How to Understand Putnam Mutual Funds

Putnam Investments is a Boston-based money management firm and one of the largest mutual fund administrator in America. In 2005, Putnam managed nearly 200 billion dollars worth of investments. They offer four different levels of investments. Clients can tailor their choices to their purposes and their tolerance of risk.

Instructions

Difficulty: Moderately Easy

Understand Growth Funds

1. Know that growth funds are those mutual funds that incur higher risks but offer higher rewards.
2. Decide how aggressive you want your growth fund to be. The most aggressive of these is the OTC and Emerging Growth Fund, which focuses on small, new companies that have high potential and high risks.
3. Know that you can also invest in a more conservative fund. The most conservative fund at this level is Health Sciences Trust. Focused on the health care industry, it is diversified within that category.

Understand Blend Funds

4. Understand that blend funds are designed to balance risk and return. They consist of stocks that are believed to be undervalued, plus stocks that are considered to be more stable, such as utilities. Consider, as examples, the Global Natural Resources and the Utilities Growth and Income Fund.

Understand Value Funds

5. Know that value funds are Putnam's oldest products. They seek to balance stocks and bonds to provide both capital gains and long-term stability. Many of these holdings are convertible securities, which offer the interest of bonds with the versatility of stocks. Consider the George Putnam Fund of Boston and the Small Cap Value Fund.

Understand Income Funds

6. Realize that taxable income funds include instruments such as money markets and high-yield bonds to ensure a steady flow of income.
7. Know that tax-free income funds generally consist of federal, state or municipal bonds.
8. Know that risk ratings and interest rates vary from state to state.

Become an Investor

9. Decide which of the above types of mutual fund best suits your goals for income flow, growth and risk tolerance. Make this decision with the help of your financial advisor, who can then invest your funds appropriately.