Seeking Income from High-Quality U.S. Dollar-Denominated Bonds

Thornburg Limited Term Income Strategy is a flexible, actively managed, core portfolio of high-quality U.S. dollar-denominated bonds. This centerpiece investment-grade portfolio seeks a reasonable level of income and lower volatility than some peers, without overextending in the pursuit of yield.

Working Photo"The Limited Term Income Strategy is designed to range across the investment-grade bond market to look for the best opportunities available in the context of a high quality, laddered portfolio. As the vast majority (around 85%) of the U.S.-dollar investment-grade bond market matures within 10 years, we believe that we can provide a large portion of the reward of U.S. bonds without much of the heavy interest rate risk in the longer end of the yield curve. We will continue to strive to bring as much income as is consistent with lower volatility and a focus on balancing risk with reward."

— Jason Brady

A High-Quality Core Portfolio

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. Rigorous research into the fundamental creditworthiness of an issuer is critical.

In the Limited Term Income portfolio, issuer credit quality is high, with 58% of the portfolio rated A or better.

Flexibility

As with other Thornburg portfolios, flexibility is key. While Limited Term Income is structured as a 10-year ladder, we enjoy the flexibility to invest wherever we see the most value. Analysts and portfolio managers are expected to be conversant across a wide range of asset classes and geographies.

Lower Volatility

Limited Term Income Strategy is a 10-year laddered portfolio, managed with an eye toward mitigated volatility. Of course, markets are inherently volatile at times, so some price movement is to be expected. But through careful credit research and portfolio construction, we seek to mute price change.

Seeking Reasonable Income

Many “core” investment-grade bond strategies seek to enhance yield by extending duration, lowering credit quality, and even through the use of leverage. While the Limited Term Income Strategy is flexible in pursuit of its goals, we keep things reasonable. We want a reasonable level of income commensurate with a moderate level of risk assumption; we won’t assume undue risk in pursuit of a few extra basis points.

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 Income, 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.

Credit quality ratings for Thornburg’s global fixed income portfolios used ratings from Moody’s Investors Service. Where Moody’s ratings are not available, we have used Standard & Poor’s ratings. Where neither rating is available, we have used ratings from other nationally recognized statistical rating organizations (NRSROs).

A bond credit rating assesses the financial ability of a debt issuer to make timely payments of principal and interest. Ratings of AAA (the highest), AA, A, and BBB are investment-grade quality. Ratings of BB, B, CCC, CC, C and D (the lowest) are considered below investment grade, speculative grade, or junk bonds.

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 Income 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.