Thornburg Limited Term U.S. Government Fund is a straightforward laddered portfolio–with an over 25-year track record–of bonds issued by the U.S. government. We do not reach for yield with this portfolio, but consider it a valuable part of an investor’s overall asset allocation.
“The fund seeks to provide U.S. government-guaranteed cash flows without outsized interest-rate exposure, along with relative safety and stability. Though certainly not the most adventurous of portfolios, the fund has an over 25-year track record and can fit well into a larger asset allocation.”
— Jason Brady
The fund is a 10-year ladder of U.S. government bonds (U.S. Treasuries and other bonds issued by U.S. government agencies). Following our tradition of quality and transparency, we don’t employ leverage or the use of derivatives in the management of this fund. We believe the few extra basis points of yield potential they provide aren’t worth their added risk and complexity.
Credit quality, in a portfolio that’s comprised almost exclusively of U.S. government bonds, is quite high, with the full faith and credit of the federal government behind interest and principal payments.
Even in government-bond portfolios, managers often reach for yield through use of leverage or derivatives. While our prospectus permits us to purchase up to 20% non-government bonds (of any stripe), we don’t. It’s a simple, straightforward, clean approach designed to keep volatility and price movement in check.
As has always been the case, government bond portfolios are best viewed as part of an investor’s overall asset allocation, where relative safety of principal, reduced volatility, and low correlation with equities is desired.
Laddering involves building a portfolio of staggered maturities so that a portion will mature each year. Money from maturing bonds provides an organic source of cash flow, and is typically reinvested in longer-maturity bonds within the range of the ladder. In the case of Limited Term U.S. Government Fund, the ladder ranges from zero to 10 years.
2012 – The firm ranked #1 out of 41 eligible firms in Lipper Inc.'s fixed income large firm universe for the three-year period ended 11/30/11.
2008 – The firm ranked #1 out of 41 eligible firms in Lipper Inc.'s fixed income large firm universe for the three-year period ended 12/31/07.