Part 2: Hold the middle ground

Part 2: Hold the middle ground

Dogged by lingering memories of the 2008–2009 bear market, many investors remain cautious about increasing their exposure to equities — even though equities today offer compelling value relative to most fixed-income asset classes. At the same time, many bond investors are finding it necessary to assume greater credit risk to capture higher yields amid a

Why the ratings don’t always reflect the risk

Why the ratings don’t always reflect the risk

One of the key strategies that several Putnam fixed-income funds have successfully employed is the use of non-agency residential mortgage-backed securities (RMBS). As the name would imply, these securities are backed by residential mortgages and have been securitized not by a government agency — such as Fannie Mae or Freddie Mac — but by a

Derivatives and financial reform

Derivatives and financial reform

The recent Dodd-Frank Act introduced sweeping changes to the derivatives market. Daniel Farrell, Putnam’s Head of Equity Trading, discusses how Putnam uses derivative contracts and the impact of the bill on Putnam equity funds. Broadly speaking, what are derivatives and how are they used? Derivatives are investments whose value is based on — or “derived”

Derivatives regulations should shore up financial system

Derivatives regulations should shore up financial system

Under the Dodd-Frank Act, many derivatives will move from over-the-counter trading to exchanges or electronic trading systems. What will this mean for Putnam funds? The Act sets the broad outlines for regulation, which will be implemented through the new powers of the Securities and Exchange Commission and the Commodities Futures Trading Commission in greater detail

The Fed’s exit from the mortgage market

The Fed’s exit from the mortgage market

On the heels of the Lehman Brothers bankruptcy in late 2008, the U.S. Treasury and Federal Reserve Board (the “Fed”) rolled out a number of unprecedented programs designed to inject liquidity into the financial system. The mortgage purchase program began in conjunction with the Troubled Asset Relief Program, or “TARP,” and both were designed to