Active Insights

Constructing Glide Paths in Target-Date Funds with Brett Goldstein, CFA Co-CIO Global Asset Allocation

September 13, 2021 Putnam Investments
Active Insights
Constructing Glide Paths in Target-Date Funds with Brett Goldstein, CFA Co-CIO Global Asset Allocation
Show Notes Transcript

In this episode, Chris speaks with Brett Goldstein, Brett is Co-Chief Investment Officer of Global Asset Allocation (GAA) and a member of Putnam's Operating Committee. In this role, Bret oversees the strategy and positioning of Putnam's GAA products, including research, security selection, portfolio construction, and risk management. He also contributes extensively to retirement glide path research and GAA's target-date funds.

During the conversation, they touch on many topics, including: 

  • What makes a target-date strategy successful
  • The glide path’s role in retirement planning 
  • Portfolio construction and risk mitigation
  • The savings rate and other variables that affect target-date strategies
  • Why volatility is so problematic for retirees
  • Inflation, and how it shapes a retirement portfolio
  • Behavioral finance


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.

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

 Each Retirement Advantage Fund and RetirementReady Fund has a different target date indicating when the fund’s investors expect to retire and begin withdrawing assets from their account. The dates range from 2025 to 2065 in five-year intervals. The funds are generally weighted more heavily toward more aggressive, higher-risk investments when the target date of the fund is far off, and more conservative, lower-risk investments when the target date of the fund is near. This means that both the risk of your investment and your potential return are reduced as the target date of the particular fund approaches, although there can be no assurance that any one fund will have less risk or more reward than any other fund. The principal value of the funds is not guaranteed at any time, including the target date.

 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                                                                                       AD1832581 9/21

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

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: Hi everyone, thanks for joining us in the Putnam Active Insights podcast. This is Chris Galipeau, Senior Market Strategist, and I’ll be your host again today. This is podcast number 7 and our focus today will be on target-date funds. We’re going to talk about different approaches to building a glide path, how success is measured when using target-date funds and what the future might hold for target-date funds. Joining us today to help shed light on target-date funds is my good friend, Brett Goldstein. Brett is the Co-Chief Investment Officer of Putnam’s Global Asset Allocation team and Brett has been at Putnam for 11 years, all of which had been in the multi-asset discipline. Brett is the Portfolio Manager of the Putnam Asset Allocation suite, so in that suite: the Growth Fund, the Balanced Fund and Conservative Fund, the Putnam Multi-Asset Absolute Return Fund, the Putnam Dynamic Risk Allocation Fund, the Putnam 529 for America plan, and most relevant to our conversation today, Brett is the Portfolio Manager of the Putnam Retirement Advantage Portfolio as well as the Putnam RetirementReady Portfolio. So with that said, Brett, welcome to the podcast.

 

Brett Goldstein: Thanks, Chris!

 

Chris Galipeau: We’re happy to have you here and I think the audience is going to know, realize quickly that you love target-date funds and you love glide path construction in theory.

 

Brett Goldstein: You know I do.

 

Chris Galipeau: So, why don’t we start out just by talking a little bit about you journey from where’d you go to high school, went to college, now here Co-CIO at Putnam.

 

Brett Goldstein: Yeah, that’s sounds great, thanks. So out of high school, I went to Cornell University. At Cornell, couldn’t really make my mind up between stats and finance so I major them both.

 

Chris Galipeau: Of course you did.

 

Brett Goldstein: Undergrad was awesome. I really have always been interested in markets, so always been interested in finance, but I knew I wanted to go on more quantitative root, so I thought it was really important to build out that toolkit personally, did that, and then just wanted to keep learning, so stayed on, did a Master’s in Statistics. Again, with a heavy dose of finance in there but technically, a Master’s in Statistics and joined GAA at Putnam right after so I’d been here a little over 11 years now. Started off just learning everything I could—attribution, exposure reporting, everything about fund management, all the nitty-gritty that you don’t learn in school. But pretty quickly moved on to risk management tasks, portfolio construction and really digging into quantitative history, learning from empirical analysis and doing all search of really interesting work.

 

Chris Galipeau: Yeah. So for the audience, I’ve spent nine years involved in the Asset Allocation team here at Putnam and I’ve learned a lot from Brett along the way and Brett’s forgot more about stats that I learned in college or in graduate school and you’re about to see proof of that too. Alright, so maybe let’s get it rolling and just talked a little bit about judging success in the use of target-date funds and I think there’s a lot of different—I mean this seems, almost seems like a wide open playing field depending on who you talk to, there’s different ways to measure being successful.

 

Brett Goldstein: Yeah, and I think that’s a bit of a loaded question itself, right. So when I personally think about a participant in our target-date funds and I’m one of them, right.

 

Chris Galipeau: Me, too.

 

Brett Goldstein: We want to think about having our participants able to maintain their quality of life to and through retirement, and so that’s really what it comes down to. A lot of times people talk about simulations of some portfolio value at some age, but I don’t like to think about it precisely that way. I used to think about it more that way but I think importantly you need two key things, you need sufficient wealth, that’s pretty obvious, right, but you also need confidence that your money is going to last you, right. So, that is where we have kind of a unique outlook in factoring in the understanding of volatility in retirement. The other piece I’ll add is when I think about success as a manager, right, is why I said it’s a loaded question. My goal is to improve outcomes where I can. So, in some cases, participants, if they don’t save enough, there’s enough equity in the world to get into sufficient wealth for high income replacement rate, right. So, I want to think about where things might go wrong along the way and how I can help as a target-date manager.

 

Chris Galipeau: Yeah. I think it’s one of the interesting things because one of things you said there is savings rate, right? Which probably doesn’t get enough airtime but I think to all of the research that we’ve done on the team and you’ve probably led most of it, it ends up being the most important variable in determining success is not the asset allocation mix but is the amount of money you can save over time.

 

Brett Goldstein: That is number one for sure. Everyone plays a role and that’s what’s really interesting about target-date, the participant plays a role, the plan sponsor and any consultant or advisor plays a role and truth be told, I mean the manager only has so much ability to shape outcomes, right? I always say I wish I could make participants save more but it’s just not possible to pull that lever. That said, we assume a 10% savings rate, all in, that’s including match and when you look at participants in plans, that’s a pretty low hurdle for a lot of them. We find the meet in savings rates are well above that across the country, right, for people who have access to these plans.

 

Chris Galipeau: Okay. That’s a good start and it makes me think about maybe it’s not an argument but maybe it’s a philosophical thing where you have target-date managers who run the plan to retirement, whatever x age, 65, just throw the number there or through retirement, and I’d love to hear you weigh in on that debate.

 

Brett Goldstein: Yeah. So that’s a little bit of industry jargon there and I think it does a bit of a disservice because the fact is every target-date manager is managing that asset based to and through retirement. We’re always managing those assets and planning for them to provide income through retirement. The to versus through is really when do you finish de-risking or when does your glide path hit its lowest point, right? And so, we manage what would be called a two glide path but we certainly expect that to provide income all the way through retirement.

 

Chris Galipeau: And so, just to be make sure we’re clear for the audience, when you say de-risking you’re referring to overall portfolio of all and most that coming from the equity part of the allocation?

 

Brett Goldstein: Exactly, yeah, so at a high level for people who aren’t familiar with target-dates or a glide path at all really young workers start with very, very high equity allocations typically from 80% to 99%. And then, over time you decrease that equity allocation as retirement approaches and how much you decrease it, will actually be quite different by manager. We finished decreasing that allocation, we reached at 25/75 equity, fixed income mix at retirement whereas some managers out there, they’re still be north of 50% equity at that time and continue to make reallocations after retirement.

 

Chris Galipeau: So I don’t want to jump ahead here but we wanted to cover just maybe general philosophy behind the glide path and you just hit on things like longevity risk and sequence of return risk without actually saying it, so maybe we can talk just about general philosophy, why you have it structured that way and I know you probably weave some of that.

 

Brett Goldstein: Definitely! So our big thing that we always talk about is managing the right risk at the right time, and so when we look at very young workers, the main risk there is that they’re not going save enough, right, and a lot of them, they’re not even really paying attention, they’re getting default and then we’re using behavioral finance, Pension Protection Act of 2006. So we’re putting them in a really aggressive portfolios, growing that wealth as quickly as we can because downside doesn’t really hurt here, right. But as you get close to retirement, downside risk is very, very important and what you talk about earlier, a sequence risk is something that most people don’t think about or even understand and that’s something that’s pretty unique to a retirement portfolio because it comes about as a result of having flows into the portfolio at various times and then switching to [then] withdrawing from the portfolio in retirement. So if you think about the riskiest time for a worker it is day one of retirement, you’ve just shut off your inflows and now you’re taking outflows, right, and so that’s why we want to make sure we hit our lowest risk allocation at that time.

 

Chris Galipeau: And it’s not as if you just put your finger up in the air and said I think we should have 75/25 allocation here in nominal dollars. There’s a lot of work behind that. You want to talk a little bit about that and why you think that’s a good ending spot here as you retire?

 

Brett Goldstein: Yeah. So, I think a lot of works feels like an understatement. Probably about five or six years ago we decided to really go back to square one and say, “Let’s take a fresh look at everything, do we really believe we have the best glide path, we have the best assumptions, we have the best justification for everything.” So, we basically tore everything down and took a fresh look at everything. And what ultimately came out of that, I put out a paper in 2018 that lays out all our assumptions, detailed philosophy, 31 pages, dents, math stuff that you would expect from me. But what we found is you can think about retirement because volatility is so problematic for retirees because of what happens with those systematic outflows from the portfolio you need to get really, really well compensated for the volatility you take on. So, what does that mean in finance terms? It means you want the highest Sharpe ratio portfolio you can find and that’s the bread and butter of Global Asset Allocation and what we do. We’re all about finding efficient portfolios, take advantage of diversification and make sure that we have a smoother ride while still being fully invested and allowing for some growth in that retirement portfolio at retirement.

 

Chris Galipeau: Yeah, it’s like we always say on the team when I was on the team that the only free lunches in the business is diversification, right?

 

Brett Goldstein: Absolutely.

 

Chris Galipeau: Good segue into the next question here and so we’re asked an awful lot when we’re talking with our clients with advisors around the country and sometimes their clients. Certainly in the last eight months, just around inflation, and so for those of you listening, not only is Brett, Co-CIO, but in his time on the team he has been tasked with the function of forming the team’s views on inflation and how to manage that, get exposure to it, that sort of thing, and through the Sharpe ratio lens, right, which is maybe not the most common thing and for folks that don’t know necessarily what Sharpe ratio means, I’ll ask the statistician to rip off the definition of Sharpe ratio Sharpe ratio so we’re clear.

 

Brett Goldstein: Sure. Definitely. So, Sharpe ratio is risk-adjusted return, so instead of just looking at returns, you are thinking about the risk that you’re taking on to generate those returns, and that’s really important in a portfolio context when we’re putting together these different asset classes because that’s what’s going to drive the efficiency of your portfolio when you are trying to take advantage of this diversification.

 

Chris Galipeau: Okay, perfect. So, a little side step there into the definition of what Sharpe ratio is. Brett has dreams about Sharpe ratio, but let’s maybe talk a little bit about inflation, right. So glide path, you’re talking 30 maybe 40 years, right, from the beginning to retirement. We can debate whether inflation is a thing or it’s not a thing but you have some built-in asset class exposure here to maybe mitigate or address or deal with inflation whether it’s temporary, whether it could be structural, that sort of thing. So, we get a ton of questions about it. How do you think about the impacts of inflation within a target-date portfolio?

 

Brett Goldstein: Yeah, great question. So when we think about this whole target-date process we’re talking about 45 years or so of a working life but then 25 plus years of retirement, so we’re talking to 70-plus-year horizon here and certainly we’ve seen quite a bit of inflation over the past 70 years and periods where there wasn’t so much. What’s important to think about in a target-date context is that most participants who are invested in this will be receiving Social Security and so for your average, typical American participant, almost half of their income in retirement is coming from Social Security which is inflation adjusted. So, I just mentioned that to keep that in context.

 

Chris Galipeau: That’s a good point though. That’s a really good point. Okay.

 

Brett Goldstein: Alright, and so then, we think about okay we’re going to build this target-date fund and we’re going to take a really long-term view, we don’t expect to change these standard allocations just for any reason, right. Now, we do dynamic allocation and we can get into that later, but we’re taking a really long-term view of these asset classes. The fact is when you think about investments, right, investing is taking on a risk to generate a return, right. That’s the risk that you might not get your money back when you invest in equity or credit risk. Inflation is a risk itself, right, it’s not a risk premium that you’re earning, it’s just a risk. And so, what we find is that typically your actually paying to get rid of inflation risk as opposed to earning in order to take on inflation risk, right. And so, an example that you kind of eluded to earlier is commodities, right. We don’t have commodities in our glide path because the Sharpe ratio long-term of commodities is pretty much zero, right, and if you look at it, once the index actually went live in 1991 and we have some blogs on this, it’s even worse.

 

Chris Galipeau: Shocker.

 

Brett Goldstein: So, it’s just not something that you want in your portfolio for the long-term. It doesn’t mean there’s not times that is good to own it. This year, we saw an inflationary environment and we were overweight for the vast majority of this year to this point. So, with that volatility and with that inflationary benefit, that’s where the active allocation decisions come in, but you don’t want that in your portfolio forever.

 

Chris Galipeau: Agree. Totally agree and that’s a part of the advice we give to financial advisors. We’ve gotten a question everyday for the last 12 months about should we put commodities in the portfolio, how should I think about this, should we use TIPS if we could touch some TIPS if you like sending of opinions there. And my response to the FAs with regard to commodities was, based on the research that Brett has done—I was using your research as my template, there’s no real advantage to doing it. If you really want to maybe mitigate it, there are a number of individual equity names you can go buy that are involved in the commodity complex that are much better Sharpe ratio plays potentially than buying copper futures, right, or something like that.

 

Brett Goldstein: Well, that’s another great point, right, because equities, the earnings are in nominal dollars. So, they’re going to give you some inflation protection themselves. It doesn’t mean that you have to have commodities or TIPS in your portfolio long-term in TIPS. Frankly, I’d be scared to own TIPS right now. TIPS, if you look at an actual treasury inflation protected security, its yield is basically zero and you’re paying $112 on a 10-year to get back $100 in inflation adjusted terms. So you’re getting basically no income and you’re losing money.

 

Chris Galipeau: Why would you do that?

 

Brett Goldstein: It’s scary. And not only that but that’s if you hold to maturity. But right now, the yield is right around -1%, so we know how bonds are priced, right. Yield has to go lower for your price to go higher. Are you going to bet that -1% is only a stop on the way to -2% or lower? I’m not ready to make that case.

 

Chris Galipeau: I’m with you. Good answer there. I think a lot of advisors maybe not realize that equities are pretty darn good hedge, a much better Sharpe ratio way to get exposure and maybe mitigate or at least address the risk of long-term inflation. In the last year, correct me if I’m wrong here, year two or three, we’ve seen the emergence of insurance-type products maybe being talked about in target-date space whether it’s at retirement or through it and I haven’t really been involved in that with you guys in the last couple years, but what are your thoughts here? Are there any plans to get in this? How’s Putnam involved in it, if at all?

 

Brett Goldstein: Certainly, the SECURE Act opened up a lot of new doors for guaranteed income and things along those lines in these accounts and then SECURE 2.0 is kind of working its way through, we’ll see what happens with that. I think there’s certainly a place for guaranteed income products in retirement. What we have found is, if you poll people and you say “Do you want guaranteed income in retirement?” Overwhelmingly, they do. If you then show them how they can have guaranteed income in retirement, they don’t want that because it’s either paying less or costs more or there are studies that maybe annuities are perceived as unfair. So, I think there’s certainly a time and a place for people who understand them and want them. We’re interested in the idea. I think it’s something that really appeals to a lot of people in the marketplace and so if you can do it in a cost-effective way, that really makes people feel secure. Again, getting back to that idea of success, that they have this efficient wealth but also the confidence to draw on that wealth, then that’s great. That’s a successful outcome.

 

Chris Galipeau: Alright. What are the chances to that? I think if you had to handicap that maybe just in terms of time, first of all, is it possible or maybe how long would it take to even produce a product like that?

 

Brett Goldstein: It definitely takes a while, we’ve certainly been having some conversations with partners. We do feel strongly that anything that is brought to market, we feel like should be the best thing out there and better than anything that’s available. So, that’s not super easy to create but I’m cautiously optimistic that if we can find the solution there, we will bring it to market and if we don’t, I’m okay with that too because ultimately it’s all about what’s best for our shareholders.

 

Chris Galipeau: Yeah, right. So for the audience, Brett and the team have been working on that for at least over a year probably, right?

 

Brett Goldstein: Since before the passage of the SECURE Act. Yeah, it’s been a few years.

 

Chris Galipeau: Okay, right. We’re starting to bump up against in terms of time. So we just covered a lot of ground there. Is there anything that we missed that you think we should touch on or maybe you want to amplify or emphasize?

 

Brett Goldstein: Yeah, I mean, there’s always a 31-page paper that I mentioned earlier, right? That’s some nice bedtime reading. I think it’s important to really think about the goals and think about how we can help participants, right? That’s what it always comes back to and so, I really like the idea of thinking about behavioral finance in the sense of using it where it creates better outcomes, like default options, but then understanding it to avoid pitfalls, right. And that’s where participants might be scared by losses and fall out of the glide path, right. Because we didn’t talk about that, but that’s part of why we’re so concerned about managing volatility close to retirement.

 

Chris Galipeau: Right. I mean we just went through it a year ago, 14, 15 months ago, you have a very sharp 35% drawdown at least in the S&P in three weeks. You and I have never managed to that before because it’s never happened before, right, 2008 or 2009 was worst order magnitude but it was like a slow moving train. This was like a rocket ship, right.

 

Brett Goldstein: It certainly felt that way.

 

Chris Galipeau: Yeah! But that’s eye-opening, right. So if you just retired in February of 2020 or whatever the number is depending, of course, on the allocation, you could have, probably did have, major behavioral finance problems or nightmares in March and April of 2020.

 

Brett Goldstein: Yeah and it was picked up by Morningstar. A lot of people fell out of the 2020-2025 vintages and that’s really a concern there. So that’s what we’re trying to avoid and that’s what we’re trying to think about and make sure. What’s ironic is that 2020 isn’t the sort of apocalyptic market that really keeps me up at night in terms of target-date success, right. Because if you did stay invested, you’re doing okay now, right—that market is okay. It’s the more extended, a few bad years in a row that really drags on a retiree’s portfolio. They are taking withdrawals, they are locking in those losses and they are recognizing losses from the market and that’s where the downside management really really protects you.

 

Chris Galipeau: Good point. So, let me try and sum up what we talked about it here, but I think probably the biggest takeaway for the listeners when I think about target-dates and glide path construction at least through Putnam’s lens, why we approach it the way your team approaches it, is thinking being thoughtful about what success actually means, right. The biggest driver of success, as you point it out earlier, is their ability to save, as the most critical part of it. And then your job, among other jobs, is essentially to build the glide path with your teammates maybe with the primary function on risk mitigation certainly for the end or near retirement or end of retirement and that’s why you have the glide path structured the way you have it. Fair?

 

Brett Goldstein: Definitely! Yeah, I guess we didn’t talk about it explicitly but early on, we’re more aggressive than the industry average and right around retirement, we are less aggressive than the industry average and that’s really about managing the right risk at the right time and thinking about the participants that way.

 

Chris Galipeau: Exactly. Alright. We’re going to shift it here from glide path construction to getting know Brett a little bit. Favorite food?

 

Brett Goldstein: So, admittedly, this might be a bit of recency bias because I ate it for lunch today, but every time I’ve been in the office I get Chacarero for lunch. So, for all of our non-Boston listeners, it’s a Chilean sandwich and the spice on it is just out of this world. I love spicy food so Chacarero number one for sure.

 

Chris Galipeau: I can’t believe you said that. So the first time Brett and I had our lunch together, that’s where we went and it was 10 years ago. Favorite type of music?

 

Brett Goldstein: I’m going to answer this one with my favorite group which is the Red Hot Chili Peppers. 

 

Chris Galipeau: Okay. Spicy food, spicy music. Got it. This one I’ve been looking forward to, so you think about what you studied in college, what you studied in the CFA program, everything, you have all the papers you read and digest, all the papers you’ve written. Undoubtedly, you’ve read a couple of books along the way here that made an impact on you, maybe made you think differently or impacted Brett Goldstein, Portfolio Manager. One or two of those books would be great.

 

Brett Goldstein: Awesome! So since you threw papers in there too, I’m going to start with ‘Save More Tomorrow’, which is by Benartzi and Thaler. Thaler just won a Nobel Prize a couple of years ago and they did some work, everyone said, “Oh, certain participants, they can’t possibly save more, they are living paycheck to paycheck.” and he said, “Well, let’s just raise your deferral each time you get a raise.” So your take-home pay doesn’t go down, right. And we’ll do it a little bit each year and after a few years, they had these workers who were supposedly living paycheck to paycheck saving 15%  of their pay. And they basically said, “Hey, if they can do it, anyone can do it.” And so, I love that not only for the target-date application but the behavioral finance stuff and so then I roll it into another book by Thaler. The one of the more recent ones that I read is called ‘Misbehaving’. Talks about just all sorts of his basically inventing of behavioral finance and how Benartzi, Thaler and obviously Kahneman and Tversky for big behavioral finance fans. It’s a good overview of all the fund stuff along the way so I thought that was a great book.

 

Chris Galipeau: Okay, I haven’t read that. I’ll get that because I love the behavioral finance stuff, too. Alright, Brett, thanks for hopping on with us, we are up against the clock here. Listeners, thanks for joining us, we’ll be back podcast number 8 with Mike Petro and talk about Small Cap Value and how that might fit in the portfolio and how he goes about building his own portfolio. So, we’re going to sign off for today. It’s Chris Galipeau, thanks very much for joining us.

 

 

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 Title and Description:

Constructing Glide Paths in Target-Date Funds with Brett Goldstein, CFA Co-CIO Global Asset Allocation

 

In this episode, Chris speaks with Brett Goldstein, Brett is Co-Chief Investment Officer of Global Asset Allocation (GAA) and a member of Putnam's Operating Committee. In this role, Bret oversees the strategy and positioning of Putnam's GAA products, including research, security selection, portfolio construction, and risk management. He also contributes extensively to retirement glide path research and GAA's target-date funds.

 

During the conversation, they touch on many topics, including: 

·       What makes a target-date strategy successful

·       The glide path’s role in retirement planning 

·       Portfolio construction and risk mitigation

·       The savings rate and other variables that affect target-date strategies

·       Why volatility is so problematic for retirees

·       Inflation, and how it shapes a retirement portfolio

·       Behavioral finance

 

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.

 

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

 

Each Retirement Advantage Fund and RetirementReady Fund has a different target date indicating when the fund’s investors expect to retire and begin withdrawing assets from their account. The dates range from 2025 to 2065 in five-year intervals. The funds are generally weighted more heavily toward more aggressive, higher-risk investments when the target date of the fund is far off, and more conservative, lower-risk investments when the target date of the fund is near. This means that both the risk of your investment and your potential return are reduced as the target date of the particular fund approaches, although there can be no assurance that any one fund will have less risk or more reward than any other fund. The principal value of the funds is not guaranteed at any time, including the target date.

 

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                                                                                       AD1832581 9/21