PFCXX
Putnam Money Market-C
Introduction to Putnam Money Market-C
The Putnam Money Market-C (PFCXX) is a mutual fund designed to provide investors with a high level of current income that is exempt from federal income taxes. Managed by Franklin Templeton Investments, this fund is categorized under Money Market funds, which are known for their stability and liquidity. With an expense ratio of 0.47%, PFCXX aims to offer a balance between income generation and prudent investing. The fund’s primary objective is to maintain a stable net asset value while providing tax-exempt income, making it an attractive option for conservative investors seeking to preserve capital while earning a modest return.
At A Glance
Executive Summary
PFCXX offers a 5.06% yield with tax-exempt income, suitable for conservative investors. It maintains a competitive expense ratio of 0.47%.
Tax-exempt income potential Stable investment with no max drawdown Competitive yield of 5.06%
Limited growth potential Higher expense ratio than some peers Negative alpha and Sharpe ratio
Yield and Income Potential
One of the standout features of the Putnam Money Market-C is its yield, which currently stands at 5.06%. This yield is particularly appealing for investors looking for tax-exempt income, as it provides a steady stream of returns without the burden of federal taxes. Compared to its benchmark, the BBG Short Treasury TR Ix Unhedged USD, which has a yield of 0.00%, PFCXX offers a significantly higher income potential. This makes it a compelling choice for those who prioritize income generation in their investment strategy, especially in a low-interest-rate environment where traditional savings accounts offer minimal returns.
Risk Metrics and Stability
PFCXX exhibits a strong correlation with its benchmark, with a correlation coefficient of 98.89%, indicating that it closely follows the performance of short-term treasury securities. Despite its negative alpha of -0.27% and a Sharpe ratio of -0.19, the fund maintains a standard deviation of just 0.41%, reflecting its low volatility. The fund’s risk metrics suggest that it is a stable investment option, with no recorded max drawdown, drawdown length, or recovery length. This stability is further underscored by its downside risk (UI) of 0.00, making it an ideal choice for risk-averse investors seeking to preserve capital.
Portfolio Composition and Holdings
The portfolio of Putnam Money Market-C is heavily concentrated in cash, with a 100% allocation, reflecting its money market nature. The fund’s top holdings include major financial institutions such as the Royal Bank of Canada, Citigroup Global Markets Inc., and J.P. Morgan Securities, each comprising approximately 18.5% of the portfolio. These holdings are indicative of the fund’s strategy to invest in high-quality, short-term debt instruments issued by reputable financial entities. This conservative approach ensures liquidity and safety, aligning with the fund’s objective of providing tax-exempt income while minimizing risk.
Comparative Analysis with Similar Funds
When compared to similar funds like Vanguard Cash Reserve Fed Money Mkt-Admr (VMRXX) and Dreyfus Government Cash Management-I (DGCXX), PFCXX holds its ground with a competitive yield of 5.06%. However, its expense ratio of 0.47% is higher than some peers, such as VMRXX, which has an expense ratio of 0.001%. Despite this, PFCXX’s yield remains attractive, especially for investors seeking tax-exempt income. The fund’s beta of 6.44 is notably higher than its peers, indicating a slightly higher sensitivity to market movements, but its overall stability and income potential make it a viable option for conservative investors.
Performance and Returns
The performance of Putnam Money Market-C over various time horizons showcases its ability to deliver consistent returns. Over the past year, the fund has achieved a return of 5.16%, closely aligning with its yield. Its five-year annualized return stands at 2.23%, while the ten-year return is 1.50%. Since inception, the fund has delivered a return of 0.75%. These figures highlight the fund’s focus on providing steady income rather than capital appreciation. While its returns may not be as high as equity-focused funds, PFCXX’s performance is consistent with its objective of offering tax-exempt income with minimal risk.
Investor Suitability and Considerations
Putnam Money Market-C is particularly suitable for conservative investors who prioritize capital preservation and tax-exempt income. Its stable performance, coupled with a competitive yield, makes it an attractive option for those looking to diversify their portfolio with low-risk investments. However, potential investors should consider the fund’s higher expense ratio compared to some peers and its negative alpha and Sharpe ratio, which may indicate limited growth potential. Despite these considerations, PFCXX remains a solid choice for individuals seeking a stable, income-generating investment that aligns with prudent investing principles.
Conclusion: Why Choose Putnam Money Market-C
In conclusion, Putnam Money Market-C stands out as a reliable option for investors seeking tax-exempt income with minimal risk. Its strong yield of 5.06%, coupled with a stable portfolio of high-quality financial instruments, makes it an appealing choice for conservative investors. While its expense ratio is higher than some competitors, the fund’s focus on providing steady, tax-exempt income aligns well with its objective. Investors looking for a stable, income-focused investment with the added benefit of tax exemption will find PFCXX to be a suitable addition to their portfolio, offering both security and consistent returns.
Similar Securities
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TFFXX: BlackRock Liquid Federal Trust-Inst | Stable Income with Low Risk
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TMDXX: TRPrice MD Tax-Free Money Market-Inv | Tax-Free Income & Stability
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