We build funds by thinking about the ultimate source of income:
Rates
Interest-rate risk (also called term structure risk) is a bond's sensitivity to changes in the level, slope, and shape of interest rates.
Credit
Credit risk is the possibility a borrower may fail to make payments to investors.
Prepayment
Prepayment risk involves borrowers paying off debt early, typically in a falling-rate environment, which reduces the number of payments and amount of interest received by investors.
Liquidity
Liquidity risk refers to the relative difficulty of trading a security in a reasonable amount of time.
We believe attractive opportunities exist outside of the index
The Bloomberg U.S. Aggregate Bond Index is a benchmark for many bond funds, but our active teams believe many sectors in the index have high interest-rate risk and unattractive total return potential. Our analysts look outside the index for better fixed-income investment opportunities.
Sources: Barclays, Bloomberg, JP Morgan, Putnam as of 3/31/21.
Data is provided for informational use only. Past performance is no guarantee of future results. All spreads are in basis points and measure option-adjusted yield spread relative to comparable maturity U.S. Treasuries except for high yield and emerging market debt, which are spread to worst, non-agency RMBS and mezzanine CMBS, which are loss-adjusted spreads to swaps calculated using Putnam's projected assumptions on defaults and severities, and agency IO, which is calculated using assumptions derived from Putnam's prepayment model. Agencies are represented by Bloomberg U.S. Agency Index. Agency MBS are represented by Bloomberg U.S. MBS Index. IG corporates are represented by Bloomberg U.S. Corporate Index. CMBS is represented by both Agency and Non-Agency CMBS that are eligible for inclusion in the Bloomberg U.S. Aggregate Bond Index. High yield is represented by JPMorgan Developed High Yield Index. Emerging-market debt is represented by the JPM EMBI Global Diversified Index. Non-agency RMBS is estimated using average market level of a sample of securities backed by various types of non-agency mortgage collateral (excluding prime securities) and credit risk transfer securities. Current OAS for mezzanine CMBS is estimated from a scenario-weighted average spread among baskets of Putnam-monitored CMBS securities and synthetic (CMBX) indices. Agency IO is estimated from a basket of Putnam-monitored interest-only (IO) and inverse IO securities. Option-adjusted spread (OAS) measures the yield over duration equivalent Treasuries for securities with different embedded options.
We can find diverse opportunities because we have a team with diverse experience
Over 80 fixed income professionals analyze investments across specialized teams
- Credit Research
- Corporate & Tax-exempt Credit
- Macro & Sovereign Credit
- Short Term Liquid Markets
- Structured Credit
- Portfolio Construction
- Risk Management
We offer funds with different benchmarks and portfolio construction approaches
| Funds | YIELDS 30-day SEC yields as of 05/31/22 |
INTEREST RATE RISK Average effective duration as of 05/31/22 |
Overall Morningstar RatingTM as of 05/31/22 |
|---|---|---|---|
| Diversified Income Trust | 5.61% | 0.96 yrs. | (out of 300 in category) |
| Floating Rate Income Fund | 3.84% | -0.01 yrs. | (out of 232 in category) |
| Global Income Trust |
3.21% with subsidy 2.81% without subsidy |
6.20 yrs. | (out of 193 in category) |
| High Yield Fund | 6.01% | 4.16 yrs. | (out of 631 in category) |
| Income Fund |
3.70% with subsidy 3.60% without subsidy |
6.00 yrs. | (out of 568 in category) |
| Short Duration Bond Fund | 2.90% | 1.85 yrs. | (out of 550 in category) |
30-day SEC yield is defined as the standardized annual yield based on the most recent 30-day period. It is calculated in accordance with current Securities and Exchange Commission regulations and is subject to change.
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 ten-year (if applicable) Morningstar Rating metrics. The weights are: 100% three-year rating for 36 to 59 months of total returns, 60% five-year rating/40% three-year rating for 60 to 119 months of total returns, and 50% ten-year rating/30% five-year rating/20% three-year rating for 120 or more months of total returns. While the ten-year overall star rating formula seems to give the most weight to the ten-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.