A Straightforward Laddered Portfolio of U.S. Government Bonds

Thornburg Limited Term U.S. Government Strategy 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.

Working Photo"Thornburg’s first assets were invested in high quality, laddered fixed income portfolios, and the Limited Term U.S. Government Strategy is a part of that tradition. The portfolio 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 strategy has a 26-year track record and can fit well into a larger asset allocation. We manage it with that goal in mind."

— Jason Brady

A Simple, Straightforward, Clean Approach

Limited Term U.S. Government Strategy follows in the tradition of the first “core” bond portfolios managed by Thornburg. The portfolio is a 10-year ladder of U.S. government bonds (U.S. Treasuries and other bonds issued by U.S. government agencies). We don’t employ leverage or the use of derivatives in the management of the portfolio in an effort to try to eke out a few extra basis points of yield.

High Quality

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.

Reasonable Pursuit of Reasonable Objectives

Even— indeed especially, in some instances— 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.

Part of an Investor’s Overall Allocation

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.

An Actively Managed Ladder

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, the ladder ranges from zero to 10 years.

Important Information

Investments in the strategy carry risks, including possible loss of principal. Portfolios investing in bonds have the same interest rate, inflation, and credit risks that are associated with the underlying bonds. The principal value of bonds will fluctuate relative to changes in interest rates, decreasing when interest rates rise. Unlike bonds, bond portfolios have ongoing fees and expenses. Investments in mortgage-backed securities (MBS) may bear additional risk. Carefully consider the strategy’s investment objectives, risks, fees and expenses before investing. There is no guarantee that the strategy will meet its investment objectives.

Weight percentages are of the total portfolio unless otherwise noted.

Portfolio characteristics are derived using currently available data from independent research resources that are believed to be accurate. Portfolio attributes can and do vary.

The laddering strategy does not assure or guarantee better performance than a non-laddered portfolio and cannot eliminate the risk of investment losses.

Portfolios invested in a limited number of holdings may expose an investor to greater volatility.

Dividends are not guaranteed.

Portfolio construction will have significant differences from that of a benchmark index in terms of security holdings, industry weightings, asset allocations and number of positions held, all of which may contribute to performance, characteristics and volatility differences. Investors may not make direct investments into any index. Investors may not make direct investments into any index.

Valuations are computed and reported in U.S. dollars.

Source: Advent/APX, FactSet and Thornburg.

View the Limited Term U.S. Government Composite GIPS compliant presentation.

To receive a complete list and description of Thornburg Investment Management's composites, please contact the Business Development Group at bdg@thornburg.com

Please see our glossary for a definition of terms.