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Is PDINX a Strong Bond Fund Right Now?

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Any investors hoping to find a Diversified Bonds fund could think about starting with Putnam Diversified Income A (PDINX - Free Report) . PDINX has a Zacks Mutual Fund Rank of 1 (Strong Buy), which is based on nine forecasting factors like size, cost, and past performance.

Objective

PDINX is one of many Diversified Bonds funds to choose from. Diversified Bonds funds give investors exposure to a variety of fixed income types that span across different issuers, maturities, and credit levels. Usually, these funds will have a good amount of exposure to government debt, in addition to modest holdings in the corporate bond market.

History of Fund/Manager

Putnam Funds is based in Canton, MA, and is the manager of PDINX. Since Putnam Diversified Income A made its debut in October of 1988, PDINX has garnered more than $906.22 million in assets. The fund is currently managed by a team of investment professionals.

Performance

Of course, investors look for strong performance in funds. This fund has delivered a 5-year annualized total return of 5.43%, and is in the top third among its category peers. Investors who prefer analyzing shorter time frames should look at its 3-year annualized total return of 2.89%, which places it in the middle 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. The standard deviation of PDINX over the past three years is 9.12% compared to the category average of 13.52%. Looking at the past 5 years, the fund's standard deviation is 7.29% compared to the category average of 11.23%. This makes the fund less volatile than its peers over the past half-decade.

With a beta of 0.32, this fund is less volatile than a broad market index of fixed income securities. Taking this into account, PDINX has a positive alpha of 4.38, which measures performance on a risk-adjusted basis.

Ratings

Investors should also consider a bond's rating, which is a grade ( 'AAA' to 'D' ) given to a bond that indicates its credit quality. With this letter scale in mind, PDINX has 47.86% in high quality bonds rated at least 'AA' or higher, while its junk bond component-bonds rated 'BB' or below-is at 30.33%. This means that the fund has an average quality of A, and focuses on high quality securities.

Expenses

Costs are increasingly important for mutual fund investing, and particularly as competition heats up in this market. And all things being equal, a lower cost product will outperform its otherwise identical counterpart, so taking a closer look at these metrics is key for investors. In terms of fees, PDINX is a load fund. It has an expense ratio of 0.99% compared to the category average of 0.85%. From a cost perspective, PDINX is actually more expensive than its peers.

Investors should also note that the minimum initial investment for the product is $500 and that each subsequent investment has no minimum amount.

Bottom Line

Overall, Putnam Diversified Income A ( PDINX ) has a high Zacks Mutual Fund rank, and in conjunction with its comparatively strong performance, average downside risk, and higher fees, Putnam Diversified Income A ( PDINX ) looks like a good potential choice for investors right now.

For additional information on the Diversified Bonds area of the mutual fund world, make sure to check out www.zacks.com/funds/mutual-funds. There, you can see more about the ranking process, and dive even deeper into PDINX too 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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