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Is Putnam Global Technology A (PGTAX) a Strong Mutual Fund Pick Right Now?

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If you've been stuck searching for Sector - Tech funds, you might want to consider passing on by Putnam Global Technology A (PGTAX - Free Report) as a possibility. PGTAX bears a Zacks Mutual Fund Rank of 5 (Strong Sell), which is based on nine forecasting factors like size, cost, and past performance.

Objective

We note that PGTAX is a Sector - Tech option, and this area is loaded with many options. Found in a wide number of industries such as semiconductors, software, internet, and networking, tech companies are everywhere. Thus, Sector - Tech mutual funds that invest in technology let investors own a stake in a notoriously volatile sector, but with a much more diversifies approach.

History of Fund/Manager

PGTAX finds itself in the Putnam Funds family, based out of Canton, MA. Putnam Global Technology A made its debut in January of 2009, and since then, PGTAX has accumulated about $186.62 million in assets, per the most up-to-date date available. Di Yao is the fund's current manager and has held that role since December of 2012.

Performance

Of course, investors look for strong performance in funds. This fund in particular has delivered a 5-year annualized total return of 17.32%, 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 24.98%, 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. The standard deviation of the fund over the past 5 years is 15.46% compared to the category average of 1.31%. This makes the fund more volatile than its peers over the past half-decade.

Risk Factors

Investors should always remember the downsides to a potential investment, and this segment carries some risks one should be aware of.

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. Alpha is an additional metric to take into consideration, since it represents a portfolio's performance on a risk-adjusted basis relative to a benchmark, which in this case, is the S&P 500. Over the past 5 years, the fund has a positive alpha of 5.2. This means that managers in this portfolio are skilled in picking securities that generate better-than-benchmark returns.

Holdings

Exploring the equity holdings of a mutual fund is also a valuable exercise. This can show us how the manager is applying their stated methodology, as well as if there are any inherent biases in their approach. For this particular fund, the focus is principally on equities that are traded in the United States.

Currently, this mutual fund is holding 93.24% stock in stocks, with an average market capitalization of $360.16 billion. The fund has the heaviest exposure to the following market sectors:

  1. Technology
  2. Other
Turnover is 93%, which means this fund makes fewer trades than its comparable peers.

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, PGTAX is a load fund and it has an expense ratio of 1.15%.

This fund requires a minimum initial investment of $500, while there is no minimum for each subsequent investment.

Bottom Line

With a 'strong sell' rank, Putnam Global Technology A is in the bottom 20% of all the mutual funds we cover. This means that our models suggest it is one of the worst options for investors in Sector - Tech right now, though this could change if the performance of the fund and the Zacks Ranks of the equities in PGTAX turnaround in the next data release.

Your research on the Sector - Tech segment doesn't have to stop here. You can check out all the great mutual fund tools we have to offer by going to www.zacks.com/funds/mutual-funds to see the additional features we offer as well for additional information. Want to learn even more? We have a full suite of tools on stocks that you can use to find the best choices for your portfolio too, no matter what kind of investor you are.


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