Floating Rate Income Fund (Class Y)  (PFRYX)

An income fund that can benefit from higher interest rates

Floating Rate Income Fund (PFRYX)

Highlights

Objective

The fund seeks high current income. Preservation of capital is a secondary goal.

Strategy and process

  • Floating-rate bank loans The fund primarily invests in bank loans with yields that are set at a margin above short-term interest rates and adjust when rates change.
  • Guard against rising interest rates Bank loans have historically performed well amid rising interest rates because their yields adjust higher and become more attractive.
  • Backed by team research The fund's experienced managers select a diverse range of loans using careful credit research.

Fund price

 Yesterday’s close 52-week high 52-week low
Net asset value $8.29
0.00% | $0.00 		$8.31
01/25/21 		$8.02
11/02/20
(Optional)

Fund facts as of 08/31/21

Total net assets
$438.84M
Turnover (fiscal year end)
32%
Dividend frequency (view rate)
Monthly
Number of issues
234
Fiscal year-end
February
CUSIP / Fund code
746763226 / 1857
Inception date
10/04/05
Class Y  
Category
Fixed Income
Open to new investors
Ticker
PFRYX

Management team

Paul D. Scanlon, CFA

Co-Head of Corporate and Tax-exempt Credit

Norman P. Boucher

Portfolio Manager

Robert L. Salvin

Co-Head of Corporate and Tax-exempt Credit

Literature

Consider stable value funds for DC plans
For retirement plan sponsors, choosing a capital preservation option can be challenging. We offer insights about stable value funds and their performance.
Bond markets in flux on rates and inflation outlook
Global financial markets were mixed during the second quarter.
China leads, other emerging markets lag
China is leading the economic recovery among emerging-market countries, buoyed by stimulus and stringent COVID-19 measures.

Performance

  • Total return (%) as of 06/30/21

  • Annual performance as of 06/30/21

Annualized Total return (%) as of 06/30/21

Annualized performance 1 yr. 3 yrs. 5 yrs. 10 yrs.
Before sales charge 8.44% 2.93% 3.76% 3.74%
After sales charge N/A N/A N/A N/A
S&P/LSTA Leveraged Loan Index 11.65%4.40%4.99%4.39%

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. The "before sales charge" performance does not reflect the current maximum sales charges, which we explain below. If performance did reflect the charges, it would be lower. The "after sales charge" performance (or returns at public offering price) varies by share class and fund. For class A and class M shares, the current maximum initial sales charges are 5.75% and 3.50% for equity funds and 4.00% and 3.25% for income funds, respectively (with these exceptions: 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). Class B share performance reflects the applicable contingent deferred sales charge (CDSC), which is 5% in the first year, declines 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; for these funds, the CDSC is 1% in the first year, declines to 0.5% in the second year, and is eliminated thereafter). Class C share performance reflects 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 by adjusting for the applicable sales charge (or CDSC) and, except for class Y shares, the higher operating expenses for such shares (note, for two funds — Putnam Tax-Free High Yield Fund and Putnam Strategic Intermediate Municipal Fund performance prior to inception is 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 has been adjusted for the applicable sales charge (or CDSC) and the higher operating expenses for such shares. The "after sales charge" performance (at public offering price) for class N shares reflects the current maximum initial sales charge of 1.50%. Class R, R3, R4, R5, and R6 shares, which are 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 R3 and R4 shares prior to their inception is derived from the historical performance of class Y shares by adjusting for the higher operating expenses for such shares. Performance for class R5 shares before their inception is derived from the historical performance of class Y shares, which has not been adjusted for the lower expenses; had it been adjusted, performance would be higher (with the exception of the RetirementReady Maturity, 2025, 2030, 2035, and 2040 Funds, for which performance is derived from the historical performance of class R6 shares and has been adjusted for the higher operating expenses for such shares; and the RetirementReady 2045, 2050, 2055, and 2060 Funds, for which performance is derived from the historical performance of class R6 shares and has not been adjusted for the lower expenses; had it been adjusted, performance would be higher). Performance for class R6 shares before their inception is derived from the historical performance of class Y shares, which has not been adjusted for the lower operating expenses; had it been adjusted, performance would be higher. For a portion of the period, some funds had expenses limitations or had been sold on a limited basis with limited assets and expenses. Had these limits not been in place, performance would be lower.

Performance snapshot

  Before sales charge After sales charge
1 mt. as of 08/31/21 0.36% -
YTD as of 09/17/21 2.62% -

Yield

Distribution rate before sales charge
as of 09/17/21		 2.95%
Distribution rate after sales charge
as of 09/17/21		 2.95%
30-day SEC yield as of 08/31/21 2.76%

Risk-adjusted performance as of 08/31/21

Sharpe ratio (3 yrs.) 0.20
Information ratio (3 yrs.) -1.00

Volatility as of 08/31/21

Standard deviation (3 yrs.) 7.62%
Beta 0.87
R-squared 0.98

Fixed income statistics as of 08/31/21

Average effective duration 0.01 yrs.

Lipper rankings as of 08/31/21

Time period Rank/Funds in category Percentile ranking
1 yr. 214/242 89%
3 yrs. 153/225 68%
5 yrs. 133/204 65%
10 yrs. 46/122 38%
Lipper category: Loan Participation Funds

Morningstar Ratings™ as of 08/31/21

Time period Funds in category Morningstar Rating™
Overall 229
3 yrs. 229
5 yrs. 207
10 yrs. 123
Morningstar category: Bank Loan

Distributions

Accrual days 30
Accrual start date 08/02/21
Accrual end date 08/31/21
Payable date 08/31/21
Income $0.01974603
Extra taxable income --
Dividend frequency Monthly

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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Holdings

Parexel 1.19%
Asurion 0.96%
Altice Numericable 0.96%
Quikrete 0.91%
CRC Escrow Issuer LLC/CRC Finco 0.87%
Clarios global 0.87%
Vertical Holdco 0.84%
UKG 0.82%
Hub International 0.81%
Directv Financing 0.80%
Top 10 holdings, percent of portfolio 9.03%

Fixed income statistics as of 08/31/21

Average effective maturity 5.04 yrs.
Average effective duration 0.01 yrs.
Average yield to maturity 4.34%
Average coupon 3.89%

Maturity detail as of 08/31/21

0 - 1 yr. 3.55%
1 - 5 yrs. 46.17%
5 - 10 yrs. 50.06%
Over 15 yrs. 0.22%

Quality rating as of 08/31/21

BBB 6.09%
BB 30.86%
B 54.07%
CCC and Below 1.91%
Not Rated 0.76%
Net cash 6.31%

Fund characteristics will vary over time.

Due to rounding, percentages may not equal 100%.

Consider these risks before investing: 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, geography, industry or sector. These and other factors may lead to increased volatility and reduced liquidity in the fund's portfolio holdings. Lower-rated bonds may offer higher yields in return for more risk. 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). 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. Risks associated with derivatives include increased investment exposure (which may be considered leverage) and, in the case of over-the-counter instruments, the potential inability to terminate or sell derivatives positions and the potential failure of the other party to the instrument to meet its obligations. Floating-rate loans may reduce, but not eliminate, interest-rate risk. These loans are typically secured by specific collateral or assets of the issuer (so that holders of the loan, such as the fund, have a priority claim on those assets in the event of the issuer's default or bankruptcy). The value of collateral may be insufficient to meet the issuer's obligations, and the fund's access to collateral may be limited by bankruptcy or other insolvency laws. 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.

Credit qualities are shown as a percentage of the fund's net assets. A bond rated BBB or higher (A-3 or higher, for short-term debt) is considered investment grade. This chart reflects the highest security rating provided by one or more of Standard & Poor’s, Moody’s, and Fitch. Ratings and portfolio credit quality will vary over time. Net cash, if any, represent the market value weights of cash, derivatives, and short-term securities in the portfolio. The fund itself has not been rated by an independent rating agency.

Top industry sectors as of 08/31/21

Consumer cyclicals 24.47%
Capital goods 13.19%
Technology 12.93%
Basic materials 9.59%
Health care 9.52%
Communication services 6.84%
Net Cash 6.31%
Financials 5.53%
Consumer staples 4.24%
 
Other		 10.89%
Non-cash investments 3.51%
Energy 3.45%
Transportation 1.96%
Utilities 1.75%
Conglomerates 0.22%

Allocations may not total 100% of net assets because the table includes the notional value of certain derivatives (the economic value for purposes of calculating periodic payment obligations), in addition to the market value of securities.

Sectors will vary over time.

Country allocation as of 08/31/21

United States 98.62%
Luxembourg 1.10%
Canada 0.28%

Expenses

Expense ratio

 Class A Class B Class C Class R Class R6 Class Y
Total expense ratio 1.04% 1.24% 1.79% 1.29% 0.70% 0.79%
What you pay 1.04% 1.24% 1.79% 1.29% 0.70% 0.79%

Sales charge

 Breakpoint Class A Class B Class C Class R Class R6 Class Y
$0-$49,999 2.25% / 2.00% 0.00% / 1.00% 0.00% / 1.00% -- -- --
$50,000-$99,999 2.25% / 2.00% 0.00% / 1.00% 0.00% / 1.00% -- -- --
$100,000-$249,999 1.75% / 1.50% -- 0.00% / 1.00% -- -- --
$250,000-$499,999 1.25% / 1.00% -- 0.00% / 1.00% -- -- --
$500,000-$999,999 0.00% / 1.00% -- -- -- -- --
$1M-$4M 0.00% / 1.00% -- -- -- -- --
$4M-$50M 0.00% / 0.50% -- -- -- -- --
$50M+ 0.00% / 0.25% -- -- -- -- --

CDSC

  Class A (sales for $500,000+) Class B Class C Class R Class R6 Class Y
0 to 9 mts. 1.00% 1.00% 1.00% -- -- --
9 to 12 mts. 1.00% 1.00% 1.00% -- -- --
2 yrs. 0.00% 0.50% 0.00% -- -- --
3 yrs. 0.00% -- 0.00% -- -- --
4 yrs. 0.00% -- 0.00% -- -- --
5 yrs. 0.00% -- 0.00% -- -- --
6 yrs. 0.00% -- 0.00% -- -- --
7+ yrs. 0.00% -- 0.00% -- -- --

Trail commissions

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

For sales and trail commission information on purchases over $500,000 and participant-directed qualified retirement plans, see a Putnam fund prospectus and the statement of additional information.

The S&P/LSTA Leveraged Loan Index is an unmanaged index of U.S. leveraged loans. You cannot invest directly in an index.

Consider these risks before investing: 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, geography, industry or sector. These and other factors may lead to increased volatility and reduced liquidity in the fund's portfolio holdings. Lower-rated bonds may offer higher yields in return for more risk. 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). 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. Risks associated with derivatives include increased investment exposure (which may be considered leverage) and, in the case of over-the-counter instruments, the potential inability to terminate or sell derivatives positions and the potential failure of the other party to the instrument to meet its obligations. Floating-rate loans may reduce, but not eliminate, interest-rate risk. These loans are typically secured by specific collateral or assets of the issuer (so that holders of the loan, such as the fund, have a priority claim on those assets in the event of the issuer's default or bankruptcy). The value of collateral may be insufficient to meet the issuer's obligations, and the fund's access to collateral may be limited by bankruptcy or other insolvency laws. 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.

Credit qualities are shown as a percentage of the fund's net assets. A bond rated BBB or higher (A-3 or higher, for short-term debt) is considered investment grade. This chart reflects the highest security rating provided by one or more of Standard & Poor’s, Moody’s, and Fitch. Ratings and portfolio credit quality will vary over time. Net cash, if any, represent the market value weights of cash, derivatives, and short-term securities in the portfolio. The fund itself has not been rated by an independent rating agency.