PEYAX
Putnam LargeCap Value-A
Introduction to Putnam LargeCap Value-A
Putnam LargeCap Value-A (PEYAX) is a mutual fund designed to provide investors with a blend of current income and capital growth. As part of the Franklin Templeton Investments family, this fund primarily targets large-cap value stocks, making it an attractive option for those seeking stability and income in their investment portfolio. With a focus on growth and income, PEYAX aims to deliver consistent returns by investing in well-established companies with strong fundamentals. The fund’s strategy is to capitalize on undervalued stocks that have the potential for appreciation, while also providing a steady income stream through dividends.
At A Glance
Executive Summary
PEYAX offers a balanced approach with a 1.20% yield and strong large-cap value focus, outperforming peers with a 35.95% 1-year return.
Strong 1-year return of 35.95%. Balanced growth and income strategy. Diverse sector allocation with top holdings in stable industries.
Higher expense ratio at 0.90%. Negative alpha indicating underperformance against benchmark. Limited bond exposure may not suit conservative investors.
Performance Highlights: A Year of Impressive Returns
In the past year, Putnam LargeCap Value-A has delivered an impressive 35.95% return, significantly outperforming its benchmark, the S&P 500 Total Return Index, which posted a 37.62% return. This strong performance is indicative of the fund’s effective stock selection and strategic sector allocation. The fund’s annualized returns over five years stand at 14.36%, showcasing its ability to generate consistent growth over the long term. Despite a slightly higher expense ratio of 0.90%, the fund’s robust returns make it a compelling choice for investors seeking both growth and income.
Sector Allocation: A Diverse Portfolio
PEYAX boasts a well-diversified sector allocation, with significant investments in financials (17.88%), health care (17.33%), and industrials (12.77%). This diversification helps mitigate risk and provides exposure to various economic sectors, enhancing the fund’s potential for stable returns. The fund’s top holdings include industry giants like Walmart Inc, Exxon Mobil Corp, and Microsoft Corp, which contribute to its stability and income generation. By maintaining a balanced approach across different sectors, PEYAX ensures that it can capitalize on growth opportunities while minimizing exposure to sector-specific downturns.
Risk Metrics: Understanding the Fund’s Volatility
The risk metrics for Putnam LargeCap Value-A reveal a fund that is relatively stable, with a beta of 0.72, indicating lower volatility compared to the market. However, the fund’s alpha of -1.71% suggests that it has underperformed its benchmark on a risk-adjusted basis. The Sharpe ratio of -0.17 further highlights the fund’s challenges in delivering returns relative to its risk. Despite these metrics, the fund’s standard deviation of 2.96% and downside risk of 1.31% suggest that it maintains a relatively low level of volatility, making it suitable for investors with a moderate risk tolerance.
Comparative Analysis: How PEYAX Stacks Up Against Peers
When compared to similar funds, PEYAX holds its ground with a strong 1-year return of 35.95%. While its expense ratio of 0.90% is higher than some peers like Fidelity Adv Growth & Income-A (FGIRX) and SEI LargeCap SIMT-F (SLGAX), its yield of 1.20% is competitive. The fund’s beta of 0.72 indicates lower volatility compared to peers such as Russell Inv Tax-Managed US LargeCap-S (RETSX) and Victory Growth & Income (USGRX). This combination of strong returns and moderate risk makes PEYAX a viable option for investors seeking a balance between growth and income.
Top Holdings: A Focus on Stability and Income
The top holdings of Putnam LargeCap Value-A reflect its strategy of investing in stable, income-generating companies. With significant positions in Walmart Inc, Exxon Mobil Corp, and AbbVie Inc, the fund prioritizes companies with strong market positions and reliable dividend payouts. These holdings not only provide a steady income stream but also offer potential for capital appreciation. The fund’s focus on large-cap stocks ensures that it invests in companies with established track records and the ability to weather economic fluctuations, aligning with its objective of growth and income.
Market Cap and Asset Allocation: A Strategic Approach
PEYAX’s market cap allocation is heavily weighted towards large-cap (45.45%) and extra-large-cap (24.28%) stocks, reflecting its focus on established companies with strong fundamentals. The fund’s asset allocation is predominantly in U.S. equities (90.96%), with a small portion in non-U.S. equities (6.05%) and cash (2.99%). This strategic allocation allows the fund to capitalize on the stability and growth potential of large-cap stocks while maintaining liquidity through cash holdings. The minimal exposure to bonds and other asset classes aligns with the fund’s growth and income objectives, catering to investors seeking equity-driven returns.
Conclusion: Is PEYAX the Right Choice for You?
Putnam LargeCap Value-A stands out as a strong contender for investors seeking a blend of growth and income. With its impressive 1-year return of 35.95% and a diversified portfolio of large-cap value stocks, the fund offers a compelling option for those looking to balance risk and reward. While its expense ratio is higher than some peers, the fund’s strategic sector allocation and focus on stable, income-generating companies make it an attractive choice for value-focused investors. However, those with a conservative investment approach may need to consider the fund’s limited bond exposure and negative alpha. Overall, PEYAX is well-suited for investors with a moderate risk tolerance seeking long-term growth and income.
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Futher Reading
https://finance.yahoo.com/quote/PEYAX/”>Yahoo: Putnam LargeCap Value-A
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