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Putnam RetirementReady Funds

Putnam RetirementReady Funds

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Published by Putnam Investments

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Published by: Putnam Investments on May 12, 2009
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11/07/2011

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Diversifcation and rebalancing are vital
Diversication is an important part o any retirementplanning strategy. Choosing a mix o dierent invest-ments can help you reduce risk and increase yourexposure to market opportunities. However, an unpre-dictable market and the demands o a busy lie can otenmake getting and keeping your retirement portolio ontrack a challenge.
Investors may not be staying on track
Because your ideal asset allocation and risk exposurewill change as you get closer to retirement, your port-olio should be rebalanced periodically to remain ontrack with your investment objectives. However, studiesshow that most investors know they should rebalance,but ew actually do. Alternatively, many investors reacton emotion during periods o market volatility, andinstead o rebalancing, exchange out o undervaluedasset classes. A recent study conducted by the indepen-dent research rm DALBAR showed that investors whoreallocate investments on their own typically do so atthe worst possible time. For the 20-year period endedDecember 31, 2009, typical equity und investors aver-aged 3.17% compared with 8.20% or investors who heldstock in companies represented by the S&P 500 or theull period.
Pension Protection Actsimplifes decision-making
Considered among the most important retirement legis-lation in decades, the Pension Protection Act o 2006 isintended to help plan sponsors and participants saeguarduture retirement savings and to prepare workers or asuccessul retirement. The act provides specic guidanceon deault investments to encourage diversication. Itsqualied deault investment alternatives include balanced,lie-cycle, and target retirement unds such as PutnamRetirementReady Funds. An increasing number o retire-ment plans have embraced these types o unds, and theirpopularity will likely gain momentum in coming years.
LIFE-CyCLE FUNDS gROW MORE POPULAR
02040608020092008200720062005
Percentage of plansoering life-cycle funds
Source:
Proft Sharing Council o America,
August 2010
.
Putnam RetirementReady® Funds
Build a diversifed retirement plan account in one easy step
Investor Education
 
Putnam RetirementReady Funds:One-step diversifcation, automaticallocations
With Putnam RetirementReady Funds, portolio diversi-cation and adjustments are automatic. Each und has adierent “target” date based on when the und’s investorsexpect to retire and begin withdrawing assets rom theiraccounts, typically at retirement. The unds are generallyweighted toward more aggressive, higher-risk invest-ments when the target date is more distant, and towardmore conservative, lower-risk investments when thetarget date is near.Simply select the und with the target year that mostclosely matches your anticipated date o retirement.Your und will automatically be rebalanced, and your riskexposure will gradually be reduced as you get closer toretirement. Putnam Retirement Income Fund Liestyle 1†is designed or participants who are in or near retirement.Each und is designed to be used as a single-choiceapproach to diversication and generally should not beused in combination with a retirement plan’s other undoptions. RetirementReady Funds can also be used withinIRA accounts and other tax-advantaged plans. The prin-cipal value o the unds is not guaranteed at any time,including the target year.
 
Underlin Putnam fund
RetirementReady Funds allocate your retirementsavings across a series o underlying unds basedon your targeted retirement date.
2055Fund2050Fund2045Fund2040Fund2035Fund2030Fund
Putnam Asset Allocation: Equit Portfolio
73%73%59%41%17%0%
Putnam Asset Allocation: growth Portfolio
16%16%30%47%68%68%
Putnam Asset Allocation: Balanced Portfolio
0%0%0%0%0%10%
Putnam Asset Allocation: Conservative Portfolio
0%0%0%0%0%0%
Putnam Mone Market Fund*
1%1%1%1%1%3%
Putnam Absolute Return 700 Fund
8%8%8%8%8%11%
Putnam Absolute Return 500 Fund
2%2%2%2%4%5%
Putnam Absolute Return 300 Fund
0%0%0%0%0%1%
Putnam Absolute Return 100 Fund
1%1%1%2%3%3%
Asset class weihtinFixed IncomeEquit
The unds gradually shit rom aggressive, higher-riskinvestments toward more conservative, lower-riskinvestments as retirement approaches.
Absolute return fund investmentsTraditional fund investments
Putnam Absolute Return Funds represent an increasinglygreater portion o the portolios over time, and aredesigned to seek to protect against volatility andthe harmul eects o adverse investment returns.
6%95%6%94%9%92%13%87%19%81%28%74%12%88%12%88%12%88%
Equity and xed-income allocations are
hpothetical
estimates based on strategic allocations to equity and xed income o each Putnam Asset AllocationFund set orth in its prospectus, and the assumptions that Putnam Money Market Fund, Putnam Absolute Return 100 Fund, and Putnam Absolute Return300 Fund are equivalent to xed income, Putnam Absolute Return 500 Fund is equivalent to 50% xed income/50% equity; and Putnam Absolute Return700 Fund is equivalent to equity. Actual allocations will vary.
Because o rounding in the calculation o allocations among underlying Putnam unds, actual allocations may be more or less than these percentages and total portolio percentages may be more or less than 100%.
    1
Mone market funds are not insured or uaranteed b the Federal Deposit Insurance Corporation (FDIC) or an otherovernmental aenc. Althouh a mone market fund seeks to preserve the value of our investment at $1.00 per share,it is possible to lose mone b investin in this fund.
    2
Putnam RetirementReady Maturity Fund was renamed Putnam Retirement Income Fund Liestyle 1 on June 16, 2011.
13%87%16%84%23%77%
 
RetirementReady is a smart,innovative strategy
Experienced manaers
With 15 members and more than14 years o experience managing multi-asset class porto-lios, Putnam’s Global Asset Allocation Team is one o themost tenured in the industry.
A rane of investment opportunities
The unds provideexposure to alternative asset classes such as real estateinvestment trusts and emerging markets, while alsooering active currency management. Unlike a typicalprediversied oering, RetirementReady portolios cantarget investments that have exhibited low correlationwith traditional asset classes.
Strateic and tactical implementation
The team imple-ments diversication in all aspects o managing the und:with the underlying investments, across asset classes,and with its approach to asset allocation. By diversiyingbeyond simple asset-class exposures and consideringtime horizons and methodologies, this strategy oersthe potential or solid long-term returns with careullymanaged downside risk.
Active investment manaement
Unlike target-maturitystrategies that use a und-o-unds approach, eachRetirementReady portolio is proessionally managedor comprehensive diversication, risk management,and efcient rebalancing.
Putnam places a greater ocus onincome as retirement nears
At Putnam, we recognize that income generation is criticalto those investors in or near retirement. Unlike workersearly in their career, who oten pursue growth, investorsapproaching retirement view capital preservation andincome as higher priorities, because they may lack the timehorizon or exibility to retire when markets are perormingwell, or to add to their accounts during market downturns.Reecting investors’ needs, Putnam RetirementReadyFunds seek to position assets or growth over an investor’sworking lietime, while reducing market risk as retirementapproaches. As an investor approaches the maturityphase o the retirement savings path, the underlyingportolio mix — or “glide path” — shits to emphasizecapital preservation and income generation.
Putnam includes Absolute Return strategiesto dampen volatility
For many years, retirement plan sponsors who investon behal o pension and dened benet plans haveemployed “total return” strategies with the goal omanaging volatility and providing greater perormanceconsistency. This investment discipline is designed to helpdeliver on the sponsors’ commitment to uture income.Putnam Absolute Return Funds are managed with a similarocus and can be part o a 401(k) plan. These unds aredesigned to pursue positive returns in good markets andbad. Their goal is to outperorm ination, as measured by
2025Fund2020Fund2015FundRetirementIncomeFundLifestle 1
0%0%0%0%29%0%0%0%40%54%25%0%0%5%22%34%4%5%6%6%13%14%9%0%6%10%20%30%4%8%13%21%4%5%6%9%
37%63%48%53%60%41%75%25%31%69%42%58%54%46%34%66%

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