Active Allocation

Dynamic Asset Allocation Growth Fund (Class A)  (PAEAX)

A globally diversified fund pursuing growth

Dynamic Asset Allocation Growth Fund received an  Overall Morningstar Rating  of  

Q2 2020 | Dynamic Asset Allocation Funds Q&A

  • Equity and bond markets prove resilient even as COVID-19 takes a toll on economic growth.
  • Risks on the horizon include growth, corporate earnings, and a second wave of the virus.
  • We will continue to take a tactical approach and adjust the fund's investments as needed.

How were market conditions in the second quarter?

Global financial markets proved to be surprisingly resilient during the second quarter. The coronavirus pandemic and the collapse in oil prices had sent equity and fixed-income markets into a tailspin during the first few months of the year. Bouncing from their lows in March, the S&P 500 Index, a broad measure of stocks, rose 20.54% and the MSCI World Index (ND) gained 19.36% during the period. The market's resilience has also benefited bondholders. The rate-sensitive Bloomberg Barclays U.S. Aggregate Bond Index advanced 2.90% during the quarter.

Investors, however, are bracing for a global recession and a second wave of the coronavirus outbreak. A flight-to-safety trade has pushed the yields on U.S. Treasuries lower. The yield on the 10-year Treasury note ended the quarter at 0.66% compared with 0.70% on March 31. The Fed cut interest rates to near zero in mid-March, and unleashed a torrent of bond-buying programs to help stabilize the markets. These actions have increased liquidity in the bond markets and, in turn, stabilized spreads. The U.S. Congress has also pumped trillions of stimulus dollars into the economy. Central banks across Europe, Asia, and other regions also rolled out COVID-19 stimulus measures.

The three Dynamic Asset Allocation Funds gained during the quarter. The Conservative Fund, with its more fixed-income-centric investments, rose 7.83%. The more equity-centric Balanced Fund and Growth Fund advanced 13.41% and 17.24%, respectively. The funds performed largely in line with their custom benchmarks.

What strategies affected performance?

All of the Dynamic Asset Allocation funds finished with positive returns, reflecting equity market strength. During the quarter, we continued to actively adjust our allocation mix. On balance, the strategies were slightly underweight equity risk and interest-rate risk, and overweight credit risk. Overall, these asset allocation decisions detracted a bit. The funds were slightly underweight equity risk entering the period, having benefited significantly in the first quarter from defensive positioning. This underweight was a small detractor early in the second quarter as equity markets rebounded sharply from the lows in late March. Equity risk was moved back to neutral in mid-April. In fixed income, the funds were slightly underweight rate risk and overweight credit risk. Still, these positions did not have a significant impact on quarterly performance.

Our active implementation decisions added to benchmark-relative performance. Security selection within equities was positive. We saw strength across U.S. large-cap equity strategies with both quantitative and fundamental sleeves adding value. In the Growth Fund, emerging-market equity selection boosted performance. Opportunistic fixed income, specifically a strategy focused on structured mortgage credit, was also additive, and made back a large portion of first-quarter weakness.

What is the outlook for the remainder of 2020?

Markets rebounded in the second quarter as governments and central banks introduced very significant stimulus measures to reduce the damage caused by the economic shutdown. However, the biggest risk on the horizon is the impact of a coronavirus resurgence on economic growth, corporate earnings growth, and cash flows. Many investors are wary as numerous uncertainties and challenges remain. In equities, we believe that a second wave may not cause a meaningful pullback because investors are prepared. Typically, bad news must be unexpected in order to have a se-vere negative impact, and historically, equity markets have tended to shrug off second waves of pandemics.

In corporate credit, both investment-grade and high-yield bonds advanced and spreads tightened, mirroring the strength seen across equity markets. We believe credit markets will continue to improve as the Fed stands as a backstop to spread widening with the purchase of investment-grade corporates. Interest rates remained range bound. Fed Chair Jerome Powell signaled in June that the central bank plans to keep rates near zero for "as long as it takes to provide some relief and stability." Therefore, we expect short-term rates to remain near record lows this year.

Against this backdrop, we continue to have conviction in our investment strategies based on their strong long-term results. As for asset allocation, we will continue to take a tactical approach, adjusting the fund's exposure across vari-ous markets as conditions warrant. We will continue to monitor equity and fixed-income markets, and add securities when we see more attractive valuation levels.



The fund seeks capital appreciation.

Strategy and process

  • Global benchmark: The fund starts with a globally diversified benchmark with more efficient exposures relative to a typical 80/20 benchmark.
  • Tactical flexibility: The managers have the ability to tilt overall equity and fixed-income allocations +/-15% and shift exposures within each asset class.
  • Active implementation: Managers proactively research and determine the most efficient implementation for each asset class.

Fund price

Yesterday’s close 52-week high 52-week low
Net asset value $17.02
0.06% | $0.01

Consistency of positive performance over five years

Performance represents 5-year returns in rolling quarter-end periods since inception.

Performance shown does not reflect the effects of any sales charges. Note that returns of 0.00% are counted as positive periods. For complete fund performance, please click on the performance tab.


Best 5-year annualized return

(for period ending 12/31/99)


Worst 5-year annualized return

(for period ending 03/31/09)


Average 5-year annualized return

Fund facts as of 07/31/20

Total net assets
Turnover (fiscal year end)
Dividend frequency
Number of holdings
Fiscal year-end
CUSIP / Fund code
746444108 / 0043
Inception date
Asset Allocation
Open to new investors

Management team

Chief Investment Officer, Global Asset Allocation
Co-Head of Global Asset Allocation
Co-Head of Global Asset Allocation
Portfolio Manager

Manager commentary | Q2 2020

Day traders not driving market prices

Jason Vaillancourt, Co-Head of Global Asset Allocation, CFA, explains day trading and its effect on stock valuations.


  • Total return (%) as of 06/30/20

  • Annual performance as of 06/30/20

Annualized Total return (%) as of 06/30/20

Annualized performance 1 yr. 3 yrs. 5 yrs. 10 yrs.
Before sales charge 1.51% 4.94% 5.49% 9.55%
After sales charge -4.33% 2.89% 4.25% 8.90%
Russell 3000 Index 6.53%10.04%10.03%13.72%
Putnam Growth Blended Benchmark 4.50%7.41%7.55%10.33%

Current performance may be lower or higher than the quoted past performance, which cannot guarantee future results. Share price, principal value, and return will vary, and you may have a gain or loss when you sell your shares. Performance assumes reinvestment of distributions and does not account for taxes. Returns before sales charge do not reflect the current maximum sales charges as indicated below. Had the sales charge been reflected, returns would be lower. Returns at public offering price (after sales charge) for class A and class M shares reflect the current maximum initial sales charges of 5.75% and 3.50% for equity funds and 4.00% and 3.25% for income funds (2.25% for class A of Putnam Floating Rate Income Fund, Short-Term Municipal Income, Short Duration Bond Fund, and Fixed Income Absolute Return Fund), respectively. Class B share returns reflect the applicable contingent deferred sales charge (CDSC), which is 5% in the first year, declining to 1% in the sixth year, and is eliminated thereafter (except for Putnam Floating Rate Income Fund, Putnam Short Duration Bond Fund, Putnam Fixed Income Absolute Return Fund, and Putnam Short-Term Municipal Income Fund, which is 1% in the first year, declining to 0.5% in the second year, and is eliminated thereafter). Class C shares reflect a 1% CDSC the first year that is eliminated thereafter. Performance for class B, C, M, N, R, and Y shares prior to their inception is derived from the historical performance of class A shares, adjusted for the applicable sales charge (or CDSC) and, except for class Y shares, the higher operating expenses for such shares (with the exception of Putnam Tax-Free High Yield Fund and Putnam AMT-Free Municipal Fund, which are based on the historical performance of class B shares). Performance for class A, C, R6, and Y shares of Putnam Mortgage Opportunities Fund before their inception is derived from the historical performance of class I shares, which have been adjusted for the applicable sales charge (or CDSC) and the higher operating expenses for such shares. Returns at public offering price (after sales charge) for class N shares reflect the current maximum initial sales charge of 1.50%. Class R5/R6 shares, available to qualified employee-benefit plans only, are sold without an initial sales charge and have no CDSC. Class Y shares are generally only available for corporate and institutional clients and have no initial sales charge. Performance for class R5/R6 shares before their inception are derived from the historical performance of class Y shares, which have not been adjusted for the lower expenses; had they, returns would have been higher. Class A shares of Putnam money market funds have no initial sales charge. For a portion of the period, some funds had expenses limitations or had been sold on a limited basis with limited assets and expenses, without which returns would be lower.

Performance snapshot

  Before sales charge After sales charge
1 mt. as of 07/31/20 5.03% -1.01%
YTD as of 08/10/20 2.59% -3.31%

Risk-adjusted performance as of 06/30/20

Sharpe ratio (3 yrs.) 0.23

Volatility as of 06/30/20

Standard deviation (3 yrs.) 14.38%

Lipper rankings as of 06/30/20

Time period Rank/Funds in category Percentile ranking
1 yr. 312/475 66%
3 yrs. 284/446 64%
5 yrs. 218/402 55%
10 yrs. 50/297 17%
Lipper category: Mixed-Asset Trgt Alloc Gro Fds

Morningstar Ratings as of 06/30/20

Time period Funds in category Morningstar Rating
Overall 309
3 yrs. 309
5 yrs. 278
10 yrs. 194
Morningstar category: Allocation--70% to 85% Equity


Record/Ex dividend date 12/18/19
Payable date 12/20/19
Income $0.259
Extra income --
Short-term cap. gain --
Long-term cap. gain --

Lipper rankings are based on total return without sales charge relative to all share classes of funds with similar objectives as determined by Lipper. Past performance is not indicative of future results.

The Morningstar RatingTM 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.

The up-market capture ratio is used to evaluate how well an investment manager performed relative to an index during periods when that index has risen. The ratio is calculated by dividing the manager’s returns by the returns of the index during the up-market, and multiplying that factor by 100. The down-market capture ratio is used to evaluate how well an investment manager performed relative to an index during periods when that index has dropped. The ratio is calculated by dividing the manager’s returns by the returns of the index during the down-market and multiplying that factor by 100.


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Apple Inc Sedol 2046251 2.91%
Amazon.Com Inc Sedol 2000019 2.60%
Microsoft Corp Sedol 2588173 2.60%
Gnma Gii30 Tba 03.5000 07/01/2050 1.48%
Alphabet Inc-Cl A Sedol Byvy8g0 1.18%
Fnma Fn30 Tba Umbs 02.5000 07/01/2050 1.10%
Adobe Inc Sedol 2008154 0.97%
Jpmorgan Chase & Co Sedol 2190385 0.95%
Procter & Gamble Co/The Sedol 2704407 0.81%
Fnma Fn30 Tba Umbs 04.0000 07/01/2050 0.80%
Top 10 holdings, percent of portfolio 15.40%

Portfolio composition as of 06/30/20

U.S. large-cap equity 48.07%
International equity 14.63%
U.S. Investment-grade bonds 12.37%
U.S. small- and mid-cap equity 10.73%
U.S. High-yield bonds 6.00%
Emerging-markets equity 5.83%
U.S. money markets 2.38%

Fixed income statistics as of 06/30/20

Average effective maturity 5.65 yrs.
Average effective duration 0.79 yrs.

Fund characteristics will vary over time.

Due to rounding, percentages may not equal 100%.

Consider these risks before investing: Allocation of assets among asset classes may hurt performance. The value of investments in the fund's portfolio may fall or fail to rise over extended periods of time for a variety of reasons, including general economic, political or financial market conditions, investor sentiment and market perceptions, government actions, geopolitical events or changes, and factors related to a specific issuer, asset class, geography, industry or sector. These and other factors may lead to increased volatility and reduced liquidity in the fund's portfolio holdings. International investing involves currency, economic, and political risks. Emerging-market securities carry illiquidity and volatility risks. 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. Funds that invest in government securities are not guaranteed. Mortgage-backed investments, unlike traditional debt investments, are also subject to prepayment risk, which means that they may increase in value less than other bonds when interest rates decline and decline in value more than other bonds when interest rates rise. Bond investments are subject to interest-rate risk (the risk of bond prices falling if interest rates rise) and credit risk (the risk of an issuer defaulting on interest or principal payments). Default risk is generally higher for non-qualified mortgages. Interest-rate risk is generally greater for longer-term bonds, and credit risk is generally greater for below-investment-grade bonds. Unlike bonds, funds that invest in bonds have fees and expenses. The use of derivatives may increase these risks by increasing investment exposure (which may be considered leverage) or, in the case of over-the-counter instruments, because of the potential inability to terminate or sell derivatives positions and the potential failure of the other party to the instrument to meet its obligations. Our investment techniques, analyses, and judgments may not produce the outcome we intend. The investments we select for the fund may not perform as well as other securities that we do not select for the fund. We, or the fund's other service providers, may experience disruptions or operating errors that could have a negative effect on the fund. You can lose money by investing in the fund.


Expense ratio

Class A Class B Class C Class R Class R5 Class R6 Class Y
Total expense ratio 1.07% 1.82% 1.82% 1.32% 0.80% 0.70% 0.82%
What you pay 1.07% 1.82% 1.82% 1.32% 0.80% 0.70% 0.82%

Sales charge

 Breakpoint Class A Class B Class C Class R Class R5 Class R6 Class Y
$0-$49,999 5.75% / 5.00% 0.00% / 4.00% 0.00% / 1.00% -- -- -- --
$50,000-$99,999 4.50% / 3.75% 0.00% / 4.00% 0.00% / 1.00% -- -- -- --
$100,000-$249,999 3.50% / 2.75% -- 0.00% / 1.00% -- -- -- --
$250,000-$499,999 2.50% / 2.00% -- 0.00% / 1.00% -- -- -- --
$500,000-$999,999 2.00% / 1.75% -- 0.00% / 1.00% -- -- -- --
$1M-$4M 0.00% / 1.00% -- -- -- -- -- --
$4M-$50M 0.00% / 0.50% -- -- -- -- -- --
$50M+ 0.00% / 0.25% -- -- -- -- -- --


  Class A (sales for $1,000,000+) Class B Class C Class R Class R5 Class R6 Class Y
0 to 9 mts. 1.00% 5.00% 1.00% -- -- -- --
9 to 12 mts. 1.00% 5.00% 1.00% -- -- -- --
2 yrs. 0.00% 4.00% 0.00% -- -- -- --
3 yrs. 0.00% 3.00% 0.00% -- -- -- --
4 yrs. 0.00% 3.00% 0.00% -- -- -- --
5 yrs. 0.00% 2.00% 0.00% -- -- -- --
6 yrs. 0.00% 1.00% 0.00% -- -- -- --
7+ yrs. 0.00% 0.00% 0.00% -- -- -- --

Trail commissions

  Class A Class B Class C Class R Class R5 Class R6 Class Y
  0.25% 0.25% 1.00% 0.50% 0.00% 0.00% 0.00%

For sales and trail commission information on purchases over $1 million and participant-directed qualified retirement plans, see a Putnam fund prospectus and the statement of additional information.

The Russell 3000 Index is an unmanaged index of the 3,000 largest U.S. companies. The Putnam Growth Blended Benchmark is a benchmark administered by Putnam Management, comprising 60% the Russell 3000 Index, 15% the MSCI EAFE Index (ND), 15% the Bloomberg Barclays U.S. Aggregate Bond Index, 5% the JPMorgan Developed High Yield