The fund seeks to combine characteristics of both money market funds and ultra-short bond funds. It will strive for a higher rate of current income than is typical of money market funds, and a have a greater focus on capital preservation than is usually associated with ultra short bond funds, with the goal of maintaining liquidity.
The Short Duration Income Fund offers a check-writing feature, through which investors may redeem shares by writing checks. The Putnam Short Duration Income Fund will invest in a diversified portfolio of fixed-income securities composed of short duration, investment-grade money market, and other fixed income securities. Its primary benchmark will be the BofA Merrill Lynch U.S. Treasury Bill Index.
Among its more traditional short-term and money-market securities holdings, the fund will invest in certificates of deposits, commercial paper, time deposits, repurchase agreements, and U.S. government securities, including Treasury Bonds and other fixed income instruments. Additionally, the fund will invest in asset-backed securities, investment-grade corporate bonds, sovereign debt, and will make use of derivatives to help mitigate risk. The fund will make daily accruals and pay distributions monthly.