"Launched in 1984, this is Thornburg's oldest mutual fund, and it remains the largest of the firm's bond funds. It has a classic 10-year laddered structure, but don't mistake it for a passively managed fund. We manage the fund actively, frequently freshening our targets for portfolio credit quality, duration, and exposure along the yield curve. We invest our time and effort in fundamental research, both before acquiring new names and to monitor existing holdings. The goal is to maximize income subject to maintaining a relatively stable principal value."
– Chris Ryon
We build 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 at the top range of the ladder.
Laddering tends to perform well against other strategies because it captures price appreciation as bonds age and their remaining life shortens, and it reinvests principal from shorter, lower-yielding bonds into longer, higher-yielding bonds.
The fund’s laddered portfolio structure is one of many important contributors (credit research also among them) to the total return an investor receives over an appropriate holding period.
In bond investing, nothing is more important than determining whether the party to whom you propose to lend money has the ability and willingness to pay you back in full and on schedule.
We conduct thorough, bottom-up credit research on every bond we purchase, both to understand the ability of the issuer to repay obligations, and to ensure that investors are adequately compensated for the risk assumed.
The portfolio is composed of almost 2,000 separate positions, in part to ensure that a potential default or price decline of any one issuer has a minimal impact upon the net asset value of the portfolio.
In adjusting position sizes within the portfolio, we may take into account the credit quality of the issuer (with higher-quality credits typically being afforded larger position sizes), the extent to which each issue contributes to the duration of the portfolio, and prospectus limitations.
It’s important for investors to match their investment horizon to the duration of the strategy in which they’re invested, and to diversify tax-exempt assets across the yield curve.
This is why Thornburg offers a range of strategies — from the Low Duration Municipal Fund on the short end to the Strategic Municipal Income Fund on the long end — to provide a home to match every time horizon.
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.