Putnam's touted world flagship has portfolio that's 50% U.S.

Fund profile

Dollars & Sense

September 12, 1999|By Kevin McDevitt | Kevin McDevitt,MORNINGSTAR

Putnam Diversified Equity Trust is poised to come into its own as a global fund, but don't be misled by its domestic-equity days. This fund has been reassigned to Putnam's stellar global lineup. After having invested primarily in U.S. stocks, the fund is now Putnam's world-stock flagship.

Given that Putnam divides its equity funds along style and market-cap lines, this fund falls between Putnam Global Growth and Income on the value side and Putnam Global Growth in the growth camp. This fund's aim is to invest in stocks with market caps greater than $2 billion.

Similar to foreign-stock sibling Putnam International Growth, though, the fund won't indulge in either deep-value plays or stratospheric growth issues.

Lead manager Paul Warren generally sticks to blue chips that have strong returns on capital.

The fund's record prior to June 1998, however, doesn't necessarily give insight into how it will perform as a world-stock offering.

That's because the fund had previously kept about two-thirds of its assets in U.S. equities.

The typical world-stock offering only has about a third of its portfolio in the United States. Considering the outperformance of U.S. stocks relative to foreign markets, the fund has had a significant advantage over its new peers.

Although the fund's U.S. weighting has come more in line with the MSCI World index, it has still enjoyed several advantages over its average rival.

Namely, the fund still has about half its portfolio in the United States. This helped in 1998's fourth quarter, as the United States soared higher than the broad Europe indexes.

The fund also benefited from its focus on large- and giant-cap stocks. With a median market cap that's twice the category average, the fund has taken full advantage of that group's dominance over smaller issues.

This fund has all of the tools to be one of the category's stalwarts.

Putnam Global Equity A

Fund managers: Michael Arends, Robert Beck, Justin Scott, Omid Kamshad, Paul Warren and Michael Stack Fund Investments

Largest investment sector: Services Style: The fund's median investment is in growth stocks of companies with large market capitalizations.

Total Returns as of 08/27/99

Year-to-date: 17.63%

One-year: 34.59%

Three-year annualized: 22.33%

Five-year annualized: 20.21%

Risk vs. domestic equity funds: Low

Morningstar rating: 5 stars

Maximum sales charge: 5.75%

Phone: 800-225-1581

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