PORTFOLIO SPOTLIGHT
“ The stock picking in technology has been so strong that despite the underweight we’ ve added significant alpha because we’ ve got the stock picks right over the past two years.”
— Kate Lakin how they will tilt the portfolio from a sector perspective.“ Uncertainty around tariffs will weigh on where we think spreads will go. All of this helps drive how we’ re positioned.”
An overarching aim of the bond portfolio is to dampen any risk on the equity side during turbulent markets.“ We want to make sure the fund’ s two strategies complement each other,” Benson says.
According to Morningstar, the fund’ s risk / reward profile during the past five years is rated as average within the moderate-allocation category. It has sported much higher alpha and Sharpe ratio scores than its peers, while its standard deviation registered a couple of ticks higher. there’ s a group of businesses such as application software companies that will benefit because they’ ll be able to get AI products much more cheaply,” she offers.“ We think there will be a bigger group of winners in technology.”
Macro Considerations
On the fixed-income side, the fund focuses mainly on investment-grade government and corporate bonds with intermediate- to long-term maturities of
Asset Allocation
Equities 62.7 % Fixed Income 34.73 % Cash and Other Net Assets 2.57 %
As of 1 / 31 / 25. Sources: Putnam Investments / Franklin Templeton and Morningstar
Portfolio Statistics
Number Of Holdings 705 Average Mkt. Cap
$ 341.4 billion P / E Ratio 21.72x Std. Dev Fund / Benchmark * 12.73 / 12.03 Turnover Ratio 80 % Net Expense Ratio 0.68 %
* 5 Year. Portfolio stats as of 1 / 31 / 25. Standard deviation is compared to the Morningstar US Moderate Target Allocation NR USD Index. Expense ratio figures are for the institutional Y- share class. Sources: Putnam Investments / Franklin Templeton and Morningstar three years or longer.“ When we think about how we position across different fixed-income sectors, I’ d say that corporates are where we generally are driving alpha,” Benson says. He adds that the team manages the bond portfolio using the Bloomberg U. S. Aggregate Index as a benchmark, aiming to outperform the specific corporate allocations within that index.
He says he works with a large team of fixed-income analysts, each of whom cover two to three sectors. They hold quarterly roundtable discussions to discuss their sectors and their top ideas. They then do deep dives into the relative value of each security and discuss how they want to be positioned along the credit curve of a given issuer.
Benson says the bond portfolio positioning takes into account current macroeconomic concerns, including the tariffs proposed by the current U. S. presidential administration, potential inflation and uncertain interest rate movements. He notes that the fund manages duration risk, or the sensitivity of a bond’ s price to changes in interest rates, to keep it in line with the Agg index, which recently sported an average duration of just under six years.
“ We’ re not taking big duration bets as a result of what we’ re seeing from the Fed or what we expect around inflation,” he explains, adding that macro factors impact
Long-Term Perspective Franklin Templeton early last year completed its acquisition of Putnam Investments, which Lakin says enables the George Putnam Balanced Fund to access new markets both in the U. S. and abroad. Part of the marketing message centers on the perceived benefit of a ready-made balanced portfolio designed to provide both asset growth and asset protection.
“ What we’ ve always said to advisors, and we’ ve had some nice traction with this under Franklin Templeton, is that this is a true balanced strategy,” Lakin says.“ You’ re getting the expertise of two highly tenured sector analyst teams. We call ourselves all-weather investors, so we want to outperform in all market environments.”
The pain of 2022 still lingers in the minds of some investors, but a sense of normalcy returned last year when bonds acted as a buffer during periods of equity volatility. The uncertainty and turbulence in the markets in the early months of 2025 could portend an unsettled year in the financial markets. Indeed, the Bloomberg U. S. Aggregate Index had outperformed the S & P 500 by early March.
But a balanced portfolio allocated between stocks and bonds might be a ticket to a smoother ride. And proponents of the 60 / 40 portfolio maintain that while all investment strategies have their ups and downs, this particular strategy still makes sense for long-term investors.
PHOTOGRAPHY OF PORTFOLIO MANAGERS COURTESY OF FRANKLIN TEMPLETON APRIL 2025 | FINANCIAL ADVISOR MAGAZINE | 53