Our focus is on maintaining and building the investment expertise to manage Thornburg strategies to a high standard, while adhering to a core set of investment principles:
- We focus on the fundamentals. We invest according to our view of the fundamental value of an issuer only after performing thorough, bottom-up research.
- We think and invest for the long term. We typically make investment decisions based upon an investment thesis we expect to play out over time. We may not always hold a security for several years, but our horizon line is typically a few years out.
- We focus on the best opportunities across equities, fixed income, and alternatives. We believe that risk management is made more effective by holding a limited number of positions and knowing them well.
- We use flexibility to enhance risk-adjusted returns. We go where we see value. Our investment mandates are generally broad and flexible, and we exercise as much flexibility as possible within any restrictions.
- We collaborate across strategies and asset classes. Portfolio managers and analysts do not specialize in sectors, geographies, or even security types, but instead must understand and communicate bottom-up fundamentals across industries, sectors, and borders.
The most important distinguishing characteristic of Thornburg is our orientation as a global manager. Portfolio managers and analysts do not specialize in industries or even asset classes, but must work and communicate effectively across sectors, security types, and geographies.
Thornburg’s culture emphasizes teamwork, respect, and the value of collaboration. A visitor to our Santa Fe headquarters will notice that there are no walls between the bond and equity teams and no partitions between value and growth managers — a design that promotes collective sharing of investment insights.
We are committed to the notion that placing artificial constraints upon portfolio managers does not produce attractive investment returns over long-term market cycles. Thornburg investment mandates are written broadly, to allow portfolio managers the latitude to invest wherever they see the most value, at any given time.
"Thornburg stands out from the crowd. The firm’s culture is distinctive as well as attractive."
- Morningstar ("Thornburg Stands Out from the Crowd," January 2011)
At Thornburg, we manage focused equity portfolios. We like to know what we own, and why we own it. We believe that diversification beyond a limited number of holdings may yield only marginal performance benefits, and that the task of analyzing, understanding, and tracking performance of 30 to 125 issuers is far more manageable than with a portfolio of 250 to 300 securities.
Focus means that each position can have a material impact on strategy performance, and helps us better understand the companies we own.
Virtually every bond manager uses the word "disciplined" to describe its management process. At Thornburg, the word carries some substance. We don't make a practice of using shortcuts to enhance yield or total returns. Every strategy is grounded in rigorous, bottom-up credit work. Portfolios are assembled carefully — in the case of our core portfolios, using laddered structures — to mitigate price fluctuation. Position sizes are controlled carefully so that no single one can have an outsized effect on a portfolio. And as with our equity portfolios, managers enjoy flexibility to seek optimal risk/reward balance.
Market indices are used for a variety of purposes, such as serving as benchmarks for the measurement of a manager’s long-term performance, but they can play a damaging role when used as a driver of decisions. While valuable for the measurement of asset classes, benchmarks are limited in key ways.
For example, the construction of a benchmark is often flawed or is undesirable for investors. Debt benchmarks are typically weighted by debt amount, which means that more indebted countries and companies have larger representation in the benchmark.
Unfortunately, investors often depend on certain benchmarks to reach portfolio goals, but the benchmark itself is not constructed to reach a goal.
While that is valuable in certain circumstances, beginning with a benchmark can compel managers to abandon common sense. Such decision making does not often lead to the best possible investment decisions.
Thornburg’s emphasis on a flexible model ensures that our portfolio managers are not limited by the parameters set by any individual benchmark. Unlike investment firms with specialists tied to specific areas, our analysts have the freedom to pursue an unlimited set of opportunities.