What’s a better way to balance a portfolio? Allocate risk rather than assets.

Putnam Dynamic Risk Allocation Fund combines flexible risk exposures with active decisions.

To improve on traditional balanced portfolios, we've developed a flexible and active approach that reduces the traditional reliance on equities. The goal is a better investment experience through full market cycles, measured by higher Sharpe ratios.

Why focus on higher Sharpe ratios?

A Sharpe ratio measures how well the return of an asset compensated an investor for the risk taken. The higher the Sharpe ratio, the greater the return per unit of risk.

Allocation by risk, not assets A risk-based allocation with a better balance of equity risk EXPAND

Equity risk is balanced with three other risk sources found in a range of global investments.

Risk Based Grid
Dynamic top-down allocation focused on risk-adjusted returns Dynamic top-down allocation focused on risk-adjusted returns EXPAND

The portfolio managers adjust the portfolio to harness more attractive Sharpe ratios.

Risk-adjusted returns (Sharpe ratios) vary over time

5-year rolling period Sharpe ratios, 12/31/89 - 12/31/12

Risk-adjusted Sharp Ratios

Source: Putnam. Equity represented by S&P 500 Total Return Index, credit represented by Barclays U.S. Corporate High Yield TR Index, interest rate represented by Barclays Intermediate U.S. Treasury Index, and inflation represented by S&P GSCI.

Active, bottom-up strategies within asset classes Active, bottom-up strategies within asset classes EXPAND

To add to performance and seek to reduce risk, the portfolio managers identify and implement individual strategies within asset classes.

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