Active Income

Mortgage Opportunities Fund (Class Y)  (PMOYX)

A dynamic approach to securitized investing

Highlights

A dynamic approach to securitized investing

The portfolio seeks to maximize total return consistent with what Putnam believes to be prudent risk.

Strategy and process

  • Multiple securitized sectors:Investing in residential and commercial MBS and collateralized mortgage obligations, the portfolio managers can pursue strategies independent of the direction of the U.S. housing market.
  • Portfolio diversification:Securitized sectors offer effective diversification potential to portfolios with equity, corporate credit, and emerging-market debt exposures.
  • Dynamic risk allocation:Our differentiated approach actively allocates to credit, prepayment, and liquidity risks while deemphasizing interest-rate risk.

Fund price

Yesterday’s close 52-week high 52-week low
Net asset value $10.71
0.00% | $0.00
$10.75
09/30/19
$10.52
07/01/19
Historical fund price

Fund facts as of 06/30/19

Total net assets
$278.83M
Turnover (fiscal year end)
1,372%
Dividend frequency (view rate)
Monthly*
Number of holdings
766
Fiscal year-end
May
CUSIP / Fund code
74676A477 / 1886
Inception date
07/01/19
Category
Taxable Income
Open to new investors
Ticker
PMOYX

* On June 28, 2019, the Board of Trustees of Putnam Mortgage Opportunities Fund voted to change the frequency of the fund’s distributions from annual to monthly. The first monthly distribution is expected to take place in August 2019.

Management team

Co-Head of Fixed Income
Portfolio Manager
Portfolio Manager



Performance

  • Total return (%) as of 09/30/19

  • Annual performance as of 09/30/19

Annualized Total return (%) as of 09/30/19

Annualized performance 1 yr. 3 yrs. 5 yrs. Life (inception: 07/01/19 )
Before sales charge 5.61% 6.39% -- 4.54%
After sales charge N/A N/A N/A N/A
ICE BofAML U.S. Treasury Bill Index 2.46%1.54%1.00%--
Bloomberg Barclays U.S. MBS Index 7.80%2.32%2.80%--

Current performance may be lower or higher than the quoted past performance, which cannot guarantee future results. Share price, principal value, and return will vary, and you may have a gain or a loss when you sell your shares. Performance assumes reinvestment of distributions and does not account for taxes. After sales charge returns for class A shares reflect a maximum 4.00% load. Class C shares are sold without an initial sales charge but reflect a 1% CDSC the first year that is eliminated thereafter. Class Y shares, available to investors through an asset-based fee program or for institutional clients, are sold without an initial sales charge and have no CDSC. Performance for class A, C, and Y shares before their inception is derived from the historical performance of class I shares, which have been adjusted for the applicable sales charge (or CDSC) and the higher operating expenses for such shares. For a portion of the periods, this fund may have had expense limitations, without which returns would have been lower. 

Performance snapshot

  Before sales charge After sales charge
1 mt. as of 09/30/19 1.12% -
YTD as of 10/11/19 7.26% -

Yield

Distribution rate before sales charge
as of 10/11/19
3.25%
Distribution rate after sales charge
as of 10/11/19
3.25%
30-day SEC yield with subsidy
as of 09/30/19
3.89%
30-day SEC yield without subsidy
as of 09/30/19
3.63%

Distributions

Record/Ex dividend date 09/18/19
Payable date 09/20/19
Income $0.029
Extra income --
Short-term cap. gain --
Long-term cap. gain --

Lipper rankings are based on total return without sales charge relative to all share classes of funds with similar objectives as determined by Lipper. Past performance is not indicative of future results.

The Morningstar RatingTM for funds, or "star rating", is calculated for managed products (including mutual funds, variable annuity and variable life subaccounts, exchange-traded funds, closed-end funds, and separate accounts) with at least a three-year history. Exchange-traded funds and open-ended mutual funds are considered a single population for comparative purposes. It is calculated based on a Morningstar Risk-Adjusted Return measure that accounts for variation in a managed product's monthly excess performance, placing more emphasis on downward variations and rewarding consistent performance. The top 10% of products in each product category receive 5 stars, the next 22.5% receive 4 stars, the next 35% receive 3 stars, the next 22.5% receive 2 stars, and the bottom 10% receive 1 star. The Overall Morningstar Rating for a managed product is derived from a weighted average of the performance figures associated with its three-, five-, and 10-year (if applicable) Morningstar Rating metrics. The weights are: 100% three-year rating for 36-59 months of total returns, 60% five-year rating/40% three-year rating for 60-119 months of total returns, and 50% 10-year rating/30% five-year rating/20% three-year rating for 120 or more months of total returns. While the 10-year overall star rating formula seems to give the most weight to the 10-year period, the most recent three-year period actually has the greatest impact because it is included in all three rating periods.

The up-market capture ratio is used to evaluate how well an investment manager performed relative to an index during periods when that index has risen. The ratio is calculated by dividing the manager’s returns by the returns of the index during the up-market, and multiplying that factor by 100. The down-market capture ratio is used to evaluate how well an investment manager performed relative to an index during periods when that index has dropped. The ratio is calculated by dividing the manager’s returns by the returns of the index during the down-market and multiplying that factor by 100.


Holdings

Top 10 holdings as of 06/30/19

Fnma Fn30 Tba Umbs 03.0000 08/01/2049 12.65%
Fnma Fn30 Tba Umbs 04.0000 08/01/2049 3.34%
Fnma Fn30 Tba Umbs 04.0000 07/01/2049 2.22%
Gnma Gii30 Tba 04.5000 07/01/2049 1.50%
Cas 2018-C05 1b1 06.6544 01/25/2031 0.76%
Cas 2017-C07 2m2 04.9044 05/25/2030 0.75%
Gnma Gii30 Tba 04.0000 07/01/2049 0.74%
Stacr 2019-Dna2 M2 04.8544 03/25/2049 0.74%
Stru Nsi-2513 Io 03.6456 06/25/2049 0.74%
Stacr 2016-Hqa4 M3 06.3044 04/25/2029 0.73%
Top 10 holdings, percent of portfolio 24.17%

Fixed income statistics as of 06/30/19

Average effective maturity 3.69 yrs.
Average effective duration 0.27 yrs.
Average yield to maturity 5.23%
Average coupon 4.08%

Sector weightings as of 06/30/19

  Cash investments Non-cash investments Total portfolio
  Weight Spread duration Weight Spread duration Weight Spread duration
Commercial MBS 7.44% 0.24 34.72% 0.88 42.16% 1.12
Agency CMO 25.77% 0.91 0.01% 0.00 25.78% 0.91
Agency pass-through 0.66% 0.02 18.60% 0.75 19.26% 0.77
Residential MBS (non-agency) 18.61% 0.95 0.00% 0.00 18.61% 0.95
Asset-backed securities (ABS) 2.06% 0.02 0.00% 0.00 2.06% 0.02
Interest rate swaps 0.00% 0.00 0.00% -0.31 0.00% -0.31
Net cash 45.46% 0.00 0.00% 0.00 45.46% 0.00

Spread duration is displayed in years and reflects the contribution by sector to the portfolio's total spread duration with the exception of the Treasury and Interest-rate swap sectors where effective duration is displayed. Spread duration estimates the price sensitivity of a specific sector or asset class to a 100 basis-point movement, 1%, (either widening or narrowing) in its yield spread relative to Treasuries. Effective duration provides a measure of a portfolio's interest-rate sensitivity. The longer a portfolio's duration, the more sensitive the portfolio is to shifts in the interest rates. Allocations may not total 100% of net assets because the table includes the notional value of derivatives (the economic value for purposes of calculating periodic payment obligations), in addition to the market value of securities.

Maturity detail as of 06/30/19

0 - 1 yr. 29.05%
1 - 5 yrs. 42.95%
5 - 10 yrs. 22.90%
10 - 15 yrs. 4.71%
Over 15 yrs. 0.39%

Quality rating as of 06/30/19

AAA 47.71%
AA 2.39%
A 23.61%
BBB 5.36%
BB 4.41%
B 6.26%
CCC and Below 3.32%
Not Rated 6.94%

Fund characteristics will vary over time.

Due to rounding, percentages may not equal 100%.

Consider these risks before investing: The value of investments in the fund's portfolio may fall or fail to rise over extended periods of time for a variety of reasons, including general economic, political, or financial market conditions, investor sentiment and market perceptions, government actions, geopolitical events or changes, and factors related to a specific issuer, geography (such as a region of the United States), industry, or sector, such as the housing or real estate markets. These and other factors may lead to increased volatility and reduced liquidity in the fund's portfolio holdings or in relevant markets. Bond investments are subject to interest-rate risk (the risk of bond prices falling if interest rates rise) and credit risk (the risk of an issuer defaulting on interest or principal payments). Default risk is generally higher for non-qualified mortgages. Interest-rate risk is generally greater for longer-term bonds, and credit risk is generally greater for below-investment-grade bonds. Mortgage-and asset-backed securities are subject to prepayment risk and the risk that they may increase in value less than other bonds when interest rates decline and decline in value more than other bonds when interest rates rise. The fund's investments in mortgage-backed securities and asset-backed securities, and in certain other securities and derivatives, may be or become illiquid. The fund's concentration in an industry group comprising privately issued mortgage-backed securities and mortgage-backed securities issued or guaranteed by the U.S. government or its agencies or instrumentalities may make the fund's net asset value more susceptible to economic, market, political, and other developments affecting the housing or real estate markets. Risks associated with derivatives include increased investment exposure (which may be considered leverage) and, in the case of over-the-counter instruments, the potential inability to terminate or sell derivatives positions and the potential failure of the other party to the instrument to meet its obligations. Our use of short selling may result in losses if the securities appreciate in value. You can lose money by investing in the fund.

Credit qualities are shown as a percentage of the fund's net assets. A bond rated BBB or higher (A-3 or higher, for short-term debt) is considered investment grade. This chart reflects the highest security rating provided by one or more of Standard & Poor’s, Moody’s, and Fitch. To-be-announced (TBA) mortgage commitments, if any, are included based on their issuer ratings. Ratings may vary over time. Cash, derivative instruments, and net other assets are shown in the not-rated category. Payables and receivables for TBA mortgage commitments are included in the not-rated category and may result in negative weights. The fund itself has not been rated by an independent rating agency.


Expenses

Expense ratio

Class A Class C Class Y
Total expense ratio 1.08% 1.83% 0.83%
What you pay† 0.87% 1.62% 0.62%

† The fund's expense ratio is taken from the most recent prospectus and is subject to change. What you pay reflects Putnam Management's decision to contractually limit expenses through 09/30/20

Sales charge

 Breakpoint Class A Class C Class Y
$0-$49,999 4.00% / 3.50% 0.00% / 1.00% --
$50,000-$99,999 4.00% / 3.50% 0.00% / 1.00% --
$100,000-$249,999 3.25% / 2.75% 0.00% / 1.00% --
$250,000-$499,999 2.50% / 2.00% 0.00% / 1.00% --
$500,000-$999,999 0.00% / 1.00% -- --
$1M-$4M 0.00% / 1.00% -- --
$4M-$50M 0.00% / 0.50% -- --
$50M+ 0.00% / 0.25% -- --

CDSC

  Class A (sales for $500,000+) Class C Class Y
0 to 9 mts. 1.00% 1.00% --
9 to 12 mts. 1.00% 1.00% --
2 yrs. 0.00% 0.00% --
3 yrs. 0.00% 0.00% --
4 yrs. 0.00% 0.00% --
5 yrs. 0.00% 0.00% --
6 yrs. 0.00% 0.00% --
7+ yrs. 0.00% 0.00% --

Trail commissions

  Class A Class C Class Y
  0.25% 1.00% 0.00%
  NA NA NA
  NA NA NA

The ICE BofAML U.S. Treasury Bill Index is an unmanaged index that tracks the performance of U.S. dollar denominated U.S. Treasury Bills publicly issued in the U.S. domestic market. Qualifying securities must have a remaining term of at least one month to final maturity and a minimum amount outstanding of $1 billion. The Bloomberg Barclays U.S. MBS Index covers the mortgage-backed pass-through securities of Ginnie Mae (GNMA), Fannie Mae (FNMA), and Freddie Mac (FHLMC). You cannot invest directly in an index.

Consider these risks before investing: The value of investments in the fund's portfolio may fall or fail to rise over extended periods of time for a variety of reasons, including general economic, political, or financial market conditions, investor sentiment and market perceptions, government actions, geopolitical events or changes, and factors related to a specific issuer, geography (such as a region of the United States), industry, or sector, such as the housing or real estate markets. These and other factors may lead to increased volatility and reduced liquidity in the fund's portfolio holdings or in relevant markets. Bond investments are subject to interest-rate risk (the risk of bond prices falling if interest rates rise) and credit risk (the risk of an issuer defaulting on interest or principal payments). Default risk is generally higher for non-qualified mortgages. Interest-rate risk is generally greater for longer-term bonds, and credit risk is generally greater for below-investment-grade bonds. Mortgage-and asset-backed securities are subject to prepayment risk and the risk that they may increase in value less than other bonds when interest rates decline and decline in value more than other bonds when interest rates rise. The fund's investments in mortgage-backed securities and asset-backed securities, and in certain other securities and derivatives, may be or become illiquid. The fund's concentration in an industry group comprising privately issued mortgage-backed securities and mortgage-backed securities issued or guaranteed by the U.S. government or its agencies or instrumentalities may make the fund's net asset value more susceptible to economic, market, political, and other developments affecting the housing or real estate markets. Risks associated with derivatives include increased investment exposure (which may be considered leverage) and, in the case of over-the-counter instruments, the potential inability to terminate or sell derivatives positions and the potential failure of the other party to the instrument to meet its obligations. Our use of short selling may result in losses if the securities appreciate in value. You can lose money by investing in the fund.

Credit qualities are shown as a percentage of the fund's net assets. A bond rated BBB or higher (A-3 or higher, for short-term debt) is considered investment grade. This chart reflects the highest security rating provided by one or more of Standard & Poor’s, Moody’s, and Fitch. To-be-announced (TBA) mortgage commitments, if any, are included based on their issuer ratings. Ratings may vary over time. Cash, derivative instruments, and net other assets are shown in the not-rated category. Payables and receivables for TBA mortgage commitments are included in the not-rated category and may result in negative weights. The fund itself has not been rated by an independent rating agency.