Small Cap Growth Fund  (PNSAX)

Seeking to capitalize on growing small companies

Objective

The fund seeks capital appreciation.

Fund price

Yesterday’s close 52-week high 52-week low
Net asset value $36.09
0.78% | $0.28
$36.17
10/06/17
$27.68
11/03/16
Historical fund price

Fund facts as of 09/30/17

Total net assets
$155.74M
Turnover (fiscal year end)
127%
Dividend frequency
Annually
Number of holdings
80
Fiscal year end
June
CUSIP / Fund code
746763549 / 0052
Inception Date
12/31/97
Category
Growth
Open to new investors
Ticker
PNSAX

Management team


Portfolio Manager

Strategy and process

  • Small companies: Often overlooked by Wall Street analysts, the stocks of small companies can represent attractive opportunities.
  • A focus on growth: Small companies tend to be flexible and innovative, and can often expand their earnings at faster rates than larger companies.
  • A disciplined process: The portfolio manager uses a disciplined bottom-up fundamental investment process that focuses on quality and growth.

Literature


Longevity and medical costs – education for the great unknowns
Understanding the impact of longevity and medical costs on savings requires education and a proactive approach to saving.
Why a meaningful near-term market correction is unlikely
2017 is a rare year without a stock market correction of at least 5%, but that doesn't make a correction more likely in the fourth quarter.
How the Japan election may influence global interest rates
The Japan election could have consequences for the future leadership of the Bank of Japan and the country's impact on global interest rate trends.

Performance

  • Total return (%) as of 09/30/17

  • Annual performance as of 09/30/17

Annualized performance 1 yr. 3 yrs. 5 yrs. 10 yrs.
Before sales charge 18.10% 8.98% 12.56% 5.50%
After sales charge 11.31% 6.85% 11.23% 4.88%
Russell 2000 Growth Index 20.98% 12.17% 14.28% 8.47%

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. To obtain the most recent month-end performance, visit putnam.com. 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 Absolute Return 500 Fund and 700 Fund, and 4.00% and 3.25% for income funds (1.00% and 0.75% for Putnam Floating Rate Income Fund, Putnam Absolute Return 100 Fund and 300 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 Absolute Return 100 Fund and 300 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, 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). 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 09/30/17 4.39 % -1.61 %
YTD as of 10/19/17 14.04 % 7.49 %

Risk-adjusted performance as of 09/30/17

Alpha (3 yrs.) -2.99
Sharpe ratio (3 yrs.) 0.58
Treynor ratio (3 yrs.) 8.87
Information ratio (3 yrs.) -1.08

Volatility as of 09/30/17

Standard deviation (3 yrs.) 14.94%
Beta 0.98
R-squared 0.96

Capture ratio as of 09/30/17

Up-market (3 yrs.) 90.99
Down-market (3 yrs.) 104.02

Lipper rankings as of 09/30/17

Small-Cap Growth Funds Percentile ranking Rank/Funds in category
1 yr. 71% 386/550
3 yrs. 73% 360/493
5 yrs. 54% 239/448
10 yrs. 90% 302/337

Morningstar ratings as of 09/30/17

Small Growth Rating Funds in category
Overall (597)
3 yrs. (245)
5 yrs. (532)
10 yrs. (399)

Distributions

Record/Ex dividend date 12/07/16
Payable date 12/09/16
Income $0.001
Extra income $0.0
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 09/30/17

Summit Materials 2.43%
John Bean Technologies Corp 2.23%
Trex 2.22%
Logmein 2.17%
Live Nation Entertainment 2.14%
Bright Horizons Family Solutions 2.14%
Littelfuse 2.13%
Siteone Landscape Supply 2.10%
Five Below 2.08%
Grand Canyon Education 2.08%
Top 10 holdings, percent of portfolio 21.72%

Full portfolio holdings as of 06/30/17

SUMMIT MATERIALS INC -CL A 2.23%
JOHN BEAN TECHNOLOGIES CORP 2.20%
HEALTHEQUITY INC 2.16%
LOGMEIN INC 2.09%
FIVE BELOW 2.05%
GLOBUS MEDICAL INC - A 2.04%
HEALTHSOUTH CORP 1.94%
SITEONE LANDSCAPE SUPPLY INC 1.91%
REALPAGE INC 1.90%
MACOM TECHNOLOGY SOLUTIONS H 1.86%
PHYSICIANS REALTY TRUST 1.84%
GRAND CANYON EDUCATION INC 1.82%
LITTELFUSE INC 1.82%
PRESTIGE BRANDS HOLDINGS INC 1.82%
BRIGHT HORIZONS FAMILY SOLUT 1.77%
CARETRUST REIT INC 1.77%
VEEVA SYSTEMS INC-CLASS A 1.75%
BWX TECHNOLOGIES INC 1.74%
LIVE NATION ENTERTAINMENT IN 1.74%
J2 GLOBAL INC 1.71%
PINNACLE FINANCIAL PARTNERS 1.71%
CAMBREX CORP 1.70%
TREX COMPANY INC 1.69%
HOME BANCSHARES INC 1.64%
TRANSUNION 1.61%
WINGSTOP INC 1.59%
INSTALLED BUILDING PRODUCTS 1.57%
MAXIMUS INC 1.53%
ESCO TECHNOLOGIES INC 1.52%
HOSTESS BRANDS INC 1.49%
CRITEO SA-SPON ADR 1.47%
PATRICK INDUSTRIES INC 1.44%
EVERCORE PARTNERS INC-CL A 1.36%
GODADDY INC - CLASS A 1.36%
EVOLENT HEALTH INC - A 1.23%
CLOVIS ONCOLOGY INC 1.21%
INSULET CORP 1.21%
EVERBRIDGE INC 1.18%
SAIA INC 1.13%
PROOFPOINT INC 1.12%
RINGCENTRAL INC-CLASS A 1.10%
QAD INC-A 1.08%
2U INC 1.06%
MASTEC INC 1.06%
TPI COMPOSITES INC 1.06%
PENUMBRA INC 1.04%
PACIRA PHARMACEUTICALS INC 1.03%
NEXSTAR MEDIA GROUP INC-CL A 1.01%
FERRO CORP 1.00%
Q2 HOLDINGS INC 1.00%
KINSALE CAPITAL GROUP INC 0.97%
LIBERTY MEDIA CORP-BRAVES A 0.96%
ADVANCED ENERGY INDUSTRIES 0.93%
CEVA INC 0.93%
K2M GROUP HOLDINGS INC 0.91%
MARCUS CORPORATION 0.89%
GENMARK DIAGNOSTICS INC 0.87%
INTEGRA LIFESCIENCES HOLDING 0.87%
KAPSTONE PAPER AND PACKAGING 0.87%
ENVESTNET INC 0.86%
PROS HOLDINGS INC 0.83%
H AND E EQUIPMENT SERVICES INC 0.79%
JAZZ PHARMACEUTICALS PLC 0.75%
PACIFIC PREMIER BANCORP INC 0.74%
HESKA CORP 0.73%
CARBONITE INC 0.71%
INSTRUCTURE INC 0.71%
QUANTA SERVICES INC 0.69%
ACLARIS THERAPEUTICS INC 0.61%
CARROLS RESTAURANT GROUP INC 0.58%
ACCELERON PHARMA INC 0.56%
REPLIGEN CORP 0.55%
NXSTAGE MEDICAL INC 0.53%
AGIOS PHARMACEUTICALS INC 0.50%
ARRAY BIOPHARMA INC 0.49%
MARINEMAX INC 0.45%
HEALTHCARE SERVICES GROUP 0.40%
MEDICINES COMPANY 0.40%
WISDOMTREE INVESTMENTS INC 0.40%
CARDIOME PHARMA CORP 0.29%

Prior top 10 holdings

Top 10 holdings as of 09/30/17
Summit Materials
John Bean Technologies Corp
Trex
Logmein
Live Nation Entertainment
Bright Horizons Family Solutions
Littelfuse
Siteone Landscape Supply
Five Below
Grand Canyon Education
Holdings represent 21.72% of portfolio
Top 10 holdings as of 08/31/17
Logmein
Summit Materials
Realpage
Littelfuse
Bright Horizons Family Solutions
Live Nation Entertainment
John Bean Technologies Corp
Bwx Technologies
Grand Canyon Education
Trex
Holdings represent 21.06% of portfolio
Top 10 holdings as of 07/31/17
Logmein
Summit Materials
John Bean Technologies Corp
Realpage
Five Below
Healthequity
Littelfuse
Siteone Landscape Supply
Globus Medical
Trex
Holdings represent 20.25% of portfolio
Top 10 holdings as of 06/30/17
Summit Materials
John Bean Technologies Corp
Healthequity
Logmein
Five Below
Globus Medical
Healthsouth Corp
Siteone Landscape Supply
Realpage
Macom Technology Solutions Holdings
Holdings represent 20.38% of portfolio

Portfolio composition as of 09/30/17

Common stock 98.13%
Cash and net other assets 1.87%

Equity statistics as of 09/30/17

Median market cap $2.86B
Weighted average market cap $3.14B
Price to book 5.24
Price to earnings 47.57

Fund characteristics will vary over time.

Due to rounding, percentages may not equal 100%.

Consider these risks before investing: Investments in small and/or midsize companies increase the risk of greater price fluctuations. Growth stocks may be more susceptible to earnings disappointments, and the market may not favor growth-style investing. Stock prices may fall or fail to rise over time for a variety of reasons, including general financial market conditions and factors related to a specific issuer or industry. You can lose money by investing in the fund.

Top Industry Sectors as of 09/30/17

Health care 25.08%
Information technology 24.92%
Industrials 18.39%
Consumer discretionary 15.43%
Materials 4.84%
Financials 4.45%
Consumer staples 2.77%
Real estate 2.25%
Cash and net other assets 1.87%

The unclassified sector (where applicable) includes exchange traded funds and other securities not able to be classified by sector.

Sectors will vary over time. Represents the equity portion of the portfolio.


Expenses

Expense ratio

Class A Class B Class C Class M Class R Class R6 Class Y
Total expense ratio 1.26% 2.01% 2.01% 1.76% 1.51% 0.81% 1.01%
What you pay 1.26% 2.01% 2.01% 1.76% 1.51% 0.81% 1.01%

Sales charge

Investment Breakpoint Class A Class B Class C Class M Class R Class R6 Class Y
$0-$49,999 5.75% 0.00% 0.00% 3.50% -- -- --
$50,000-$99,999 4.50% 0.00% 0.00% 2.50% -- -- --
$100,000-$249,999 3.50% -- 0.00% 1.50% -- -- --
$250,000-$499,999 2.50% -- 0.00% 1.00% -- -- --
$500,000-$999,999 2.00% -- 0.00% 1.00% -- -- --
$1M-$4M 0.00% -- -- -- -- -- --
$4M-$50M 0.00% -- -- -- -- -- --
$50M+ 0.00% -- -- -- -- -- --

CDSC

  Class A (sales for $1,000,000+) 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. 0.00% 5.00% 1.00% -- -- -- --
2 yrs. -- 4.00% 0.00% -- -- -- --
3 yrs. -- 3.00% 0.00% -- -- -- --
4 yrs. -- 3.00% 0.00% -- -- -- --
5 yrs. -- 2.00% 0.00% -- -- -- --
6 yrs. -- 1.00% 0.00% -- -- -- --
7+ yrs. -- 0.00% 0.00% -- -- -- --

The Russell 2000 Growth Index is an unmanaged index of those companies in the small-cap Russell 2000 Index chosen for their growth orientation. You cannot invest directly in an index.

Consider these risks before investing: Investments in small and/or midsize companies increase the risk of greater price fluctuations. Growth stocks may be more susceptible to earnings disappointments, and the market may not favor growth-style investing. Stock prices may fall or fail to rise over time for a variety of reasons, including general financial market conditions and factors related to a specific issuer or industry. You can lose money by investing in the fund.