Mortgage Securities Fund (Class A) (PGSIX)
Seeking opportunities through mortgage-backed securities
Highlights
Objective
The fund seeks as high a level of current income as Putnam Management believes is consistent with preservation of capital.
Strategy and process
- Broad securitized opportunities:The fund invests in mortgage sectors, including agency MBS and CMOs, and non-agency RMBS and CMBS, and ABS.
- Higher potential returns: By investing in mortgage-backed bonds, the fund can offer the potential for higher returns than an investment strategy focused only on agency MBS.
- Leading research: The fund's portfolio managers use proprietary models to assist in the evaluation of mortgage-backed bonds and to manage the fund's interest-rate risk.
Fund price |
Yesterday’s close | 52-week high | 52-week low |
|---|---|---|---|
| Net asset value |
$12.10
-0.08% | $-0.01 |
$12.86
12/05/17 |
$12.10
11/16/18 |
Fund facts as of 10/31/18
$976.65M
1,403%
Monthly
868
September
746885102 / 0017
02/08/84
Taxable Income
PGSIX
Management team
Manager commentary | Q3 2018
Finding opportunity in vintage mortgages
Portfolio Manager Brett Kozlowski explains why the commercial mortgage strategy avoids newer issues.
Literature
Fund documents |
| Prospectuses/SAI |
| Fact Sheet (Y share) (PDF) |
| Annual Fund Report (PDF) |
| Semiannual Fund Report (PDF) |
Performance
Consistency of positive performance over five years
Performance shown above does not reflect the effects of any sales charges. Click on the dots to see specific returns in each five-year period as of the date revealed. Note that returns of 0.00% are counted as positive periods. For complete fund performance, please see below.
12.45%
Best 5-year annualized return
(for period ending 06/30/89)
0.98%
Worst 5-year annualized return
(for period ending 03/31/18)
6.12%
Average 5-year annualized return
Total return (%) as of 09/30/18
Annual performance as of 09/30/18
Annualized Total return (%) as of 09/30/18
| Annualized performance | 1 yr. | 3 yrs. | 5 yrs. | 10 yrs. |
|---|---|---|---|---|
| Before sales charge | -0.67% | 0.56% | 1.23% | 4.19% |
| After sales charge | -4.65% | -0.80% | 0.40% | 3.76% |
| Bloomberg Barclays U.S. MBS Index | -0.92% | 0.98% | 2.02% | 3.33% |
| BBG Barc GNMA-BBG Barc U.S. MBS Linked Benchmark | -0.99% | 0.85% | 1.82% | 3.37% |
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 Putnam Multi-Asset Absolute Return Fund, and 4.00% and 3.25% for income funds (2.25% and 0.75% for Putnam Short Duration Bond Fund and 1.00% and 0.75% for Putnam Floating Rate Income Fund, Putnam Fixed Income Absolute Return Fund, and Putnam Short-Term Municipal Income 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, T1, 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). 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, M, and T1 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 10/31/18 | -1.08 % | -5.04 % | |
| YTD as of 11/16/18 | -1.92 % | -5.84 % | |
Yield
| Distribution rate before sales charge as of 11/16/18 |
4.86% |
|---|---|
| Distribution rate after sales charge as of 11/16/18 |
4.67% |
| 30-day SEC yield with subsidy as of 10/31/18 (after sales charge) |
5.20% |
| 30-day SEC yield without subsidy as of 10/31/18 (after sales charge) |
5.07% |
Risk-adjusted performance as of 10/31/18
| Sharpe ratio (3 yrs.) | -0.44 |
|---|---|
| Information ratio (3 yrs.) | -0.27 |
Volatility as of 10/31/18
| Standard deviation (3 yrs.) | 1.52% |
|---|---|
| Beta | 0.46 |
| R-squared | 0.32 |
Lipper rankings as of 10/31/18
| Time period | Rank/Funds in category | Percentile ranking |
|---|---|---|
| 1 yr. | 94/122 | 77% |
| 3 yrs. | 91/113 | 80% |
| 5 yrs. | 85/96 | 88% |
| 10 yrs. | 19/65 | 29% |
Morningstar Ratings™ as of 10/31/18
| Time period | Funds in category | Morningstar Rating™ |
|---|---|---|
| Overall | 887 | |
| 3 yrs. | 887 | |
| 5 yrs. | 785 | |
| 10 yrs. | 568 |
Distributions
| Record/Ex dividend date | 11/14/18 |
|---|---|
| Payable date | 11/20/18 |
| Income | $0.049 |
| 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
Top 10 holdings as of 10/31/18
| Fnma Fn30 Tba 03.0000 11/01/2048 | 9.30% |
|---|---|
| Gnma Gii30 Tba 03.0000 11/01/2048 | 8.61% |
| Gnma Gii30 Tba 04.5000 12/01/2048 | 7.45% |
| Fnma Fn30 Tba 04.0000 11/01/2048 | 6.35% |
| Gnma Gii30 Tba 03.5000 11/01/2048 | 6.13% |
| Gnma Gii30 Tba 05.0000 11/01/2048 | 6.01% |
| Fnma Fn30 Tba 05.5000 11/01/2048 | 5.64% |
| Fncl 2.50 04/01/2042 | 5.47% |
| Gnma Gii30 Tba 04.0000 11/01/2048 | 4.64% |
| Gnma Gii30p 783937 03.5000 11/20/2043 | 4.50% |
| Top 10 holdings, percent of portfolio | 64.10% |
Fixed income statistics as of 10/31/18
| Average effective maturity | 11.61 yrs. |
|---|---|
| Average effective duration | 5.05 yrs. |
| Average yield to maturity | 7.49% |
| Average coupon | 6.97% |
| Average price | $81.66 |
Sector weightings as of 10/31/18
| Cash investments | Non-cash investments | Total portfolio | ||||
|---|---|---|---|---|---|---|
| Weight | Spread duration | Weight | Spread duration | Weight | Spread duration | |
| Agency pass-through | 27.25% | 1.88 | 57.02% | 3.51 | 84.27% | 5.39 |
| Commercial MBS | 5.90% | 0.19 | 37.19% | 1.10 | 43.09% | 1.29 |
| Agency CMO | 41.71% | 1.71 | 0.85% | 0.04 | 42.56% | 1.75 |
| Residential MBS (non-agency) | 19.55% | 1.02 | 0.00% | 0.00 | 19.55% | 1.02 |
| Asset-backed securities (ABS) | 1.94% | 0.02 | 0.00% | 0.00 | 1.94% | 0.02 |
| Interest rate swaps | 0.00% | 0.00 | 0.00% | -2.84 | 0.00% | -2.84 |
| Net cash | 3.65% | 0.00 | 0.00% | 0.00 | 3.65% | 0.00 |
Spread duration is displayed in years and reflects the contribution by sector to the portfolio's total spread duration with the exception of the Treasury and Interest-rate swap sectors where effective duration is displayed. Spread duration estimates the price sensitivity of a specific sector or asset class to a 100 basis-point movement, 1%, (either widening or narrowing) in its yield spread relative to Treasuries. Effective duration provides a measure of a portfolio's interest-rate sensitivity. The longer a portfolio's duration, the more sensitive the portfolio is to shifts in the interest rates. Allocations may not total 100% of net assets because the table includes the notional value of derivatives (the economic value for purposes of calculating periodic payment obligations), in addition to the market value of securities.
Maturity detail as of 10/31/18
| 0 - 1 yr. | -53.51% |
|---|---|
| 1 - 5 yrs. | 16.67% |
| 5 - 10 yrs. | 127.86% |
| 10 - 15 yrs. | 8.98% |
Quality rating as of 10/31/18
| AAA | 134.56% |
|---|---|
| AA | 0.10% |
| A | 0.90% |
| BBB | 5.18% |
| BB | 5.38% |
| B | 6.55% |
| CCC and Below | 1.67% |
| Not Rated | -54.34% |
Fund characteristics will vary over time.
Due to rounding, percentages may not equal 100%.
Consider these risks before investing: Funds that invest in government securities are not guaranteed. Mortgage-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. 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 greater for longer-term bonds, and credit risk is greater for below-investment-grade bonds. 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. Unlike bonds, funds that invest in bonds have fees and expenses. Bond prices may fall or fail to rise over time for several reasons, including general financial market conditions; changing market perceptions (including perceptions about the risk of default and expectations about monetary policy or interest rates); changes in government intervention in the financial and housing markets; and factors related to a specific issuer or industry. These and other factors may lead to periods of increased volatility and reduced liquidity in the fund's portfolio holdings. 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 B | Class C | Class M | Class R | Class R6 | Class Y |
|---|---|---|---|---|---|---|---|
| Total expense ratio | 0.89% | 1.62% | 1.64% | 1.13% | 1.14% | 0.51% | 0.64% |
| What you pay† | 0.75% | 1.48% | 1.50% | 0.99% | 1.00% | 0.37% | 0.50% |
† 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 04/20/19
Sales charge
| Investment Breakpoint | Class A | Class B | Class C | Class M | Class R | Class R6 | Class Y |
|---|---|---|---|---|---|---|---|
| $0-$49,999 | 4.00% | 0.00% | 0.00% | 3.25% | -- | -- | -- |
| $50,000-$99,999 | 4.00% | 0.00% | 0.00% | 2.25% | -- | -- | -- |
| $100,000-$249,999 | 3.25% | -- | 0.00% | 1.25% | -- | -- | -- |
| $250,000-$499,999 | 2.50% | -- | 0.00% | 1.00% | -- | -- | -- |
| $500,000-$999,999 | 0.00% | -- | -- | -- | -- | -- | -- |
| $1M-$4M | 0.00% | -- | -- | -- | -- | -- | -- |
| $4M-$50M | 0.00% | -- | -- | -- | -- | -- | -- |
| $50M+ | 0.00% | -- | -- | -- | -- | -- | -- |
CDSC
| Class A (sales for $500,000+) | Class B | Class C | Class M | Class R | 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% | -- | -- | -- | -- |
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). The Bloomberg Barclays GNMA Index is an unmanaged index of Government National Mortgage Association bonds. The Bloomberg Barclays GNMA - Bloomberg Barclays U.S. MBS Linked Benchmark represents performance of the Bloomberg Barclays GNMA Index through April 18, 2018 and performance of the Bloomberg Barclays U.S. MBS Index thereafter. You cannot invest directly in an index.
Consider these risks before investing: Funds that invest in government securities are not guaranteed. Mortgage-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. 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 greater for longer-term bonds, and credit risk is greater for below-investment-grade bonds. 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. Unlike bonds, funds that invest in bonds have fees and expenses. Bond prices may fall or fail to rise over time for several reasons, including general financial market conditions; changing market perceptions (including perceptions about the risk of default and expectations about monetary policy or interest rates); changes in government intervention in the financial and housing markets; and factors related to a specific issuer or industry. These and other factors may lead to periods of increased volatility and reduced liquidity in the fund's portfolio holdings. 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.