Multi-sector income

Income strategies that invest outside the aggregate index

As you move outside of the benchmark ... you get away from interest-rate risk and into other types of risk that we think are more attractive.

— BILL KOHLI, CIO, Fixed Income
Putnam Income Fund PNCYX

This fund received a Overall Morningstar Rating™

Putnam Diversified Income Trust PDVYX

This fund received a Overall Morningstar Rating™

Putnam Income Fund (PNCYX)

An all-weather strategy favoring investment-grade bonds

Average historic duration (6/30/15–6/30/18)

4.56 Income Fund

5.79 BBG Barclays U.S. Aggregate Bond Index

Correlation to the index

0.51

The outcome of this outside-the-index approach is a fund with positive but lower correlation historical correlation to the index.

Portfolio managers

Michael Salm

Co-Head of Fixed Income

29 years of investing | 21 years at Putnam

Brett Kozlowski, CFA

Portfolio Manager

21 years of investing | 10 years at Putnam

Emily Shanks

Portfolio Manager

19 years of investing | 6 years at Putnam

Putnam Diversified Income Trust (PDVYX)

A nontraditional income strategy with increased
flexibility

Average historic duration (6/30/15–6/30/18)

-0.68 Diversified Income Trust

5.79 BBG Barclays U.S. Aggregate Bond Index

Correlation to the index

-0.36

The outcome of this outside-the-index approach is a fund with negative historical correlation to the index.

Portfolio managers

D. William Kohli

CIO, Fixed Income

30 years of investing | 24 years at Putnam

Michael Atkin

Portfolio Manager

30 years of investing | 21 years at Putnam

Robert Davis, CFA

Portfolio Manager

19 years of investing | 19 years at Putnam

Brett Kozlowski, CFA

Portfolio Manager

21 years of investing | 10 years at Putnam

Michael Salm

Co-Head of Fixed Income

29 years of investing | 21 years at Putnam

Paul Scanlon, CFA

Co-Head of Fixed Income

32 years of investing | 19 years at Putnam

Two flexible income strategies that invest outside the index

We view interest-rate risk as only one source of potential returns, and it isn’t always the most attractive. That’s why we use a risk- based approach focused on four key areas in pursuit of alpha generation: rates, credit, prepayment, and liquidity.

Product brochure (PDF)
Interest rates and trade create headwinds

Interest rates and trade create headwinds

While the outlook for global growth is favorable, challenges to fixed-income markets are increasing.

Fixed Income OutlookFIO | Q2 2018

Duration measures the sensitivity of bond prices to interest-rate changes. A negative duration indicates that a security or fund may be poised to increase in value when interest rates increase. For correlation, numbers less than 1 indicate a diminishing correlation. The maximum correlation is 1 and the minimum is 0, with values between 0 and -1 indicating negative correlation.

The Morningstar Rating for funds, or "star rating", is calculated for managed products (including mutual funds, variable annuity and variable life subaccounts, exchange-traded funds, closed-end funds, and separate accounts) with at least a three-year history. Exchange-traded funds and open-ended mutual funds are considered a single population for comparative purposes. It is calculated based on a Morningstar Risk-Adjusted Return measure that accounts for variation in a managed product's monthly excess performance, placing more emphasis on downward variations and rewarding consistent performance. The top 10% of products in each product category receive 5 stars, the next 22.5% receive 4 stars, the next 35% receive 3 stars, the next 22.5% receive 2 stars, and the bottom 10% receive 1 star. The Overall Morningstar Rating for a managed product is derived from a weighted average of the performance figures associated with its three-, five-, and 10-year (if applicable) Morningstar Rating metrics. The weights are: 100% three-year rating for 36-59 months of total returns, 60% five-year rating/40% three-year rating for 60-119 months of total returns, and 50% 10-year rating/30% five-year rating/20% three-year rating for 120 or more months of total returns. While the 10-year overall star rating formula seems to give the most weight to the 10-year period, the most recent three-year period actually has the greatest impact because it is included in all three rating periods. Ratings do not take into account the effects of sales charges and loads.