investors should carefully consider the investment objectives, risks, charges, and expenses of a fund before investing. For a prospectus or summary prospectus containing this and other information for any Putnam fund or product, click on the prospectus section or call your financial representative or call Putnam at 1-800-225-1581. Please read carefully the prospectus if available before investing.

Putnam Retail Management