Mortgage Opportunities Fund (Class Y)  (PMOYX)

A dynamic approach to securitized investing

Highlights

Objective

The portfolio seeks to maximize total return consistent with what Putnam believes to be prudent risk.

Strategy and process

  • Multiple securitized sectors:Investing in residential and commercial MBS and collateralized mortgage obligations, the portfolio managers can pursue strategies independent of the direction of the U.S. housing market.
  • Portfolio diversification:Securitized sectors offer effective diversification potential to portfolios with equity, corporate credit, and emerging-market debt exposures.
  • Dynamic risk allocation:Our differentiated approach actively allocates to credit, prepayment, and liquidity risks while deemphasizing interest-rate risk.

Fund price

Yesterday’s close 52-week high 52-week low
Net asset value $10.88
0.00% | $0.00
$10.88
12/09/19
$10.52
07/02/19
Historical fund price

Fund facts as of 11/30/19

Total net assets
$303.47M
Turnover (fiscal year end)
1,012%
Dividend frequency (view rate)
Monthly*
Number of holdings
864
Fiscal year-end
May
CUSIP / Fund code
74676A477 / 1886
Inception date
07/01/19
Class Y  
Category
Fixed Income
Open to new investors
Ticker
PMOYX

* On June 28, 2019, the Board of Trustees of Putnam Mortgage Opportunities Fund voted to change the frequency of the fund’s distributions from annual to monthly. The first monthly distribution is expected to take place in August 2019.

Management team

Co-Head of Fixed Income
Portfolio Manager
Portfolio Manager



Performance

  • Total return (%) as of 09/30/19

  • Annual performance as of 09/30/19

Annualized Total return (%) as of 09/30/19

Annualized performance 1 yr. 3 yrs. 5 yrs. Life (inception: 07/01/19 )
Before sales charge 5.61% 6.39% -- 4.54%
After sales charge N/A N/A N/A N/A
ICE BofAML U.S. Treasury Bill Index 2.46%1.54%1.00%--
Bloomberg Barclays U.S. MBS Index 7.80%2.32%2.80%--

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, 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 11/30/19 1.43% -
YTD as of 12/09/19 9.60% -

Yield

Distribution rate before sales charge
as of 12/09/19
3.64%
Distribution rate after sales charge
as of 12/09/19
3.64%
30-day SEC yield with subsidy
as of 11/29/19
3.41%
30-day SEC yield without subsidy
as of 11/29/19
3.26%

Distributions

Record/Ex dividend date 11/18/19
Payable date 11/20/19
Income $0.033
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.


Holdings

Fnma Fn30 Tba Umbs 03.0000 12/01/2049 18.66%
Fnma Fn30 Tba Umbs 04.0000 11/01/2049 5.30%
Gnr 2018-153 Ai Io 04.5000 09/16/2045 0.92%
Fnr 2019-41 Sb Io 04.2273 08/25/2049 0.84%
Gnr 2019-83 Sl Io 04.2536 07/20/2049 0.81%
Cas 2018-C05 1b1 06.0728 01/25/2031 0.75%
Gnr 2019-6 Sm Io 04.2036 01/20/2049 0.72%
Gnma Gii30 Tba 04.5000 11/01/2049 0.71%
Cas 2017-C07 2m2 04.3228 05/25/2030 0.71%
Fnr 2019-28 S Io 04.2273 06/25/2049 0.71%
Top 10 holdings, percent of portfolio 30.14%



Fixed income statistics as of 10/31/19

Average effective maturity 4.10 yrs.
Average effective duration 0.22 yrs.
Average yield to maturity 5.54%
Average coupon 4.68%

Maturity detail as of 10/31/19

0 - 1 yr. 11.37%
1 - 5 yrs. 47.44%
5 - 10 yrs. 41.19%

Quality rating as of 10/31/19

AAA 65.55%
AA 1.99%
A 8.46%
BBB 5.87%
BB 4.54%
B 5.49%
CCC and Below 3.51%
Not Rated 4.59%

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 (such as a region of the United States), industry, or sector, such as the housing or real estate markets. These and other factors may lead to increased volatility and reduced liquidity in the fund's portfolio holdings or in relevant markets. 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. Mortgage-and asset-backed securities are subject to prepayment risk and the risk 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. The fund's investments in mortgage-backed securities and asset-backed securities, and in certain other securities and derivatives, may be or become illiquid. The fund's concentration in an industry group comprising privately issued mortgage-backed securities and mortgage-backed securities issued or guaranteed by the U.S. government or its agencies or instrumentalities may make the fund's net asset value more susceptible to economic, market, political, and other developments affecting the housing or real estate markets. 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. Our use of short selling may result in losses if the securities appreciate in value. 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. To-be-announced (TBA) mortgage commitments, if any, are included based on their issuer ratings. Ratings may vary over time. Cash, derivative instruments, and net other assets are shown in the not-rated category. Payables and receivables for TBA mortgage commitments are included in the not-rated category and may result in negative weights. The fund itself has not been rated by an independent rating agency.


Expenses

Expense ratio

Class A Class C Class Y
Total expense ratio 1.08% 1.83% 0.83%
What you pay† 0.87% 1.62% 0.62%

† The fund's expense ratio is taken from the most recent prospectus and is subject to change. What you pay reflects Putnam Management's decision to contractually limit expenses through 09/30/20

Sales charge

 Breakpoint Class A Class C Class Y
$0-$49,999 4.00% / 3.50% 0.00% / 1.00% --
$50,000-$99,999 4.00% / 3.50% 0.00% / 1.00% --
$100,000-$249,999 3.25% / 2.75% 0.00% / 1.00% --
$250,000-$499,999 2.50% / 2.00% 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 C Class Y
0 to 9 mts. 1.00% 1.00% --
9 to 12 mts. 1.00% 1.00% --
2 yrs. 0.00% 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 C Class Y
  0.25% 1.00% 0.00%
  NA NA NA
  NA NA NA

The ICE BofAML U.S. Treasury Bill Index is an unmanaged index that tracks the performance of U.S. dollar denominated U.S. Treasury Bills publicly issued in the U.S. domestic market. Qualifying securities must have a remaining term of at least one month to final maturity and a minimum amount outstanding of $1 billion. The Bloomberg Barclays U.S. MBS Index covers the mortgage-backed pass-through securities of Ginnie Mae (GNMA), Fannie Mae (FNMA), and Freddie Mac (FHLMC). 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 (such as a region of the United States), industry, or sector, such as the housing or real estate markets. These and other factors may lead to increased volatility and reduced liquidity in the fund's portfolio holdings or in relevant markets. 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. Mortgage-and asset-backed securities are subject to prepayment risk and the risk 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. The fund's investments in mortgage-backed securities and asset-backed securities, and in certain other securities and derivatives, may be or become illiquid. The fund's concentration in an industry group comprising privately issued mortgage-backed securities and mortgage-backed securities issued or guaranteed by the U.S. government or its agencies or instrumentalities may make the fund's net asset value more susceptible to economic, market, political, and other developments affecting the housing or real estate markets. 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. Our use of short selling may result in losses if the securities appreciate in value. 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. To-be-announced (TBA) mortgage commitments, if any, are included based on their issuer ratings. Ratings may vary over time. Cash, derivative instruments, and net other assets are shown in the not-rated category. Payables and receivables for TBA mortgage commitments are included in the not-rated category and may result in negative weights. The fund itself has not been rated by an independent rating agency.