Having trouble finding a Mutual Fund Bond fund? Putnam Diversified Income Y (PDVYX) is a potential starting point. PDVYX holds a Zacks Mutual Fund Rank of 2 (Buy), which is based on nine forecasting factors like size, cost, and past performance.
History of Fund/Manager
PDVYX finds itself in the Putnam Funds family, based out of Canton, MA. Since Putnam Diversified Income Y made its debut in October of 1998, PDVYX has garnered more than $723.91 million in assets. The fund is currently managed by a team of investment professionals.
Performance
Obviously, what investors are looking for in these funds is strong performance relative to their peers. PDVYX has a 5-year annualized total return of 0.2% and it sits in the bottom third among its category peers. Investors who prefer analyzing shorter time frames should look at its 3-year annualized total return of -2.73%, which places it in the bottom third during this time-frame.
When looking at a fund's performance, it is also important to note the standard deviation of the returns. The lower the standard deviation, the less volatility the fund experiences. The standard deviation of PDVYX over the past three years is 9.3% compared to the category average of 15.57%. Over the past 5 years, the standard deviation of the fund is 7.58% compared to the category average of 13.55%. This makes the fund less volatile than its peers over the past half-decade.
This fund has a beta of -0.1, meaning that it is less volatile than a broad market index of fixed income securities. Taking this into account, PDVYX has a negative alpha of -0.39, which measures performance on a risk-adjusted basis.
Ratings
Investors should also consider a bond's rating, which is a grade ( 'AAA' to 'D' ) given to a bond that indicates its credit quality. With this letter scale in mind, PDVYX has 46.54% in high quality bonds rated at least 'AA' or higher, while its junk bond component-bonds rated 'BB' or below-is at 34.48%. This means that the fund has an average quality of A, and focuses on high quality securities.
Expenses
As competition heats up in the mutual fund market, costs become increasingly important. Compared to its otherwise identical counterpart, a low-cost product will be an outperformer, all other things being equal. Thus, taking a closer look at cost-related metrics is vital for investors. In terms of fees, PDVYX is a no load fund. It has an expense ratio of 0.76% compared to the category average of 0.83%. So, PDVYX is actually cheaper than its peers from a cost perspective.
Investors need to be aware that with this product, the minimum initial investment is $0; each subsequent investment has no minimum amount.
Bottom Line
Overall, Putnam Diversified Income Y ( PDVYX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively weak performance, better downside risk, and lower fees, Putnam Diversified Income Y ( PDVYX ) looks like a great potential choice for investors right now.
This could just be the start of your research on PDVYXin the Mutual Fund Bond category. Consider going to www.zacks.com/funds/mutual-funds for additional information about this fund, and all the others that we rank as well for additional information. If you want to check out our stock reports as well, make sure to go to Zacks.com to see all of the great tools we have to offer, including our time-tested Zacks Rank.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
