Is Putnam Global Technology A (PGTAX) a Strong Mutual Fund Pick Right Now?
Sector - Tech fund seekers should consider taking a look at Putnam Global Technology A (PGTAX). PGTAX holds a Zacks Mutual Fund Rank of 2 (Buy), which is based on nine forecasting factors like size, cost, and past performance.
Objective
The world of Sector - Tech funds is an area filled with options, and PGTAX is one of them. Sector - Tech mutual funds allow investors to own a stake in a notoriously volatile sector with a much more diversified approach. Tech companies can be in any number of industries such as semiconductors, software, internet, networking just to name a few.
History of Fund/Manager
Putnam Funds is based in Canton, MA, and is the manager of PGTAX. The Putnam Global Technology A made its debut in January of 2009 and PGTAX has managed to accumulate roughly $201.89 million in assets, as of the most recently available information. The fund is currently managed by Di Yao who has been in charge of the fund since December of 2012.
Performance
Obviously, what investors are looking for in these funds is strong performance relative to their peers. This fund in particular has delivered a 5-year annualized total return of 17.82%, and is in the top third among its category peers. If you're interested in shorter time frames, do not dismiss looking at the fund's 3-year annualized total return of 22.53%, which places it in the top 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. Over the past three years, PGTAX's standard deviation comes in at 16.24%, compared to the category average of 10.54%. Over the past 5 years, the standard deviation of the fund is 16.14% compared to the category average of 10.67%. This makes the fund more volatile than its peers over the past half-decade.
Risk Factors
It's always important to be aware of the downsides to any future investment, so one should not discount the risks that come with this segment.
Investors should not forget about beta, an important way to measure a mutual fund's risk compared to the market as a whole. PGTAX has a 5-year beta of 1.14, which means it is likely to be more volatile than the market average. Another factor to consider is alpha, as it reflects a portfolio's performance on a risk-adjusted basis relative to a benchmark-in this case, the S&P 500. PGTAX's 5-year performance has produced a positive alpha of 6.26, which means managers in this portfolio are skilled in picking securities that generate better-than-benchmark returns.
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, PGTAX is a load fund. It has an expense ratio of 0.58% compared to the category average of 1.30%. PGTAX is actually cheaper than its peers when you consider factors like cost.
While the minimum initial investment for the product is $500, investors should also note that there is no minimum for each subsequent investment.
Bottom Line
Overall, Putnam Global Technology A ( PGTAX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, worse downside risk, and lower fees, Putnam Global Technology A ( PGTAX ) looks like a good potential choice for investors right now.
For additional information on this product, or to compare it to other mutual funds in the Sector - Tech, make sure to go to www.zacks.com/funds/mutual-funds for additional information. Zacks provides a full suite of tools to help you analyze your portfolio - both funds and stocks - in the most efficient way possible.
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