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When it comes to global investing, sometimes the longer you've been at it, the better the payoff.
Putnam's Global Growth Fund has been around forever. At least that's what a Gen Xer might think. Introduced in 1967, this fund, which invests its assets anywhere in the world its team of portfolio managers sees fit, has returned on average 13.03 percent per year to its longtime shareholders. To newcomers, the fund has been more generous: In 1998, it was up about 28 percent and, for the past three years, according to Lipper Analytical Services Inc., had an average annual total return of just over 17 percent--impressive total returns in a world where some argue the only place to invest is the United States.
Even though the U.S. market has been hot, without any international holdings, you could miss out on lucrative investment opportunities. "The more the United States gets stretched relative to other countries, the more likely it is that--if capitalism works properly--the U.S. will have to rest, and other countries will catch up," says Robert Swift, lead portfolio manager for the fund and chief investment officer of Putnam's International Growth Equities Group.
Being a satisfied global fund investor begins by believing there are plenty of good investment opportunities outside the United States. It ends with buying into the notion that people like Swift and the five other managers of the Global Growth Fund will be able to find them.
Of the world's approximately 11,000 quoted securities, Swift says there are about 1,000 large-cap growth stocks. "We choose our portfolio from about 500 of these stocks, on which the Putnam analysts have done detailed forecasts," he says, adding that the kinds of companies he likes are those with a revenue growth rate of at least 12 percent per year.
Global Growth typically holds between 140 and 160 stocks. As of March, approximately 50 percent of the fund's portfolio was made up of U.S. companies, 25 percent came from the European Monetary Union (excluding the United Kingdom), 9 percent from the UK, 7 percent from Japan, 3 percent from the Pacific Basin (excluding Japan), and 2 percent was in cash. (The fund doesn't invest in emerging markets.)
Investors in the Global Growth Fund can expect to see companies in the fund's portfolio change frequently, as the fund bases sell disciplines on the way a stock's per share price moves over a given time period. "Obviously, if a share price moves quickly, or a stock is very volatile, we'll sell more frequently," says Swift.
Managed to keep risk in check, this fund is worth a look for those who want to broaden their horizons and put their money in a fund with a long-term track record that invests in well-established growth companies worldwide.
Dian Vujovich is a nationally syndicated mutual fund columnist and author of 101 Mutual Fund FAQs (Chandler House Press). For free educational mutual fund information, visit her Web site, http://www.diansfundfreebies.com
At A Glance
Fund name: Global Growth Fund (PEQUX)
Managed by: Putnam
Investment Management Lead portfolio manager: Robert Swift
Holdings include: Lucent Technologies Inc., Microsoft, Nokia, Vodafone
Total assets: $5.4 billion
Average annual return:13.03% (since its inception in 1967)
Maximum load: 5.75% on Class A shares
Total expense ratio: 1.24% including 12b-1 fees
Management fee: 0.64%
Minimum initial investment: $500 ($250 for an IRA)
Web site: http://www.putnaminv.com
Figures are as of March 5, 1999.