Putnam Investments is one of the oldest mutual fund companies. It started offering funds to investors in 1937 and manages $177 billion in assets and offers over 100 different mutual funds to its investors as of Sept. 2018.
A number of its funds are good candidates for retirement savings, providing investors with income, stability, growth and diversification. The balancing between the funds depends on the individual investor’s needs. A general rule of thumb for investors approaching retirement is to take a more conservative approach towards income while investors saving for retirement should be more focused on growth. IRA or Roth IRA investors receive the extra tax-advantaged treatment of portfolio earnings as an added benefit.
The following funds are appropriate for use in or out of a retirement plan.
Equity Income Fund (PEYAX)
An ideal fund for a retirement diversification portfolio is the Equity Income Fund. The fund invests in large U.S. companies that pay dividends and are undervalued. It looks for companies that have the potential for long-term appreciation in share value and the ability to steadily increase dividends. Dividends are key as roughly 40% of the long-term total return of the S&P 500 is attributable to dividends.
This highly rated fund has returned an annualized 11.35% over the last five years (before the sales charge), as of Sept. 30, 2018. It has a yield of 1.29%, as of Nov. 5, 2018. It is worthy of consideration for investor funds and is highly suitable for either a Roth IRA or traditional IRA.
George Putnam Balanced Fund (PGEOX)
The Balanced Fund has been offering investors a mix of stocks and bonds since 1937. It has a long history of steady returns and sets the basis for much of Putnam’s investment philosophy. Investing in bonds may be a bad idea when interest rates are rising – bond values drop as interest rates rise. The majority of the bonds in the fund’s portfolio are shorter-term notes. When these notes mature, the money can be reinvested in new bonds at the higher rate with no loss of principal. This positioning shows proper management.
Of the fund’s holdings, 60% consists of stocks of large domestic corporations. The fund is highly diversified across many sectors and in numerous companies. Its five-year annualized return is 8.69% (before the sales charge), as of Sept. 30, 2018. Its current yield is 1.32%, as of Nov. 5, 2018.
Retirement Income Fund Lifestyle 1 (PRMAX)
The Retirement Income Fund Lifestyle 1 is intended for those who are nearing or are already in retirement that are looking to take distributions from their savings while preserving capital. The fund uses a conservative approach and favors assets with historically lower volatility, such as fixed income and absolute return, over equities.
The fund has nearly 75% of its holdings in fixed-income investments and has generated a five-year annualized return of 3.12% (before the sales charge), as of Sept. 30, 2018. It offers investors a 1.75% yield, as of Nov. 5, 2018.