Mortgage Opportunities Fund

The Fund is not currently offered for sale outside the United States.

Inception date Benchmark Total net assets Product literature
April 7, 2015 BofA Merrill Lynch U.S. Treasury Bill Index $190.7M (As of November 30, 2017) Prospectus (PDF)
Strategy profile (PDF)
Annual report (PDF)
SAI (PDF)
  • Highlights
  • Performance
  • Holdings
  • Expenses

Goal

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

Product highlights

  • Our differentiated approach to risk allocation allows for active management of credit, prepayment, and liquidity risks in pursuit of alpha.
  • The portfolio's primary alpha sources are expected to be RMBS, CMBS, and CMOs, which should allow the managers to pursue a strategy that is relatively agnostic regarding the direction of the U.S. housing market.
  • MBS and various types of derivatives are expected to be used to hedge undesired interest-rate risk and volatility embedded in the CMO strategy, enabling the managers to focus on prepayment risks.
  • ABS are expected to play a minor role in the strategy; if used, the sector would also be expected to provide a source of alpha and diversification.

Investment team

Our portfolio managers are supported by a talented and seasoned team of seven mortgage specialists skilled in fundamental and quantitative research, and benefit from the insights of over 80 professionals in Putnam's Fixed Income group.

Michael V. Salm

Co-Head of Fixed Income

Brett S. Kozlowski, CFA

Portfolio Manager

Jatin Misra

Portfolio Manager

Investment opportunity

  • Securitized sectors offer more effective portfolio diversification potential than seemingly diversified allocations to equities, corporate credit, and emerging markets.
  • Private investors have an opportunity to become providers of capital to securitized sector, as traditional players (government agencies, banks) are seeing their roles diminish due to new regulation and legislation.
  • We believe this highly idiosyncratic market may continue to reward security selection.
  • The liquidity premium that currently exists in the securitized markets can be beneficial for long-term investors.
  • The range of yields across the portfolio's investment universe is currently attractive versus other high-yielding fixed-income sectors, including high-yield corporate bonds, bank loans, and emerging-market debt.

XBRL (ZIP)

Consider these risks before investing: The value of bonds in the fund's portfolio may fall or fail to rise over extended periods of time for a variety of reasons, including general financial market conditions, changing market perceptions of the risk of default, changes in government intervention in the financial and housing markets, and factors related to a specific issuer, industry, geography (such as a region of the United States), or sector (such as the housing or real estate markets). These factors may also lead to periods of high volatility and reduced liquidity in the 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). Interest-rate risk is greater for longer-term bonds, and credit risk is greater for below-investment-grade bonds. Mortgage-backed securities are subject to prepayment risk and the risk that they may increase in value less when interest rates decline and decline in value more 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 composed of 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.

Indices noted in the correlation chart include the Barclays U.S. Corporate Index, Barclays U.S. High-Yield Index, Barclays U.S. High-Yield Loan Index, Barclays U.S. Aggregate: AA, Barclays U.S. Aggregate: A, Barclays Aggregate: BBB, Barclays U.S. Aggregate: BB, Barclays U.S. Aggregate: B, Barclays Aggregate: CCC, and Barclays EM USD Sovereign Indices. Where there is no available representative index, data is based on a universe of securities selected by Putnam that are representative of various fixed-income sectors and subsectors within the mortgage market.