Absolute return investing offers an alternative to traditional mutual funds that invest in stocks, bonds, or money market securities. By definition, absolute return strategies are independent of asset classes and can take steps to reduce market risk. Absolute return funds look for a wide variety of positive return opportunities and seek to reduce unwanted risks through the use of hedging strategies.
Absolute return funds pursue positive returns above inflation over three years with less risk than securities markets.
Seeking positive returns above inflation, as measured by T-bills, over a full market cycle of at least three years.
Chart does not represent the performance of Putnam Absolute Return Funds. For performance, click here. The 3-year annualized return of the BofA Merrill Lynch U.S. T-Bill Index through 12/31/13 was 0.12%. You cannot invest directly in an index.
The funds are not intended to outperform stocks and bonds during strong market rallies.
Consider these risks before investing: Our allocation of assets among permitted asset categories may hurt performance. The prices of stocks and bonds in the funds' portfolio may fall or fail to rise over extended periods of time for a variety of reasons, including both general financial market conditions and factors related to a specific issuer or industry. Our active trading strategy may lose money or not earn a return sufficient to cover associated trading and other costs. Our use of leverage obtained through derivatives increases these risks by increasing investment exposure. 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. Unlike bonds, funds that invest in bonds have ongoing fees and expenses. Lower-rated bonds may offer higher yields in return for more risk. Funds that invest in government securities are not guaranteed. Mortgage-backed securities are subject to prepayment risk. International investing involves certain risks, such as currency fluctuations, economic instability, and political developments. Additional risks may be associated with emerging-market securities, including illiquidity and volatility. Our use of derivatives may increase these risks by increasing investment exposure (which may be considered leverage) or, in the case of many over-the-counter instruments, because of the potential inability to terminate or sell derivatives positions and the potential failure of the other party to the instrument to meet its obligations. The funds may not achieve their goal, and they are not intended to be a complete investment program. The funds' effort to produce lower-volatility returns may not be successful and may make it more difficult at times for the fund to achieve their targeted return. In addition, under certain market conditions, the funds may accept greater volatility than would typically be the case, in order to seek their targeted return. For the 500 Fund and 700 Fund these risks also apply: REITs involve the risks of real estate investing, including declining property values. Commodities involve the risks of changes in market, political, regulatory, and natural conditions. Additional risks are listed in the funds prospectus. You can lose money by investing in the funds.