Active Insights

Today’s Municipal Landscape with Paul Drury

June 24, 2021 Putnam Investments
Active Insights
Today’s Municipal Landscape with Paul Drury
Show Notes Transcript

In this episode, Chris speaks with Paul Drury, Portfolio Manager and head of Putnam’s Municipal Bond team.  During the conversation, they touch on many topics, including: 

  • The current municipal landscape  
  • Tax Plans, and the impact on the muni market
  • Infrastructure
  • Revenue vs General Obligation bonds
  • Muni Yield Curve
  • Rate Cycle
  • Issuance, Demand and Liquidity

This material is for informational and educational purposes only. It is not a recommendation of any specific investment product, strategy, or decision, and is not intended to suggest taking or refraining from any course of action. It is not intended to address the needs, circumstances, and objectives of any specific investor. This information is not meant as tax or legal advice. Investors should consult a professional advisor before making investment and financial decisions and for more information on tax rules and other laws, which are complex and subject to change. 

Duration measures the sensitivity of bond prices to interest-rate changes. A negative duration indicates that a security or fund may be poised to increase in value when interest rates increase. 

All funds involve risk, including the loss of principal. You can lose money by investing.

 To view additional information including performance and holdings, please visit the Putnam Tax Exempt Income Fund page found on putnam.com. 

 Investors should carefully consider the investment objectives, risks, charges, and expenses of a fund

before investing. For a prospectus, or a summary prospectus if available, containing this and other

information for any Putnam fund or product, call your financial representative or call Putnam at 1-

800-225-1581. Please read the prospectus carefully before investing.

 

Putnam Retail Management                                                                                       AD1698240 6/21

You should consider the fund’s investment objectives, risks, charges, and expenses carefully before you invest. This and other important information is contained in the fund’s prospectus available on Putnam.com or by calling 1-833-228-5577. Please read carefully before you invest.

Putnam ETFs are distributed by Foreside Fund Services, LLC. Foreside is not affiliated with Putnam Investments.

Putnam Retail Management AD2557752 11/22

Active Insights

Putnam Investments


Episode 3

 Patrick Laffin: Welcome to Putnam Investments Active Insights, a podcast series hosted by Chris Galipeau. Chris is the Senior Market Strategist in the Capital Market Strategies Group at Putnam Investments. Each episode, Chris has an in-depth conversation with a different Putnam portfolio manager to share timely insights on the markets and global economy.

 

Chris Galipeau: Thanks for joining us folks. This is Chris Galipeau, Senior Market Strategist at Putnam, and we’re here for a next podcast and we’re going to talk about muni bonds today. Very exciting! Paul Drury is here with us. Paul runs our muni operation at the firm, a 32-year veteran and investor. And so, Paul thanks for hopping on the podcast.

 

Paul Drury: Yeah, great! Thanks for having me. Glad to be here.

 

Chris Galipeau: Why don’t we start just by talking about how you got to where you are today, right, in 32 years in the business, how did it start and tell us about the journey.

 

Paul Drury: Sure. So, I’m a Boston born and raised. Been here my whole life and I went to college right down the street, Suffolk University, about a mile or so away, so spent a lot of time in this area. And after graduating in 1989, jobs were made a little bit harder to come by and I knew I wanted financial services just to know exactly what pod I was going to end up in and so took a job with Putnam, big money manager right downtown, checked a lot of boxes for me and took a job in the back office in the fund accounting group. And a couple years later, was very fortunate to get a job on the trading desk and that’s sort of migration from, sort of, the back office to the investment team, what wasn’t something done a lot and so I was very happy to make that I got on to the trading desk. And within a couple of years, I was the head of the trading desk in Munis and so spent the first 10 years out of the 12 on the muni desk and that was just a tremendous experience working daily with the portfolio managers, working daily with the analysts and the other traders. It was just—you got to learn so much because you were at the front end, right, I mean talking to Wall Street. Munis, obviously, is a very niche market in a very diffuse market so we ended up talking to big Wall Street banks, smaller firms, really boutique-type firms and the systems back then in sort of now we have—all of the electronic platform, it give us lots of real-time information back in the day. You had—it was no books, and pens and pencils, and making lots of outgoing dialogue, and phone calls to collect the data so glad that we’ve come far away since then and we use the technology now. And then in 2002, I was asked to lead up a high yield muni effort and have been on the portfolio since 2002 and five years ago I was asked to head up the team and really fortunate to work for just a tremendous company for all 32 years which is very, very unlikely these days, but it’s been terrific.

 

 

 

Chris Galipeau: So, to two things occurred to me when I just reviewed your bio this morning, one of them was 32 years at one place, right, but the other one, the really thing that’s struck me, is your time as a trader and so I didn’t follow that exact path myself but the knowledge and the information you must have gain from being the a trader. Specifically, what occurred to me or thought of immediately was liquidity, how do these bonds trade? Do they trade by appointment? They're not that liquid right? And so was has that morphed or has it morphed at all or is it the same?

 

Paul Drury: Yeah, I think the experience was invaluable. Just understanding that liquidity aspect which people talk about all the time and it’s an important aspect to muni bonds, right, less than half of 1% of them trade daily. So, knowing who’s involved in the market, knowing what firms are involved, knowing how certain sectors or coupons are traded. It certainly evolved because the markets growing inside certainly, it’s doubled or tripled since I started years ago. The platforms are a little bit different, you have things like SMAs and global buyers, big banks, insurance companies which were a lot smaller back then. So, the buyer-based changes a little bit but at the end of the day it’s still in the way that we control, sort of, a less liquid market. Just to make sure that the portfolios is highly diversified.

 

Chris Galipeau: Alright. I want to talk a little bit about something that we’re asked everyday which is—and this really started last fall and it’s ramped up when Biden won and of course now we’re starting to get some details of the tax plans whether it’s individual or corporate, so I wanted to talk about that and just your thoughts around the plans and the potential impact on your business in the muni market.

 

Paul Drury: Sure. So, if you look back to 2020, I think sort of having it, sort of a quick recap may be helpful. And we’ve come along way since 2020, right, I mean to say it at least, not only with the vaccine rollout and the re-openings, but the muni market in March and April of last year when COVID first hit were down 5% which is—if you know the muni market back-to-back months of 2.5% those were big moves in the muni market. We had record redemptions, so we had $50 billion come out of our market last spring which is the most in a five-period ever. So you have this, again, back to liquidity these events but you had the Federal Government coming and the Fed come in so you had this aggressive fiscal and monetary policy which is really help the ARP, the American Rescue Plan, first the CARES Act and then the ARP $350 billion to state and local governments plus other muni issuers over $1 trillion was given to the muni industry whether state and locals, higher-ed hospitals, toll roads, public transportation. So, really the combination of all of those is really led to much improve fiscal performance of the state level. For the Infrastructure Acts, I think we’re still early, we are starting to see contours, right. So you have the American Jobs Plan which is really kind of when we look at it, sort of, the way you and I would think about traditional infrastructure; roads, highways, airports, water and sewer. Maybe almost half of it for transportation and that’s going to—the proposal is to raise corporate income taxes from 21% to 28% there. Again, this is still going through the D.C., to figure out what’s going on, but we think that that’s could be positive for the muni market for really the two big reasons. One is additional aid for infrastructure takes that off the back of state and local governments so allowing in to avoid increases in leverage and really increases their financial flexibility; that’s first thing from a real side of broad basis. Secondly is from sort of—so that be fundamental. By raising the corporate tax rate, that could bring at some point, banks and taxable buyers more into the muni markets. Now, the reason why it keep come into the banks, retail is the big holder of our market, right. They own 70% of the market and the next slice is about 10% to 15% of banks, insurance company, et cetera. After the great financial crisis, banks were washed with sort of savings and the rates plummeted, they were looking for a home and banks doubled their exposure to muni, so they became a real big buying force in the market as well as global buyers in ‘09 and ‘10. So, they have some of these buyers outside of retail looking at our market in changes to the tax code like in the American Jobs Plan that could do something, that’s an important about. And the America’s Family Plan, that’s sort of the next bill it’s called human infrastructure sort of.

 

Chris Galipeau: All the infrastructure.

 

 

Paul Drury: Yeah, exactly. Paid family, child-care and some of these other very important topics but that’s obviously still winding it’s way through D.C. We’re going to see, but that is proposed pay for, one of the proposed pay for us on that bill is to raise the top end of the federal income taxes from 37 back to 39.6. And so, again, details still whether it’s bipartisan, partisan whether or not it’s two bills, one bill, it seems to us like it’s more likely to be one bill than two bills. This is probably a higher likely hood it’s done through reconciliation, it just seems like that both sides are having trouble finding common areas to pursue. So but overall, I’d say, generally speaking, both of the infrastructure bill should be positive to the muni market and then there’s a lot of other things in there in those bills whether or not it’s return to build America bonds, which where I’m happy to talk about or the SALT cap or advance for funding a lot of muni specific. There’s a lot going on, we should just continue to pay attention to it.

 

Chris Galipeau: So, one of things that were asked a lot about when it comes to muni space and I think this was a very big fear and you probably heard it more from financial advisors maybe in California, maybe in Illinois, maybe in New York about where the state budget stood and of course the projections were dire, but that’s not what happened at all and so maybe we could just get you views on where you think generally, broadly, and you can call out certain areas of states if you want, but the state of the union here with respect to the state and local governments.

 

Paul Drury: Yeah and I agree with you. There were some predictions last spring, which again because COVID was so unique, first time in a hundred years that the impact to tax revenue was highly uncertain. It’s probably an understatement. And there were some out there as you said that dire’s probably the right word. So, just taking a step back like pre-COVID if you think about it, we had the US economy had sort of 10 years of economic stability. Tremendous growth, record low unemployment and driving, if you think about state, we could take it state and then local. State governments, the vast majority of their revenues is income taxes and sales taxes. It’s pretty straightforward, right? So, record low unemployment, lots of folks are paying income taxes, unemployment low, lots of folks going and buying things on Amazon and going to the movies, and going to play golf with you. And so, this really allowed state and local governments to build up their reserves, build up their rainy day funds that sort of a muni, that’s a little bit in the muni lexicon, bringing into the muni lexicon here. There were a lot of sectors who are really thriving going into COVID. So, the pre-pandemic credit quality so to speak was strong. One of our analyst mentioned to me recently that going into COVID, the liquidity was 7%, the rainy day funds were 7% of their budget which was the highest since the great financial crisis. So, you have a lot of these borrowers in the muni market going into a terrible event like COVID in pretty good fiscal shape now, then COVID hits and unemployment rates spikes to almost 15%, but the make-up, because of the make-up of where a lot of the job losses came, which were a lot in the service industry, food and beverage, some of the low wage jobs that we actually saw the tax revenue performance hold up much better and for the year it ended up about down 5% and there were plenty of down as you said, down 20%. So, post-COVID so that kind of get you into like what happened down 5% for the year, the kind of vaccines kicking in, reopening, starting to see unemployment falling. As I mentioned, the significant fiscal aid, I mean the American Rescue Plan, just to put $350 billion, I mean that’s a lot of money you put that in perspective. That was about 15% to 20% of the average state budget, 15% to 20%, and they were only down 5% the previous year. That, again, just the reopening. One thing we didn’t see that a lot often times people don’t hear about, because it’s really so specific to the muni market, is the amount of—well did states come in and issue, did they lever up, and they really didn’t. State tax-supported debt and aggregate was down about 1% last year. So, fiscal restraint which is that’s not what we saw post-GFC. They had to that run up a little bit so that pensions look pretty good to us. So, overall, that’s the state. On the local side, local governments get their revenues predominantly and I’m talking 75%, 80% in some cases from property taxes. I’ll turn the table. How’s the property markets doing.

 

Chris Galipeau: Reasonable.

 

Paul Drury: Pretty good, right? Rates are very low, inventory’s very low. I have a friend that’s been looking to try to, he’s moving, he’s going to try to buy a house and I get the horror stories about every week he goes to open houses and there’s a hundred people and they’re trading on his way home, they’re selling. So, that should support the continued property and that’s different than the GFC, right. This was mortgage, housing related. Completely different. So state’s in good shape, local’s in good shape, even when we look at things like defaults and I know that’s something that we don’t talk about much in munis because they just don’t default like corporates. I mean, look at all the studies. Defaults, they haven’t spiked or anything like that, Downgrades S&P was out recently, Downgrades in the first quarter of 2021 was the lowest in 10 years so lots of good fundamental information in the market.

 

Chris Galipeau: It’s interesting to listen to you lay it out that way. So, my takeaway from that would be you’ve got the combo of states and locals being better prepared right heading into this pandemic. Probably learnings from ‘07, ‘08, ‘09. Then you get the layering on of massive stimulus and the end result was not as bad as people had expected in many cases. So, it almost seems like, I don’t want to put words in your mouth but almost seems like you’re saying “Hey, states and locals, they’re in much better shape than we would’ve thought and they’re way better coming out than they were on GFC”.

 

Paul Drury: Absolutely.

 

Chris Galipeau: Which reminds me of the big banks, right, which were the epicenter of the problem in the GFC. They caused it with the mortgage issue. Now, super wealth capitalized in part of the solution, not part of the problem. So, it’s amazing to go through these events.

 

Paul Drury: Absolutely. I think you hit the nail in the head.

 

Chris Galipeau: Alright. Another question that we get from our client base a lot is, how does Paul feel about revenue bonds or just general obligation bonds and just from a high level how do you think about that as you build a portfolio?

 

Paul Drury:Sure. So, when we talk about just a quick, sort of, overview so when we talk about GO bonds, that’s general obligation that’s backed by—those were issued by state and local governments, school districts and that’s based full faith in credit and taxing power of the state of Mass with a city of Boston. So, that’s one sub-sector in the muni market. The other big sector is revenue bonds where the bonds are paid back by the revenue to the project whether it’s a hospital or toll road or a housing complex or retirement community. At this point, we’re favoring with tilting more towards the revenue than the GO sector. The first question, I think, “You just said states and locals are in terrific shape?”

 

Chris Galipeau: Right.

 

Paul Drury: Like terrific shape and they absolutely are and the reason for the tilt is because state and locals are very high rated. Most of those were in the double A, triple A, single A and meaning most 90%, 95%, very high quality, highly rated, low spread, low yield cohort. So, with yields approaching all-time lows and spreads now back to pre-COVID or tighter, it seems like there’s been a lot wrung out of that towel so to speak. There’s just, like, forward returns to that, look, pretty modest versus in the revenue space—so the only real triple B you could get in the GO space would be Illinois and Illinois is a credit we still own, we’re still overweight, they have managed through COVID terrifically. Spreads in Illinois GO were 70 spread last February. They went out to 400 or more and now they’re back to 70 and we held. Our conviction was there is still a state government, it’s still a very diverse city, they have lots of levers, they had the highest reserves that they had had in many years. We thought they were going to make it through spreads bite. We were able to add some more spreads narrowed, it’s worked out terrifically. So overall, if you think of revenues and GOs, GOs really represent that higher quality cohort, revenues are lower and we think some of those lower quality, the triple Bs and high yield, there’s still some spread there. Not what it when it was April or May but there’s still some additional spread and so at some point, if the rate structure gets a little bit bumpy and maybe rates start to rise a little bit, at least with the triple B and high yield, you have some income offset to dampen that price.

 

Chris Galipeau: Duration risk. Right.

 

Paul Drury: Exactly. But we’re very fortunate here at Putnam that our credit analysts, which we have a terrific team of credit analysts, seven full-time analyst and we’re not buying bonds and saying, “Hey, Jim! I just bought this, can you make sure it’s okay?” They’re doing all the bottom-up, fundamental research.

 

Chris Galipeau: Wait until they hear this.

 

Paul Drury: Yeah and they are terrific. They are terrific and they are really the backbone of our credit selection, the high yield process and without them, we couldn’t do.

 

Chris Galipeau: That’s great to hear. So, If I were to try and sum up what you just said there, you feel like even though, on the GO side, the states and locals I should talk about are in great shape. You feel like most of the juice has been squeezed from those lemons and more on the RO side. Okay.

 

Paul Drury: Correct.

 

Chris Galipeau: Can you comment on—I don’t know the best way to phrase this—but the length of issuance, the duration or out years in maturity, are there parts of that curve that are more interesting than other parts of the curve?

 

Paul Drury: Yeah. So, right now, we’re a little bit more bulleted in, sort of, that 10-year to 20-year part of the yield curve. In a normal environment where the Fed has cut rates and then has been on hold and then at some point we’re approaching where the Fed is going to start taking accommodation away. Our preferred, sort of, yield curve structure at that point, would be a little bit more barbelled. Have some more longer maturities that are already starting to price in the Fed going higher and having some real short bonds that just don’t have a lot of duration to, sort of, hurt you. That would be, sort of, our normal stance at this point in cycle but when we look at the muni yield curve, so the muni curve between 5 years and 30 years typically averages 160 basis points, that’s how much you get paid, 5 to 30, 160, it’s now less than 100, it’s at 99 and if you look at the periods where the Fed was getting ready to tighten, the curve would even be steeper so it’s flatter and so we’re hesitant on the very longest part of the market and we think the reason why curve is so flat is because the technicals have been so positive. So much money has come into the muni market and has driven that down. So, we preferred now to stay more bulleted in that kind of—the front end has been pegged to zero and those rates and spreads are just very, very low. So, a little bit further. More of the, kind of, intermediate, I’d call, intermediate to long, 10 to 20 is sort of where we are.

 

Chris Galipeau: Okay. The next question I want to ask you about which is just the thoughts and comments around issuance, final demand, and you’re paint a pretty rosey picture there when we started the conversation about states being in great shape and high credit quality and that sort of thing but talk about that. I don’t know that the listeners have a handle on issuance and what it means and how it affects liquidity.

 

Paul Drury: Absolutely.

 

Chris Galipeau: Alright, let’s go there.

 

Paul Drury: The technical of the muni market, when you ask a muni PM or an analyst or a trader, there’s so much information. It’s a very technically driven market, right? The number of bonds coming in the market, what kind of bonds they are and how much demand is coming in. Is money going out? Is money coming in? 2020, money was coming in at first and then like I said, 50 billion went out all at once and then started to come back in when sort of the COVID fear, so to speak, started to die down. Year-to-date, we are now on pace. If the year ended today, it would be the fourth strongest inflow year on record in munis.

 

Chris Galipeau: And we’re halfway through the year.

 

Paul Drury: And we’re only halfway through the year. We’re number four. So, the demand has been—and again, that’s probably—maybe some diversification, maybe some rebalancing going on between the risk markets and stock markets being higher. Some reallocation going on. Different for everybody but it seems it’s been 54 out of 55 weeks in a row. I mean it’s been..

 

Chris Galipeau: Amazing.

 

Paul Drury: And on the supply side. Supply is a little bit higher year to date but importantly, the amount of refinancing supply is down about by a third and we think the thing that’s driving that is in the infrastructure bill, as I mentioned, there’s a few muni-specific details that you’d really have to be a muni expert to see and there was a change in the muni market brought on by TCJA in 2017, advance refunding. So the issuers we’re limited to the bonds that they could refinance and they’re thinking of bringing that back in a nutshell and so issuers, knowing where muni yields are, are not going out issuing taxable munis or other munis. They’re sort of waiting because if that comes back, they’re likely then to reintroduce supply.

 

Chris Galipeau: Got it.

 

Paul Drury: And maybe later on this year.

 

Chris Galipeau: Okay, that makes sense.

 

Paul Drury: But tacticals overall, supply/demand dynamics, all in favor of demand.

 

Chris Galipeau: Interesting. And I have to say that in the first 20 minutes, you’ve made the muni market exciting.

 

Paul Drury: I tried to talk about this at home but nobody wants to listen to me at home.

 

Chris Galipeau: Don’t start calling me at 11 o’clock at night on a Thursday, “Hey!”. So, we just covered a ton of ground there in the essence of time. Is there anything that we didn’t talk about that you want to talk about, that you think your shareholders or prospective shareholders or just listeners in general would want to know?

 

Paul Drury: Sure. I’d say, where we are, sort of, in the rate cycle and where we are, I’d say the one thing that I would point out is even though when the markets get choppy and I’ve seen this over 30 years, rates go up and returns go negative and money goes out of the market and people, sometimes the volatility in the muni markets, almost all the time, I should say that I’ve seen over my career, have been some of the best buying opportunities and so, you might, “Well, rates are low, spreads are tight.” But be on the lookout for those opportunities that when volatility gets introduced or returns might get a little bit bumpy or you could print negative returns, those go back to—whether it was the great financial crisis or the election or the tech bubble burst or the presidential election ‘16 or COVID, at some of these times, there are these opportunities to be added but again, the muni market, just from an overall standpoint, it is the efficient way to get high quality, low default, tax-exempt income, taxes, the highest level we know of have gone up, corporate taxes going up, even we’ve seen on the state level, New Jersey and New York, both increased their highest. So, taxes are going up and the muni market is sound.

 

Chris Galipeau: It’s a great way to end it. You’ve made a lot of great points but volatility, it creates anxiety, people get nervous.

 

Paul Drury: Yeah, absolutely.

 

Chris Galipeau: You see your account balance drop, the end client calls the advisor and there’s a lot of  consternation but I think what we need to remember and you just spoke to it is volatility also creates opportunity for the prepared investor.

 

Paul Drury: Absolutely.

 

Chris Galipeau: Alright, we’re going to end up by getting to know Paul Drury a little bit more here so let’s talk about your favorite food.

 

Paul Drury: Oh, my favorite food?

 

Chris Galipeau: You can only pick one.

 

Paul Drury: Oh, it’s a no-brainer, it’s pizza.

 

Chris Galipeau: Okay.

 

Paul Drury: If pizza is around me, it’s my kryptonite, I have zero willpower.

 

Chris Galipeau: Love it.

 

Paul Drury: And it could be any kind of pizza and I’m all in.

 

Chris Galipeau: Okay. Alright. I’m in agreement with that by the way. So, you got our perfect pizza, what are we listening to for music?

 

Paul Drury: Well, if it’s up to me.

 

Chris Galipeau: It is right now.

 

Paul Drury: It’s 80s. I went to high school and college in the 80s. I have a big ‘80s game. Although, I’ll pretty much listen to anything.

 

Chris Galipeau: Did you just say you have a big ‘80s game?

 

Paul Drury: I have a big ‘80s game. My wife will laugh and will be in the car and I love the radio and she’ll be like, “What is this?” I’m like, “Oh, this is Kajagoogoo from 1986.”

 

Chris Galipeau: It’s LL Cool J.

 

Paul Drury: She’s just shaking her head.

 

Chris Galipeau: That’s awesome. Alright. So, big part of our business is reading a lot and being prepared and getting different perspectives, one or two of the best investment books that you’ve read that you’ve been able to take something away from, maybe even influenced you as a PM.

 

Paul Drury: Yeah. The book that I keep going back to, not literally going back to, but lessons learned was when I was taking the CFA, a book called Winning the Loser's Game by Dr. Charles Ellis and it’s a quick read, it’s a paperback, it might be a 150 pages. But it talks about the principles of you got to be in the market. That dovetails a little bit with what I’ve saying earlier that sometimes it feels, it’s unsettling. There’s going to be time, when everything go and it feels great, but when things are going down it feels unsettle but you got to be in because, again, some of those abilities to protect those quick turnaround maybe a few waited for higher munis to bounce back and you wait until November of last year. This still doing great this year, but you missed a huge opportunity. So, those kind of things, be in the market and again, one thing that we try to do is, we try to limit the amount of, sort of, real big duration tilts because just the overall rates. So, we really try to have our credit quality sector calls, security selection, curve management really bubble up and that really the income is the benefit of the munis over the long period of time. So Winning the Loser’s Game, terrific read, quick read.

 

Chris Galipeau: Alright. Great. Well, I appreciate it. Paul, thanks for joining us. It was wonderful, lot of info in the session.

 

Paul Drury: It’s glad, it was fun.

 

Chris Galipeau: Yeah. It was wonderful. We’ll have to get you back on here. You make munis fun!

 

Paul Drury: You like that?

 

Chris Galipeau: Absolutely. Alright, listeners thanks. This is Chris Galipeau signing off, we’ll back with you shortly with another Putnam Portfolio Manager.

 

Patrick Laffin: Thank you for listening to Active Insights. For more information on Putnam Investments, please visit Putnam.com. All opinions expressed by the podcast host or podcast guests are solely their own opinions and do not represent the opinions or views and Putnam Investments or any affiliates. This podcast is not investment advice and is not intended as a recommendation to buy or sell any type of securities. This production is for informational purposes only.

 

 

Online Description:

In this episode, Chris speaks with Paul Drury, Portfolio Manager and head of Putnam’s Municipal Bond team.  During the conversation, they touch on many topics, including: 

•           The current municipal landscape  

•           Tax Plans, and the impact on the muni market

•           Infrastructure

•           Revenue vs General Obligation bonds

•           Muni Yield Curve

•           Rate Cycle

•           Issuance, Demand and Liquidity

 

This material is for informational and educational purposes only. It is not a recommendation of

any specific investment product, strategy, or decision, and is not intended to suggest taking or

refraining from any course of action. It is not intended to address the needs, circumstances, and

objectives of any specific investor. This information is not meant as tax or legal advice. Investors

should consult a professional advisor before making investment and financial decisions and for

more information on tax rules and other laws, which are complex and subject to change.

 

Duration measures the sensitivity of bond prices to interest-rate changes. A negative duration indicates that a security or fund may be poised to increase in value when interest rates increase.

 

All funds involve risk, including the loss of principal. You can lose money by investing.

 

To view additional information including performance and holdings, please visit the Putnam Tax Exempt Income Fund page found on putnam.com. 

 

Investors should carefully consider the investment objectives, risks, charges, and expenses of a fund

before investing. For a prospectus, or a summary prospectus if available, containing this and other

information for any Putnam fund or product, call your financial representative or call Putnam at 1-

800-225-1581. Please read the prospectus carefully before investing.

 

Putnam Retail Management                                                                                       AD1698240 6/21