Is PDVYX a Strong Bond Fund Right Now?
If investors are looking at the Mutual Fund Bond fund category, make sure to pass over Putnam Diversified Income Y (PDVYX). PDVYX holds a Zacks Mutual Fund Rank of 4 (Sell), which is based on various forecasting factors like size, cost, and past performance.
History of Fund/Manager
Putnam Funds is based in Canton, MA, and is the manager of PDVYX. Since Putnam Diversified Income Y made its debut in October of 1998, PDVYX has garnered more than $508.58 million in assets. A team of investment professionals is the fund's current manager.
Performance
Investors naturally seek funds with strong performance. This fund carries a 5-year annualized total return of 0.22%, and it sits in the bottom third among its category peers. But if you are looking for a shorter time frame, it is also worth looking at its 3-year annualized total return of -2.02%, which places it in the bottom third during this time-frame.
It is important to note that the product's returns may not reflect all its expenses. Any fees not reflected would lower the returns. Total returns do not reflect the fund's [%] sale charge. If sales charges were included, total returns would have been lower.
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. Over the past three years, PDVYX's standard deviation comes in at 5.07%, compared to the category average of 13.16%. Over the past 5 years, the standard deviation of the fund is 7.86% compared to the category average of 13.9%. This makes the fund less volatile than its peers over the past half-decade.
With a beta of 0.21, this fund is less volatile than a broad market index of fixed income securities. Taking this into account, PDVYX has a negative alpha of -0.83, 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 60.64% in high quality bonds rated at least 'AA' or higher, while its junk bond component-bonds rated 'BB' or below-is at 21.69%. This means that the fund has an average quality of AA, and focuses on high quality securities.
Expenses
Costs are increasingly important for mutual fund investing, and particularly as competition heats up in this market. And all things being equal, a lower cost product will outperform its otherwise identical counterpart, so taking a closer look at these metrics is key for investors. In terms of fees, PDVYX is a no load fund. It has an expense ratio of 0.79% compared to the category average of 1%. PDVYX is actually cheaper than its peers when you consider factors like cost.
While the minimum initial investment for the product is $0, investors should also note that there is no minimum for each subsequent investment.
Fees charged by investment advisors have not been taken into considiration. Returns would be less if those were included.
Bottom Line
Overall, even with its comparatively weak performance, better downside risk, and lower fees, Putnam Diversified Income Y ( PDVYX ) has a low Zacks Mutual Fund rank, and therefore looks a somewhat weak choice for investors right now.
Your research on the Mutual Fund Bond segment doesn't have to stop here. You can check out all the great mutual fund tools we have to offer by going to www.zacks.com/funds/mutual-funds to see the additional features we offer 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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