PCNMX - Putnam Convertible Securities M

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Putnam Convertible Securities M (PCNMX)
Expense Ratio: 1.62%
Expected Lifetime Fees: $45,252.33

The Putnam Convertible Securities M fund (PCNMX) is a Convertibles fund started on 03/13/1995 and has $610.00 million in assets under management. The current manager has been running Putnam Convertible Securities M since 12/19/2008. The fund is rated by Morningstar. In addition to trading fees and broker commissions, this fund has 12b-1 fees of 0.75%

MarketRiders Prefers The Following ETF

SPDR Barclays Capital Convertible Bond (CWB)
Expense Ratio: 0.41%
Expected Lifetime Fees: $12,984.20

The SPDR Barclays Capital Convertible Bond (CWB) is an Exchange Traded Fund. It is a "basket" of securities that index the Convertibles investment strategy and is an alternative to a Convertibles mutual fund. Fees are very low compared to a comparable mutual fund like Putnam Convertible Securities M because computers automatically manage the stocks.

The Following Convertibles Funds Have Lower Fees Than Putnam Convertible Securities M (PCNMX). Why are these metrics important?
Mutual Fund Name Ticker Symbol Turnover Assets (M) Annual Fees
Allianz AGIC Convertible D ANZDX 129.0% 814 0.98%
Allianz AGIC Convertible Fund Class P ANCMX 129.0% 814 0.80%
Allianz AGIC Convertible Fund Institutional Class ANNPX 129.0% 814 0.70%
Calamos Convertible A CCVIX 65.7% 1,900 1.07%
Calamos Convertible I CICVX 65.7% 1,900 0.82%
Columbia Convertible Securities A PACIX 66.0% 508 1.11%
Columbia Convertible Securities Z NCIAX 66.0% 508 0.86%
Fidelity Advisor Convertible Securities Fund Class A FACVX 24.0% 1,900 0.88%
Fidelity Advisor Convertible Securities Fund Institutional Class FICVX 24.0% 1,900 0.65%
Fidelity Convertible Securities FCVSX 24.0% 1,900 0.61%
Franklin Convertible Securities A FIQSZ 23.2% 1,000 0.89%
Franklin Convertible Securities A FISCX 23.2% 1,000 0.89%
Franklin Convertible Securities Adv FCSZX 23.2% 1,000 0.64%
Invesco Convertible Securities A CNSAX 38.0% 829 0.98%
Invesco Convertible Securities Y CNSDX 38.0% 829 0.73%
Lord Abbett Convertible A LACFX 64.1% 385 1.20%
Lord Abbett Convertible I LCFYX 64.1% 385 1.00%
Lord Abbett Convertible R3 LCFRX 64.1% 385 1.50%
MainStay Convertible A MCOAX 80.0% 734 0.99%
MainStay Convertible A MCOSZ 80.0% 734 0.99%
MainStay Convertible Instl MCNVX 80.0% 734 0.74%
MainStay Convertible Inv MCINX 80.0% 734 1.19%
Miller Convertible A MCFAX 69.0% 308 1.50%
Miller Convertible I MCIFX 69.0% 308 1.00%
PIMCO Convertible Fund Class D PCVDX 147.0% 1,600 1.05%
PIMCO Convertible Instl PFCIX 147.0% 1,600 0.65%
Putnam Convertible Securities A PCONX 79.0% 610 1.12%
Putnam Convertible Securities Y PCGYX 79.0% 610 0.87%

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Why Are These Metrics Important?

Turnover represents how much of a mutual fund's holdings are changed over the course of a year through buying and selling. Active mutual funds have an average turnover rate of about 85%, meaning that funds are turning over nearly all of their holdings every year. A high turnover means you could make lower returns because: 1) buying and selling stocks costs money through commissions and spreads and 2) the fund will distribute yearly capital gains which increases your taxes. Look for funds with turnover rates below 50%. For comparison, ETF turnover rates average around 10% or lower.

Generally, smaller funds do better than larger ones. The more assets in a mutual fund, the lower the chance that it will beat its index. Managers outperform an index by choosing stocks that are undervalued. In order to find these undervalued stocks, the manager has to know more than his competitors to develop an "edge." There are only a finite number of stocks a mutual fund manager can reasonably analyze and actively track to gain such a competitive edge. When the fund has more assets, the manager must analyze large companies because he needs to take larger positions. Large companies are more efficiently priced in the market and it becomes increasingly difficult to get an edge.